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OP hits record high as Optimism proposes the Bedrock upgrade (CoinDesk/Highcharts.com)
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Ethereum layer 2 scaling system Optimism on Wednesday proposed a mainnet upgrade to boost performance and functionality, accelerating the rally in its governance token OP.
“The Optimism Foundation is proud to propose the first protocol upgrade to the Optimism Collective: Bedrock,” the proposal floated in the governance forum said.
“This upgrade offers a new level of modularity, simplicity, and Ethereum equivalence for layer 2 solutions, providing unprecedented performance and functionality,” the proposal added, noting additional benefits that may lead to a Cambrian explosion of layer 2 protocols.
OP has rallied nearly 25% in the past 24 hours, hitting a new record high of $2.90, CoinDesk data show. The Bedrock proposal seems to have driven the token higher.
The community will vote on the proposal after two weeks of discussion. If approved, the upgrade will be implemented on March 15 at 9:00 a.m. PT (17:00 UTC).
Bedrock is a rollup architecture developed by Optimism. Rollups enable batching and publishing hundreds of transactions in a single mainnet block. In other words, they compress many transactions into one, speeding up the blockchain.
Per Messari’s Kunal Shah, the Bedrock upgrade will help Optimism improve transaction fees and speed and create a foundation for future improvements like decentralized sequencing, helping it compete with its main rival, Arbitrum. “OP Labs expects Bedrock will make optimism the cheapest rollup on Ethereum,” Shah said in a research note last month.
Web3 research and development firm Xord’s research writer Zainab Hasan expects the Bedrock upgrade to reduce the block time of Optimism in case of pending transactions from 13 seconds to 2 seconds and facilitate faster deposits.
“With Bedrock, Optimism will be the first EVM-based rollup to deliver Ethereum-level security guarantees,” Hasan said in an analysis published in October.
OP token leads the way
Optimism’s OP token has rallied nearly 200% in the past few weeks, outshining bitcoin (BTC) and ether (ETH) by a big margin. The top two coins have gained 44% and 39%, respectively. Optimism’s rival Arbitrum doesn’t have its native token yet.
Optimism has also outpaced in terms of the percentage growth in total value locked in the decentralized finance ecosystem in the past 30 days.
Data from DeFiLlama shows the total value locked (TVL) in Optimism has increased by 47% to $744 million, while that in Arbitrum has gone up by 27% to $1.3 billion.
“One of the big narratives of 2023 looks to be Layer 2’s and the only way to get direct exposure to them right now is through the OP token,” Conor Ryder, research analyst at Paris-based crypto data provider Kaiko, said. “TVL on Optimism has also outpaced Arbitrum, its closest competitor, to start the year.”
The layer 2 adoption kicked off last year with Arbitrum and Optimism experiencing a steady growth in the user base despite the broader market swoon. Active user participation on Optimism surpassed that on Arbitrum at the end of December.
The chart by Galaxy research shows Optimism surpassed Abritrum in terms of daily active users at the end of 2022. (Galaxy Research) (Galaxy Research)
If that’s not enough, early today, Binance, the world’s biggest cryptocurrency exchange by trading volumes, announced the integration of its dollar-pegged stablecoin BUSD and its wrapped version Binance-peg BUSD on Optimism.
Binance users can now move BUSD and Binance-peg BUSD across Ethereum, BNB Chain, Polygon, TRON, Avalanche and Optimism networks.
The integration may galvanize more investor interest in Optimism, considering BUSD is the world’s third-largest stablecoin by market value. At press time, BUSD has a market cap of over $16 billion and a 24-hour trading volume of $12.14 billion.
“BUSD is one of the largest stablecoins, and having it on Binance simplifies the user experience for retail and institutional traders without the need for decentralized bridges,” said pseudonymous DeFi researcher Ignas, speaking to CoinDesk.
“Currently, only Ethereum, Polygon, Avax, and Tron are supported. Surprisingly, Arbitrum is not yet supported,” Ignas added.
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