Autor Cointelegraph By Sritanshu Sinha

How Bitcoin whales make a splash in markets and move prices

How Bitcoin whales make a splash in markets and move prices

Uverejnil používateľ | aug 7, 2022 |

Deriving their names from the size of the massive mammals swimming around the earth’s oceans, cryptocurrency whales refer to individuals or entities that hold large amounts of cryptocurrency. In the case of Bitcoin (BTC), someone can be considered a whale if they hold over 1,000 BTC, and there are less than 2,500 of them out there. As Bitcoin addresses are pseudonymous, it is ofte difficult to ascertain who owns any wallet. While many associates the term “whale” with some lucky early adopters of Bitcoin, not all whales are the same, indeed. There are several different categories:Exchanges: Since the mass adoption of cryptocurrencies, crypto exchanges have become some of the biggest whale wallets as they hold large amounts of crypto on their order books. Institutions and corporations: Under CEO Michael Saylor, software firm MicroStrategy has come to hold over 130,000 BTC. Other publically-traded companies such as Square and Tesla have also bought up large hoards of Bitcoin. Countries like El Salvador have also purchased a considerable amount of Bitcoin to add to their cash reserves. There are custodians like Greyscale who hold Bitcoins on behalf of large investors.Individuals: Many whales bought Bitcoin early when its price was much lower than today. The founders of the crypto exchange Gemini, Cameron and Tyler Winklevoss, invested $11 million in Bitcoin in 2013 at $141 per coin, buying over 78,000 BTC. American venture capitalist Tim Draper bought 29,656 BTC at $632 apiece at a United States Marshal’s Service auction. Digital Currency Group founder and CEO Barry Silbert attended the same auction and acquired 48,000 BTC.Wrapped BTC: Currently, over 236,000 BTC is wrapped in the Wrapped Bitcoin (wBTC) ERC-20 token. These wBTCs are mostly kept with custodians who maintain the 1:1 peg with Bitcoin. Satoshi Nakamoto: The mysterious and unknown creator of Bitcoin deserves a category of his own. It’s estimated that Satoshi may have over 1 million BTC. Although there is no single wallet that has 1 million BTC, using on-chain data shows that of the first 1.8 million or so BTC first created, 63% have never been spent, making Satoshi a multi-billionaire. Centralization within the decentralized worldCritics of the crypto ecosystem say that whales make this space centralized, maybe even more centralized than the traditional financial markets. A Bloomberg report claimed that 2% of accounts controlled over 95% of Bitcoin. Estimates state that the top 1% of the world control 50% of the global wealth, which means that the inequality of wealth in Bitcoin is more prevalent than in traditional financial systems: an accusation that breaks the notion that Bitcoin can potentially break centralized hegemonies. The charge of centralization in the Bitcoin ecosystem has dire consequences that can potentially make the crypto market easily manipulatable. However, insights from Glassnode show that these numbers seem to be exaggerated and don’t take the nature of addresses into account. There might be some degree of centralization, but that may be a function of free markets. Especially when there are no market regulations and some whales understand and trust Bitcoin more than the average retail investor, this centralization is bound to occur. The “sell wall”Sometimes, a whale puts up a massive order to sell a huge chunk of their Bitcoin. They keep the price lower than other sell orders. That causes volatility, resulting in the general reduction of the real-time prices of Bitcoin. This is followed by a chain reaction where people panic and start selling their Bitcoin at a cheaper price. The BTC price will only stabilize when the whale pulls their large sell orders. So, now the price is where the whales want it to be so they can accumulate more coins at their desired price point. The following tactic is known as a “sell wall.”The opposite of this tactic is known as the Fear of Missing Out, or the FOMO, tactic. This is when whales put massive buy pressure on the market at higher prices than with current demand, which forces bidders to raise the price of their bids so they sell orders and fill their buy orders. However, this tactic needs substantial amounts of capital that aren’t required to pull off