Optimism’s OP token has struggled to gain value, splitting DAO members over a buyback vote. OP has fallen more than 93.7% from its peak and hit a low of $0.2519 last month. This marked the token’s lowest price level ever in December. In response, Optimism DAO delegates are voting on a proposal to use protocol revenue to buy back OP tokens. The vote began on Thursday and will last six days, concluding on January 28. At the time of writing, delegates have cast more than 4.2 million votes in favor of the proposal, compared with just over 491.9K votes against it. Voters have the option to vote for, against, or abstain. The buyback proposal passes if the ‘for’ votes exceed the quorum and if the ‘for’ votes, relative to the total votes, exceed the approval threshold. The quorum for this proposal is at 30% and the approved threshold is 94.40%. If approved, the proposal would require the Optimism Foundation to spend half of the Superchain’s monthly revenue on purchasing OP. As revenue grows, the foundation would be required to buy more OP tokens each month. Supporters say this mechanism could help support the token’s price. The vote on OP tokens buyback is live. Source: Optimism website . DAO members split over OP’s buyback plans But the proposal has split the DAO. Some delegates support the plan, while others think it wastes funds and weakens Optimism’s financial runway. Critics point out that Optimism is currently a net seller of OP. PaperImperium, an Optimism DAO delegate, believes OP holders should vote against this buyback proposal. He thinks it is illogical to use valuable assets to buy back OP while continuing to sell tokens, especially if it shortens the project’s runway. PaperImperium is also concerned about OP buybacks execution. He said, “…This proposal uses an OTC desk instead of using Optimism’s own chain, which is a bad look.” The program is planned to operate over the counter (OTC) rather than on open markets. This means purchases would not directly affect OP market prices. Michael Vander Meiden, an Optimism DAO delegate, warned in a forum post that OTC buybacks could allow employees or investors to sell unlocked tokens into the program. He said , “This would be concerning because it defeats the purpose of aligning incentives, with unlocks currently happening at a rate much higher than the planned buybacks.” The Optimism Foundation said it chose OTC execution to simplify the process. It pledged to publicly report all OTC trades on stats[dot]optimism[dot]io or the governance forum. The debate comes in spite of Optimism’s expanding role in blockchain technology. Its OP Stack powers over 50 blockchains, such as Uniswap’s Unichain, Coinbase’s Base , Kraken’s Ink, Zora Network, Sam Altam’s World Chain and other blockchains. Can buybacks fix token slumps? Skepticism toward buybacks extends beyond Optimism. Researchers at Messari say that buyback strategies often waste money. They divert funds from marketing and growth, and the overall impact of buybacks on token prices is minimal. Several crypto projects considered ending token buyback programs. Siong Ong, founder of Jupiter DEX asked community members if the exchange should stop buying JUP tokens back since it did not benefit the price. The DEX spent more than $70 million on buybacks last year, and the price didn’t move much. GFXlabs argued in a forum post that Optimism should prioritize creating and sharing a business plan for long-term financial sustainability. He added that a buyback does not address this issue and could make it worse. Several DAO members have echoed these points. Supporters of the proposal think it represents progress. Milo Bowman, an Optimism DAO delegate, said that running buybacks alongside emissions is acceptable even if they partially offset each other. He added that the buyback framework allows participants to better model the outcomes of a potential 100-fold growth of the Superchain. Claim your free seat in an exclusive crypto trading community - limited to 1,000 members.
