Optimism’s freshly launched governance token, OP, has plunged 40% since peaking at $2.10, leading members of the community to discuss baring those who dumped their tokens from future airdrops.
Cointelegraph reported on Tuesday that the Ethereum layer-2 scaling solution was overwhelmed with demand for the first OP governance token airdrop, as 5% of the token supply was distributed to around 250,000 eligible users.
As per CoinGecko data, the token opened at roughly $1.43 before surging to $2.10, but as more users got their hands on the free airdrop over the day, OP dropped to as low as $1.09 before climbing back to $1.18 at the time of writing, marking a 43% drop.
Following the sharp drop of OP’s price, a member of Optimism’s governance community who goes by OxJohn put forward a proposal in the Optimism governance forum to exclude addresses that dumped 100% of their airdropped tokens. The post garnered a significant amount of attention from the community, pulling in 11,200 views, 305 replies and 595 likes.
OxJohn highlighted several addresses that received at least 32,000 OP tokens and promptly dumped them on the market, arguing that their actions are “counter-productive” to the community and diluted the governance process.
The OP hodler went on to suggest that these accounts should be barred from the next round of OP airdrops with “a public list of accounts that engage in this behavior” excluded. In their view, doing so would see the distribution of governance weight to only those who plan to actively participate.
“Why should Optimism Collective continue rewarding these kind of mercenary actors who will dump their tokens on first sight? Why should any future airdrops reward these addresses?”
The proposal was submitted purely for ideas and feedback and is not close to the stage of being voted on. The reaction from the governance community has been mixed so far. Some users were in complete support, others rejected the idea totally, and some were calling for a more nuanced position.
User Mohammedt75 said, “Very valid points. Incentivize people who care about the longer term and let others who don’t care about the ecosystem pack and get out.”
Mgomes stated that “one of the goals of the airdrop is to incentivize people to use the chain. Even if they plan to dump it is fine, because they have used Optimism and if they liked the chain they will keep using it.“
Member JustinMarx also highlighted an interesting counterpoint, stating that dumpers should not be penalized as “you never know the personal circumstances of someone who dumped their tokens.”
One of the most high-profile Crypto Twitter users to weigh in was Cobie, the co-host of the UpOnly crypto podcast who has nearly 700,000 followers. He responded to the proposal in his typical satirical/mocking manner.
Cobie submitted a lengthy counter-proposal in the forum titled “Extended ineligibility for future airdrops” that was temporarily removed due to being flagged as “inappropriate” but has since been reinstated.
In it, he said that “my lack of support for this proposal is not because I disagree with the sentiment. On the contrary, it is because this proposal does not go far enough.”
“I propose that we, Optimism Collective, cancel the future airdrops of anyone that has sold any token in the last 6 months. These people have a pattern of undesirable behavior, we can consider them ‘potential future sellers’.”
To counter potential future sellers, Cobie suggested issuing them with a debt token and also considering the use of “physical violence” against them.
However, after being prompted to provide a more serious response to the proposal, Cobie highlighted several reasons why he thinks that it’s a bad idea.
He made points such as OP’s early price being irrelevant, sellers having different motives, the possibility to sell and still engage with governance, the token being used as part of customer acquisition costs from Optimism, and the ease of making a new address to avoid restrictions.
“The only people that care are price-speculators, traders and short-term investors. Governance certainly performs the same whether the price is $1.50 or $2. Sure, extensive price changes could make governance attacks on Optimism cheaper, but there is not a single mention of that in the initial proposal.”
“And it is not really a concern given the size of the airdrop or the short-term nature of the sell-pressure from ‘instant dumpers’,” he added.