a sell wall.Watching the selling and buying patterns of whales can sometimes be good indicators of price movements. There are websites like Whalemap that are dedicated to tracking every metric of whales and Twitter handles like Whale Alert, which has been a guide for Twitter users around the world to stay updated on whale movements. When a whale makes a splashSixty-four of the top 100 addresses have yet to withdraw or transfer any Bitcoin, showing that the biggest whales might be the biggest hodlers in the ecosystem, ostensibly because of the profitability of their investment.The evidence that whales mostly stay profitable is clear from the above graph. When calculated for a 30-day moving average, for the past decade, whales have remained profitable for over 70% of the time. In many ways, their trust in Bitcoin is what fortifies the price action. Being profitable (month-on-month in this case) during most of their investment period helps reinforce their faith in the hodl strategy. Even in 2022, one of the most bearish years in the history of Bitcoin, exchange balances have gone down, showing that most HODLers are stocking up on their Bitcoin. Most seasoned crypto investors refrain from keeping their long-term Bitcoin investments in exchanges, using cold wallets for hodling. Kabir Seth, the founder of Speedbox and a long-term Bitcoin investor, told Cointelegraph:“Most whales have seen multiple market cycles of Bitcoin to have the patience to wait for the next one. In the Bitcoin ecosystem now, the faith of whales is reinforced by the macroeconomics of inflation and more recently, the correlation with the stock markets. On-chain data of whale wallets show that most of them are hodlers. The ones that have come during this market cycle have not made realized profits to be selling. There is no reason to believe that whales will abandon the Bitcoin ship, especially when there is an economic fear of an impending recession looming.”Kabir’s point on macroeconomics and correlation with the stock market can be observed in the graph below, which shows that since the last market cycle in early 2018, Bitcoin has closely followed traditional investment assets.The silver lining in this trend is that Bitcoin has entered the mainstream in terms of consumer sentiment, changing its reputation of being a peripheral asset. On the other hand, a 0.6 Pearson correlation with the S&P 500 in no way means a hedge against the traditional markets. Other experts within the crypto ecosystem also seem to be frustrated with this trend. The correlation with the stock markets is annoying.— Michaël van de Poppe (@CryptoMichNL) June 7, 2022Broader macroeconomics might be an important reason for the correlation between stocks and Bitcoin. The past couple of years saw inflows of funds to stock markets that were unparalleled in history. There are theories that in an elongated bear market or in terms of financial catastrophes, the correlation with the stock market might break. What does it mean when a whale sells?Although, just looking at the on-chain data for the past three months shows that the number of whale wallets decreased by almost 10%. However, there has been a corresponding increase in wallets that own from 1 BTC to 1,000 BTC. The whales seem to be derisking their positions and the bigger retail investors have been accumulating in turn, providing liquidity to the whales. The historical trend shows that whenever this occurs, there will be a short-term decrease in Bitcoin prices which will eventually lead to whales starting to aggressively accumulate more. When asked about the very recent whale sell-off, Seth said:“It’s almost inevitable that there will be some a period of a few weeks when the Whales will start selling. This is the mechanics of market movements. Currently, the broader market sentiment of Bitcoin is that the Bottom is in. There are sentiment analysis tools to confirm this. Some whales might be playing against this trend, in turn creating a bigger panic in the market. If there is a major sell-off now, Bitcoin prices might tank as the retail support will break. Only whales will have the liquidity to accumulate then.”What the market can learn from Kabir’s point and the whales is that the future of Bitcoin is where one’s bet should be. Locally, the sentiments can be manipulated and the prices can be influenced. However, in the long run, when the dust settles, hodlers will prevail. 

