With the popularity of Ethereum and the congestion of its blockchain, layer 2 scaling solutions like Optimism have emerged as a promising way for investors to get exposure to Ethereum’s growth potential. By investing in the native token OP of Optimism, investors can benefit from the growth of its ecosystem. There are several ways for investors to gain exposure to Optimism crypto, such as buying OP tokens on exchanges,yield farming on Optimism-based DeFi protocols, or investing in funds focusing on layer 2 projects. With its innovative rollup technology and backing from top investors like a16z, Optimism stands out as a leading layer 2 contender amid the scaling solutions.
Purchase OP, Optimism’s native token, on major crypto exchanges
The most direct way to invest in Optimism is to buy its native token OP on cryptocurrency exchanges. OP powers the Optimism ecosystem and captures the value of its network. Major exchanges like Binance, Coinbase, FTX allow users to easily purchase OP with fiat currencies or stablecoins. The process is similar to buying other cryptocurrencies. Investors can trade OP against stablecoin pairs like OP/USDT to reduce volatility risk. OP tokens can also be withdrawn into self-custody Ethereum wallets instead of leaving them on exchanges. However, investors should be aware of the high gas fees on Ethereum which can eat into returns.
Provide liquidity on Optimism-based DeFi protocols to earn farming rewards
Another option is to provide liquidity to Optimism-based decentralized finance (DeFi) protocols and earn farming rewards in OP tokens. Popular DeFi projects like Uniswap, Synthetix, Lyra have deployed on Optimism rollups, allowing users to farm their native tokens. For example, by adding liquidity to Uniswap V3 pools on Optimism, users can earn UNI and OP token rewards. The yields are generally higher than those on Ethereum Layer 1. The risks are impermanent loss when providing liquidity and smart contract risks inherent to DeFi projects.
Invest in funds focusing on layer 2 solutions like Optimism
For investors who want exposure to Optimism and the layer 2 ecosystem without managing crypto assets directly, investing in layer 2 focused funds is an option. Venture capital firms like a16z and crypto hedge funds have raised dedicated funds to invest in layer 2 scaling solutions across blockchains. These funds provide diversified exposure to leading layer 2 contenders like Optimism, Arbitrum, zkSync, StarkNet etc. Investors can potentially benefit from the growth of the whole layer 2 ecosystem instead of picking individual projects.
Take note of network adoption and development progress as key investing metrics
When investing in Optimism and other layer 2 solutions, investors should monitor metrics like developer activity, total value locked, daily active users, and adoption by Ethereum-based protocols. These reflect the usage and growth potential of such networks. The development progress of key features like data availability also affects an optimism crypto investment thesis. As scaling competition heats up, Optimism needs to iterate its core technology and expand its ecosystem to attract users and capital.
As Ethereum gas fees remain high, layer 2 solutions like Optimism that help scale Ethereum without compromising on security and decentralization are likely to see increased adoption. Investing in the native token OP allows investors to gain exposure to the growth potential of Optimism. Proper due diligence needs to be done taking into network adoption metrics and technology progress.