Can Optimism [OP] benefit from the latest Coinbase move?
- Optimism protocol may reap benefits from Coinbase’s new product.
- However, its token may get impacted negatively.
The much-awaited Coinbase layer 2 solution will be launching on the Optimism network very soon. It’s important to note that multiple factors are in favor of Coinbase’s new initiative.
The success of Coinbase’s layer 2 solution could have a positive impact on the Optimism protocol, but the same cannot be said for the OP token.
Is your portfolio green? Check out the Optimism Profit Calculator
One of the ways in which Optimism would benefit from Coinbase’s layer 2 protocol would be through the fees generated by Coinbase.
The exchange would be contributing a portion of its fees collected on its network to the Optimism protocol. With the help of the fees collected through Coinbase, Optimism can earn more revenue.
With another stream of revenue added to the Optimism protocol, it could reduce the fees applied to the users on its network and help them save more of their ETH.
This would make the Optimism network more attractive to crypto users and it would help the layer 2 solution outperform its competitors such as Arbitrum.
Using OP is OPtional
Even though the Coinbase collaboration may help improve the conditions of the Optimism protocol, it may not have the same effect on the OP token.
Notably, Coinbase has more incentive to have USDC as the native token on its protocol, rather than OP.
This is because USDC is issued by Centre, a consortium co-founded by both Circle and Coinbase. If USDC does end up becoming the native token of Coinbase’s layer 2 solution, OP may not be able to reap the same rewards as the Optimism protocol.
OP’s current state
However, for the time being, OP observed a lot of growth. According to Santiment’s data, both its prices and volume continued to rise.
Over the past month, its price surged by 24.41% and its volume increased from 200 million to 223.1 million.
This spike in prices and volume was accompanied by a decline in Optimism’s MVRV ratio.
Realistic or not, here’s OP market cap in BTC’s terms
A negative MVRV ratio implied that most holders would not make a profit if they decided to sell their tokens.
Currently, OP holders can be at ease, as the long-term effects of Coinbase’s protocol on OP are yet to be determined.