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The opportunities and risks of Metaverse for small businesses

The opportunities and risks of Metaverse for small businesses

Uverejnil používateľ | júl 22, 2022 |

The Metaverse has been become one of the biggest buzzwords in the blockchain and crypto, as it promises to provide a more immersive, interactive and collaborative experience than what the internet has accomplished to date. This promise of a new world has huge enterprises like Meta (formally known as Facebook) investing huge sums in the budding space. When most hear the name Metaverse, their mind wanders to a few things: an avenue for global conglomerates to showcase their technology-forward bent, an esoteric product for a selected few to display nonfungible tokens (NFTs) or a new front in gaming development. However, a deep dive into Metaverse reveals a whole new world, a world full of new opportunities and risks for both consumers and businesses. Although the current Metaverse ecosystem might be populated with giant corporations, eventually, for wider adoption, small businesses will have to make a transition. Looking at historical patterns in the adoption of new technology like the internet, mobile payments and more, it is apparent that small businesses play a monumental role in getting the masses onboarded.One of the critical insights from Facebook’s Connect 2021 was that the advent of Metaverse is imminent, but the timeline for widespread adoption is spread out at least over a decade. A study done by Pew Research found that around 54% of top technology innovators, developers and businesses. Meanwhile, policy leaders believe that by 2040, the Metaverse will be a functioning aspect of daily life for a half-billion or more people globally.The urgency for transitioning to Metaverse may not be immediate, but businesses should be considering the technology at least in the periphery. By strategically using resources now, an enterprise will be able to improve the experience for customers of the future.To understand what opportunities and risks Metaverse brings to a business, it is imperative to understand the infrastructure of Metaverse. Jon Radoff, CEO of 3D gaming company Beamable, categorized in seven layers:Infrastructure: This layer is the semiconductors, material science, cloud computing and telecommunications networks that enable the construction of the layers over it. Human interface: The human interface layer refers to the hardware that will be used to access the metaverse. This includes everything from mobile devices to VR headsets.Decentralization: Build everything on a permissionless, distributed and democratized structure.Spatial computing: This layer refers to the software that brings objects into 3D and allows the hardware interface to interact with them. Creator economy: Make it easier for creators to make Metaverse projects and monetize them.Discovery: Ways to discover the experience. Experience: Users can engage with games, social experiences, live music and so on.In all probability, most small businesses will be involved in bringing Metaverse experiences to their customers. Talking to Cointelegraph about the disruptive potential of Metaverse, Naveen Singh, co-founder and CEO of decentralized data management network Inery, said:Recent: Blockchain without crypto: Adoption of decentralized tech“It is no longer a question that the Metaverse would be a major disruption for the digital economy. The real focus now is for which industries the Metaverse would be the most significant. As a gateway for a new digital economy, the Metaverse opens new possibilities for several domains.” “The industries that are most likely to undergo transformation and feel the immediate impact of the Metaverse are gaming, fashion, entertainment, media and retail. At the same time, for the Metaverse to unleash its full potential one of the most defining properties would be interoperability across its fabric,” he said.The Metaverse is reshaping industriesThe gaming industry has traditionally been a trailblazer in adopting cutting-edge technologies, and it’s the same case for the Metaverse. Many gamers already consider Metaverse to be the next frontier in gaming. Developers say today’s gaming can often feel lonely. Although multiplayer gaming solves the problem of isolation to an extent, Metaverse takes immersion and community to a whole new level. Communities created by Metaverse projects like Decentraland, Axie Infinity and Sandbox give not only social benefits but also monetary ones. However, the current Metaverse gaming space is dominated by large firms. The research and development for a Metaverse game are generally out of budget for small businesses. Nikita Sachdev, the founder and CEO of Luna PR, thinks that along with gaming, real estate is another sector that could potentially be an earlier adopter of the Metaverse. Sachdev told Cointelegraph:“For real estate, companies and agencies are always looking to develop ways of touring and visualizing properties for pre-plan sales and foreign investors. Imagine if you can tour an entire compound before it is even developed? Investing in real-world property will become a lot more immersive and ‘open houses’ will not be necessary anymore.”The global real estate market is estimated to be valued at over $3 trillion, and any potential dent in this space can have immense economic and sociological implications.Fashion is another sector that could be disrupted by the Metaverse. In fact, there has already been a successful Metaverse Fashion Week which included runway shows, after-parties, immersive experiences, shopping, panel talks and more. Wahid Chammas, the co-founder of Faith Tribe — an open-source design platform — believes that since the Metaverse and fashion are ultimately about identity, they are bound to complement each other. Speaking to Cointelegraph, he said:“People venture into the Metaverse and do all kinds of things to live and portray an identity that they may not be living in the physical realm. Wearables are undoubtedly the most conducive to showcasing your personality and identity. Having this link between physical and digital accentuates your perceived identity, we believe there will be further disruption of both the physical and the Metaverse worlds of fashion for brands that take digital fashion seriously.”Risks associated with MetaverseExposure to Metaverse can have a higher risk for small businesses. The ecosystem is still taking shape and the uncertain and nascent character of Metaverse could lead some businesses’ roadmap astray. Expounding on this point, Jake Fraser, head of business development at Mogul Productions, told Cointelegraph:Recent: Demand for widely used euro stablecoin is huge, says DeFi expert“Technical expertise and knowing how to structure environments for users virtually is a fluid space and requires people to have their finger on the pulse to execute the best user experience. There also needs to be value for the user and something unique that they can’t get from your brand in another place. If there is no clear ‘hook,’ it can be difficult to drive adoption from businesses.”However, it is evident that venturing into the Metaverse for relevant companies not only helps businesses to be ready for the future but also makes their present offerings more lucrative. The benefits far outweigh the risks. George Narita, CEO of Aurora42, told Cointelegraph: “The most significant risk is not getting into the metaverse world. I see a lot of opportunities, especially for early adopters, the same way it was at the beginning of the dotcom era; many didn’t understand how to communicate. Just being in the Metaverse is not enough. Those who have a disruptive vision and provide experiences and emotional connections by co-creating with their followers will be ahead. Today, people do not want to be passive but to be part of the construction of this universe.”

