Optimism Foundation sells another $90m worth of OP in ‘private token sale’

The Optimism Foundation sold another $90 million worth of OP tokens, marking the second significant sale in recent months.

“Optimism has entered into a private token sale of approximately 19.5 million OP tokens,” the Optimism Foundation said in a post on the Optimism governance forums. “As this was a private sale, the terms and purchaser are not able to be disclosed.”

The lack of transparency, which the foundation says is necessary, is a point of contention within crypto circles. It means the Optimism community will have to trust the foundation’s decision.

“Not able to be disclosed? Honestly this feels a bit shady for a supposedly transparent DAO,” Ber10, a user on the Optimism governance forum said in reply to the announcement.

“How much of OP is actually being governed by OP token holders? Maybe I just have the wrong impression of what OP is supposed to be.”

OP traded at around $4.64 per token at the time of the sale, meaning the transaction had a market value of about $90 million.

The Optimism Foundation is a nonprofit organisation that serves as a steward for the development of the Optimism blockchain.

The foundation’s recent sale follows a similarly opaque deal — “a private token sale” — conducted in September, when it sold 116 million OP tokens to seven purchasers.

Don’t trust, verify

It’s not uncommon for crypto nonprofits to sell tokens in order to fund the development of their projects.

The Ethereum Foundation, a nonprofit dedicated to supporting Ethereum and related technologies, routinely sells portions of its Ether token stash to fund employee salaries, among other things.

Still, while the Ethereum Foundation sells its Ether onchain through DeFi protocols, allowing anyone to check the price tokens were sold for, the Optimism Foundation sells tokens to undisclosed investors at an unspecified price.

Members of the Optimism community — OP token holders and delegates — also aired concerns about this lack of transparency after the September token sale.

“By not disclosing material-non-public information such as the buyers identities and discounts paid you are eroding trust for current holders as well potentially incurring a huge legal liability down the line,” Optimism governance forum user canyonboy said.

Another consideration is that unlike Ethereum’s Ether token, Optimism’s OP token grants governance rights to its holders, meaning OP holders can use their tokens to propose and vote on changes to the protocol.

“Having unknown entities with considerable voting power, probably sold at a discount, does seem to change the current Optimism landscape,” 0xged, another Optimism governance forum user, said at the time.

A final complaint was that in the September sale, the Optimism Foundation did not use a smart contract — an instance of blockchain-based code — to guarantee the stipulated two-year lockup period.

In response, Bobby Dresser, a general manager at the Optimism Foundation said “the details that we are able to disclose around this private sale have all been shared.”

The Optimism Foundation’s token sales are not the first controversy to hit the Optimism DAO.

In August, Optimism DAO members were concerned after conflicts of interest between DAO delegate Griff Green and potential recipients of Optimism grants were revealed.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.