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The price of Optimism crypto collapsed shortly after the token’s long-awaited airdrop started to arrive on users’ wallets as early backers appear to have dumped the token right after they got it while the network experienced significant delays to clear transactions during the event.

Optimism is a layer-two protocol built on top of the Ethereum network that offers “low-cost and lighting fast” transactions within the popular smart contracts blockchain to solve the scalability issues that have held back adoption in the past few years.

Even though it is not the first or even the only one of its kind, Optimism’s developing team believes that they offer the most user-friendly UX for developers who would like to build decentralized apps on the Ethereum blockchain while avoiding the network congestion and elevated gas fees that most crypto programmers typically complain about.

According to data from CoinMarketCap, the price of Optimism’s native token OP went down from $4.5 per coin to as little as 80 cents in a matter of hours on 31 May to then slightly recover to $2 per coin by the end of that day’s crypto trading session.

Meanwhile, the price is rising 8% this morning at $1.36 per coin but remains nearly 69% below the listing price.

What Went Wrong with The Optimism Crypto Airdrop?

One of the situations that led to a sharp drop in the value of OP was the fact that some wallets received their tokens earlier than the rest of the community and that allowed these users to quickly sell their assets at a point when supply was low.

These early transactions appear to have clouted the network and the developing team was not prepared to handle those kinds of volumes.

In summary, those who came late to the party saw the value of their tokens dropping rapidly and rushed to cut their losses only to find a congested network. The combination of these two events accentuated the selling spree and pushed the price to the lows seen on 31 May.

According to the Optimism team, it took them around 5 hours to stabilize the network. They also added that they will be looking into the incident and publish a report “on the lessons learned”.

Members of the community were very discontent with how things went. One user in particular took things to another level by introducing a governance proposal that seeks to ban the wallets that immediately sold Optimism crypto from participating in subsequent distributions.

The user, named 0xJohn, cited four different wallets that quickly dumped their OP holdings for profits of around $40,000 each.

“These accounts are not playing a constructive role in Optimism governance. Instead of contributing to governance, they are maximising for profit”, the user claimed.

He added: “Nothing wrong with that, as per the airdrop criteria the coins are theirs and they are free to do as they wish. However, from Optimism governance’s perspective, such accounts are counter-productive for our stated goals”.

The proposal was supported by prominent crypto influencer Cobie (@Cobie). His endorsement, however, came with some controversy as the moderators of the Optimism governance forum initially took down his post and then republished it after Cobie made the situation public on his official Twitter account.

See the full thread here:

What is a Layer-Two Blockchain Project?

A layer-two blockchain protocol is an application that relies on the primary network – also known as layer one – to secure and record all transactions. However, layer-two protocols can modify how transactions are bundled and included on the chain and most are used to improve the functioning of their corresponding layer-one blockchain.

Proponents of these protocols believe that they are a short-term solution to the scalability issues that many of the most popular layer-one networks such as Ethereum and Bitcoin have experienced.

Meanwhile, detractors believe that they reduce the safeness of the ecosystem as the coding, consensus mechanism, and other characteristics of the app need to be as foul-proof as those of the mainnet they are built on – which is not always the case.

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