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Celsius’ crisis exposes problems of low liquidity in bear markets

Celsius’ crisis exposes problems of low liquidity in bear markets

Uverejnil používateľ | jún 22, 2022 |

After one week of pausing user withdrawals, swaps and transfers, the firm said it was maintaining an open dialogue with regulators and officials and plans to continue working with them regarding this pause. Celsius has yet to comment on when the company is going to stabilize its operations. Celsius has also paused communications on Twitter Spaces and ask-me-anything (AMA) sessions “to focus on navigating these unprecedented challenges.”Although Celsius has refrained from communication, media and social media have been buzzing with news and speculation going on around the past, present and future of the company. One of the most interesting developments is a community-led Gamestop-style short squeeze. The dust from the Terra debacle hasn’t yet settled and but another crisis is shaking up crypto markets. The multi-billion-dollar crypto lending and staking platform Celsius is the latest crypto company to be beset by controversy. Earlier anomalies Celsius’ tagline is, “An economy where financial freedom doesn’t come with a price tag.” This marketing tagline, although unbelievable for some, was truly effective for some time. Since opening its doors in 2017, the company had roped in over $25 billion in crypto over five years until things came to a head on June 12, 2022, when the company paused user withdrawals.However, signs of Celsius’ mismanagement of funds were visible prior to this instance. In December 2020, during the $120 million BadgerDAO hack, Celsius reportedly lost over $50 million worth of crypto, making them the largest single victim of the act. To recompense victims for their losses, BadgerDAO enforced a restitution plan by creating the remBADGER token. Token holders were assured a payout in remBADGER over the next two years that would cover the remainder of the loss. This assurance came with only one requirement: The remBADGER must remain within the Badger vault. If the token were to be withdrawn, all future repayments would be forfeit. However, on March 18, 2022, Celsius withdrew all of its allotted remBADGER, worth roughly $2.1 million at the time of the transaction. When Celsius Network realized its mistake, it tried to convince the Badger team to allow it to re-deposit in violation of the rules set forward by the BIP-80 resolution. Unfortunately, for Celsius, the BadgerDAO took the code is law ethos earnestly, and the proposition was voted down. Many users have also been concerned about the firm’s leadership. Celsius chief financial officer Yaron Shalem and chief revenue officer Roni Cohen-Pavon were both arrested for money laundering in November 2021On May 11, 2022, when the Terra debacle was just starting to unfold, some began to look at Celsius. Cointelegraph then reported that the Celsius Network had started to deny rumors of significant losses to the company. Celsius chief financial officer Rod Bolger had said, “Our front office teams […] think and act as risk managers to ensure that we are not exposed in any significant way to market swings.”All funds are safe. We continue to be open for business as usual As part of our responsibility to serve our community, @CelsiusNetwork implemented and abides by robust risk management frameworks to ensure the safety and security of assets on our platform.— Alex Mashinsky (@Mashinsky) May 11, 2022Investors had accused the Celsius team of sitting on its hands while token price tumbled as a result of the Terra fiasco. On May 20, 2022, Celsius (CEL) had fallen from its all-time high of $8.05 to $0.82, which is a 90% drop. Some Celsius users claimed that the platform liquidated their holdings as CEL dropped. They suggested that trading was illiquid as the price fell, worsening their losses. When Cointelegraph contacted the CEO of Celsius, Mashinsky attributed this to the “Shark of Wall Street,” stating:“They took down LUNA. They tried Tether, Maker and many other companies. It’s not just us. I don’t think they have specific hate or focus on Celsius. They are all looking for any weakness to short and destroy. The point is that the Sharks of Wall Street are now swimming in crypto waters.”The problem with high-yield APY projectsCelsius was one of the fastest-growing institutions in the crypto market. Up until the collapse, Celsius had 800 people working for them, with the employee count increased by over 200% in just the last year. The problem is that crypto is in a bear market now and to keep on functioning normally, companies need to continue having liquidity. Now, when most retail investors and institutions are pulling their crypto out, liquidity becomes a major concern for them.Recent: Scams in GameFi: How to identify toxic NFT gaming projectsOne of the biggest reasons for the collapse of Terra was also illiquid assets. However, most projects, when asked about how their individual projects, claim to be on a different business model than the project that is in trouble at that instance. Cointelegraph had reached out to Synthetix to clarify why their lucrative business model of high yield annual percentage yield (APY) was more well-founded than the ones that went down like Terra and Celsius. Their representative replied:“Several accounts have attempted to draw parallels between Synthetix and LUNA. And, while there might be a surface-level similarity, ultimately the tokenomics and collateralization mechanics of Synthetix are much more robust and battle tested than LUNA. Further, while the top line APY appears high, that number is derived from two distinct sources.” “Trading fees in sUSD, which is revenue from transactions generated by our ecosystem partners like Kwenta, Lyra, 1Inch, Popcorn Finance and others make up a portion and depending on the previous week’s volume have contributed between 5%–25% of the weekly staking rewards. Inflationary supply, is the second source of weekly APY, and contributes the remaining APY amount, and is currently at a roughly 50% annual growth rate. That inflation amount is minted weekly and is currently distributed between stakers on ETH mainnet and Optimism,” they added.Liquidity crunch in crypto mirrors traditional markets What we are seeing now in the crypto ecosystem is all the lessons learned over the past 100 years in the traditional finance system playing out. As the ecosystem matures, crypto markets will inevitably become cyclical, just like traditional markets. To weather the downturn, projects must learn from the past. This doesn’t mean crypto loses its edge, just that there are smart principles of sustainability that are applicable to any emerging market. Loren Mahler, CEO of Jupiter Exchange, stressed that most financial markets are fundamentally similar and prone to become illiquid during the inevitable bear run. She told Cointelegraph:“One of the most important is the issue of liquidity. An emphasis on rapid user growth at all costs is not a sustainable philosophy. Offering outrageous staking rewards on the most mundane activities is naturally going to create a run on the system, whether in crypto or traditional banking. The projects that innovatively apply these traditional finance lessons are going to be best positioned to capture new growth opportunities when the cycle turns again.”Giant projects like Terra and Celsius going under tend to have a cascading effect on the broader market which is well evident from the plummeting prices of most cryptocurrencies. The sentiments of retail and institutional investors are bound to become overwhelmingly negative. Although, Lilly Zhang, chief financial officer of Huobi Global, saw a way out of the domino effect of liquidation. She told Cointelegraph:“The market could see further declines as more liquidations occur and players are forced to sell, and companies and investors who have made poor decisions will be hardest hit. Trouble at Celsius, in turn, also made traders worried about Staked Ether. Fortunately, as the selling pressure on stETH continues to increase, more demand will seep into the second-hand markets and create cheaper stETH prices that may be attractive to new investors, which will in-turn increase demand and drive prices back up to normal.”Not your keys, not your coins“Not your keys, not your coins” is a popular expression in the world of cryptocurrencies which refers to needing to own the private keys associated with your funds. The person owning private keys is the one deciding how the crypto assets associated are spent. Failing to do so means that we entrust a third party to hold our coins safely for us. Stories like the Celsius one are an eerie reminder that these third parties often do not act in the self-interest of their clients. Recent: From games to piggy banks: Educating the Bitcoin ‘minors’ of the futureAlthough the popular takeaway from this story has been that people should hold the keys to their crypto, there have been people like Sung Hun Kim, CEO of Metaverse World, who pointed out that the problem lies in centralized projects like Celsius. In an interview with Cointelegraph, Sung said:“When discussing security issues, it is less about how and more about why. Both centralized and decentralized structures are not impregnable, however, Celsius being inherently closed-circuit affects the right of the customer to assess the growing risk. It is not about who stores the keys, but the level of transparency a project is willing to provide.”

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Can the Optimism blockchain win the battle of the rollups?

Can the Optimism blockchain win the battle of the rollups?

Uverejnil používateľ | jún 13, 2022 |

Ethereum is plagued with criticisms of its less than optimal scaling capabilities and high gas prices. There have been talks about increasing the scaling capacity of the Ethereum mainnet for a while now. However, the Ethereum ecosystem needs a solution for scaling right now, and if Ethereum is not able to give these new applications a platform with enough scaling capabilities, they can seek alternatives like the BNB Chain or Cardano. Optimism rollout was created to solve exactly the scalability problem of Ethereum.Optimism Rollup network is one of the several solutions trying to address Ethereum’s congestion problem. The Ethereum network is often congested to the almost maximum capacity, and until upgrades to the main blockchain are made, scaling solutions like Optimism allow Ethereum’s transactional abilities to remain usable without shelling out a fortune on gas fees. In short, Optimism uses advanced data compression techniques to speed up and cut the costs of Ethereum transactions. They do so by a technique known as called Optimistic Rollups, where multiple transactions are “rolled up” into one transaction and settled on another cheaper blockchain. The verified transactions are then fed back to the main Ethereum blockchain. The biggest advantage of Optimistic Rollups is the fact that they do not compute by default, which theoretically leads to scalability gains. Estimates say Optimistic Rollups can offer 10-100x improvements to scalability. On the downside, however, is the existence of a “challenge period,” which is a time window in which anyone can challenge assertion and increase withdrawal time. Battle of the rollupsNow, a natural question arises: How is this different from widely used zero-knowledge (zk) Rollups? Zk-Rollups rely on a zero-knowledge proof for all state transitions to function correctly. Afterward, each transaction is compared to the smart contract on the mainchain. Meanwhile, Optimistic Rollups depend on a user submitting a new state root to the sidechain without validating the rollup contract.When it comes to application, perhaps the biggest difference between the two lies in costs, as Optimistic Rollups require nodes to simply execute contracts, whereas zk-Rollups need to produce a complex cryptographic proof that requires hundreds or thousands of expensive elliptic curve operations in a proof. This makes zk-Rollups significantly more expensive to use than Optimistic Rollups. However, zk systems have an advantage in bridging to layer 1. In the world of Optimistic Rollups, there are two main players: Optimism and Arbitrum. The main difference between the two lies in the way they generate a fraud proof for the network. While the current version of Optimism requires non-interactive fraud proof, Arbitum uses an interactive method. Other differences are regarding their Ethereum Virtual Machine (EVM) compatibility and Ethereum tooling. Currently, there are over 1,000 projects that use Optimism and the total value locked on this chain, according to DefiLlama, is $364.7 million at the time of writing. One of their biggest proponents seems to be Synthetix, which has over $120 million locked on Optimism. When asked about their trust in Optimism, a spokesperson from the Synthetix team told Cointelegraph:“Synthetix was an early adopter of Optimism and decided on a protocol back in 2020 to build on this Ethereum scaling solution. At that time, it was a matter of choosing a solution with conviction. We identified early that we absolutely had to have scaling, as we are a very complex smart contracts suite. Perpetual futures and low latency oracles were not going to happen on L1.”When Cointelegraph asked why Sythethix chose Optimism over Arbitium, considering Arbitium was market-ready prior to Optimism, they replied:“Both Arbitrum and Optimism had a lot of work to do, but we made the decision to commit to working with a specific team, which was Optimism, and bear a lot of the costs that it would take to get to mainnet. We chose Optimism because they have some of the best researchers in the Ethereum community and we had a lot of confidence that they would be able to execute on their vision.”In many ways, Synthetix has taken a similar approach to that they did with Chainlink in their pre-mainnet process. Synthetix has invested heavily in transitioning the protocol from a user-facing protocol, enabling direct trades and swaps to a base layer on Optimism for other protocols to build on top of. Since launching on Optimism, the team at Synthetix has seen several other protocols integrate with Synthetix to establish the foundation of the Synthetix ecosystem, which facilitates unique and efficient trading across several financial derivatives. Recent: Bitcoin and banking’s differing energy narratives are a matter of perspectiveHowever, many in the industry share the same opinion. Jagdeep Sindhu, the lead developer and president of Syscoin, told Cointelegraph that the traction Optimism has gained is short-lived and, in the long run, Arbitium might have the edge over it. He elaborated:“Optimism is front-line to EIP-4844 (blob tx data) as well as Cannon, which is inside of the new bedrock release. This means it removes the OVM interpreter and relies directly on EVM execution for fraud proofs. Nitro of Arbitrum does the same thing. However, Arbitrum is a bit more tight-lipped on scheduling the release. We feel Arbitrum is closer to release, but it works under more of a closed source methodology, making it hard to know until all of the tooling is released.”Jagdeep thinks it’s only a matter of time until the release of Nitro and the pendulum will go back in Arbitium’s favor. He continued: “We put Nitro at about a 1–2 month schedule to release and Cannon at about a 3–6 month schedule to release, given the current state of the codebases. We do not feel Optimism is gaining on Arbitrum long-term because once Nitro is released there will be considering adoption for it as well.”The increasing traction of Optimism Optimism has gained institutional support from the likes of Andreessen Horowitz (a16z) and Paradigm. In March 2022, they raised a total of $150 million in a Series B funding round at a valuation of $1.65 billion. In the press release announcing the Series A funding for Optimism, a16z said:“One of the most exciting things about what Optimism has built is that it can be seen in many ways as an extension of Ethereum — from its philosophy down to its tech stack. This close adherence to Ethereum development paradigms results in a very easy transition for developers, wallets, and users: no new programming languages, minimal code changes to existing contracts required and out-of-the-box support for the majority of existing Ethereum tooling.”The aspect of aligning the core philosophies of both Optimism and Ethereum was recently praised by Ethereum co-founder Vitalik Buterin too:This is a great example of why I’m so proud of @optimismPBC for adding non-token governance (the Citizen House).Optimism explicitly has goals *other* than just “make OP go up”, and the only way to do that long-term is with explicit representation of non-token-holder interests. pic.twitter.com/vofVVx53mC— 豚林 vitalik.eth (@VitalikButerin) June 3, 2022Token House, which is already active, governs technical decisions related to Optimism, such as software upgrades. Citizens’ House is scheduled to be active later in 2022 and will govern public-goods funding decisions. Talking about the governance of Optimism, founder of Wealth Mastery, Lark Davis — popularly known as TheCryptoLark — told Cointelegraph:“Governance is most often a whale game. And, governance participation rates are often very very low. So, using a non-token model actually makes sense. That way smaller more active community members actually matter, and big lazy whales matter less.”Optimism’s roadmap comprises updates to the Optimism protocol, like a next-generation fault proof, sharded rollups and a decentralized sequencer. The decentralized sequencer, which is the technology responsible for creating blocks on Optimism, provides an avenue to move most transactions off-chain.Optimism token and airdropOptimism launched its native token OP on May 31, 2022, where a total of 231,000 addresses were eligible to claim 214 million OP tokens as part of their first airdrop. This was one of the most prominent events in Optimism’s history as far as tokenomics is concerned, as the 214 million OP tokens accounted for 5% of the total 4.29 billion supply. However, 95% of the tokens are yet to hit the market. Recent: DeFi pulls the curtain on financial magic, says EU Blockchain Observatory expertOP tokens were distributed according to the following:19% of the initial OP token supply is reserved for user airdrops.25% of the initial OP token supply is allocated for proactive project funding. 20% of the initial OP token supply plus inflation is allocated for retroactive public goods funding.19% of the initial OP token supply is allocated to core contributors.17% of the initial OP token supply is allocated to OP investors.Optimism-based projects have spiked the interest of both developers and people with a monetary interest in the token. However, despite institutional interest from prestigious firms like a16z and industry leaders like Buterin, the price of the OP token has fallen from $4.50 to just over $1.00. A lot of it could be attributed to the market conditions at large and the current limited use of OP tokens. However, when the market turns bullish and the Ethereum network gets more congested, it is certain that interest in Optimism is bound to pick up. 

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