Looking Ahead to the Cancun Upgrade: Can OP Be "Optimistic" Again?
TechFlow Selected TechFlow Selected
Looking Ahead to the Cancun Upgrade: Can OP Be "Optimistic" Again?
The new narrative of OP Mainnet is grand and is being concretely implemented.
Navigating Web3 tides with focused insights
1. Introduction
Since its inception, OP Mainnet (*formerly Optimism) has enjoyed exceptional resources and continuous acclaim. Born from Ethereum core developers, this "phoenix" of Ethereum was created to solve the ecosystem's most pressing scalability challenges. However, its development path has been winding—initially adopting EVM-compatible OVM 1.0 to rapidly scale Ethereum, a move that required extensive custom development for protocols and applications deployed on L2. Subsequently, significant effort was invested in upgrading toward Ethereum equivalence. This pursuit came at a cost: the upgrade sacrificed true "optimistic proofs," rendering the Optimistic Rollup label somewhat misleading. Arbitrum One, another Optimistic Rollup solution, launched nine months after OP Mainnet without a token but eventually surpassed OP Mainnet in both popularity and user adoption.
Nonetheless, OP Mainnet is now advancing a grander narrative and strategic positioning. On June 6, 2023, it completed the Bedrock upgrade, laying a solid foundation for rapid future growth. The next major milestone will be the rollout of the next-generation fault proof system—Cannon. Meanwhile, the Ethereum developer conference in June confirmed the upcoming Dencun upgrade centered around EIP-4844, expected to launch in the second half of the year. The macro environment is also shifting rapidly: initial panic spread through the market following SEC lawsuits against Binance and Coinbase, only to be counterbalanced by top-tier traditional Wall Street institutions investing in new U.S.-based crypto exchanges. Amid these transformations, can OP Mainnet regain its optimism? This article explores that question.
2. The Halo Around OP Mainnet
1. Exceptional Core Team and Backers
In 2017, Vitalik Buterin and Joseph Poon co-authored the paper "Plasma: Scalable Smart Contracts," one of the earliest proposals addressing Ethereum’s scalability issues. The Plasma proposal resonated with three Ethereum core developers, who formed the non-profit research group Plasma Group to explore scaling solutions. Eventually, the team abandoned the Plasma architecture and introduced the Optimistic Rollup solution, showcasing a decentralized application demo with Uniswap at Devcon. Shortly afterward, top-tier VCs like Paradigm approached them, and with $3.5 million in funding from Paradigm and IDEO, Plasma Group transitioned from a non-profit into a for-profit startup—Optimism was officially born (*On June 24, 2023, the official OP team renamed the blockchain network OP Mainnet to distinguish it from other meanings of "Optimism").
The OP Mainnet team originates from Ethereum’s core developers and researchers, backed by elite venture capital firms such as Paradigm and a16z. It has raised $178.5 million across three funding rounds, achieving a valuation of $1.65 billion. Coinbase joined as a core developer within OP Labs and recently launched Base, an L2 network built on the OP Stack architecture—further cementing OP Mainnet’s position among the industry’s most well-resourced projects.
Figure: Core Team
Figure: Funding Information
2. Early Token Launch (OP) with Strong Narrative, Tokenomics, and Governance Vision
OP Mainnet operates under two key organizations: OP Labs, responsible for technical development, and the Optimism Collective, focused on governance. The vision of the Optimism Collective is to foster a thriving, valuable ecosystem through sustainably developed public goods. Its economic model leverages a three-step flywheel to generate value.
Figure: Ecosystem Flywheel
The ecosystem includes three participant roles: token holders, contributors and builders, and users/community members. As an L2 project, OP’s primary goal in tokenomics is to provide an efficient, stable, and low-cost network environment for all participants. OP’s revenue stems from ownership of the OP Mainnet and the value of its blockspace—the demand for OP blockspace generates income.
In this flywheel mechanism, OP Mainnet first builds the network and deploys applications. A centralized sequencer generates revenue, which accumulates in The Optimism Foundation for redistribution—token holders meeting certain criteria can become citizens of the OP Collective, gaining voting rights to allocate foundation funds toward public goods via RetroPGF (*RetroPGF includes not only OP ecosystem projects but many ETH ecosystem initiatives, reflecting OP’s vision of symbiosis with Ethereum). Public goods recipients receive token airdrops; users and builders utilize OP tokens—all operating on the OP blockchain network, supported by the Sequencer, completing one full cycle.
Figure: RetroPGF Round 2 Funding Distribution
Well-designed tokenomics act as a “nuclear weapon” accelerating project growth. After announcing its tokenomics, OP launched its token on June 1, 2022, with an initial total supply of 4,294,967,296 OP tokens. Total supply expands annually at a rate of 2%. Allocations include 25% to the ecosystem fund, 20% to RetroPGF, 19% airdropped to users, 19% to core contributors, and 17% to investors. Within the first year post-launch, 64% of tokens were allocated to the community (*investor and core contributor tokens unlock after one year). OP’s first user airdrop reached 5% of supply (*248,699 addresses), generating short-term buzz. However, due to a lack of competitive native projects compared to other chains, and fewer subsequent airdrops or catalyst events, OP’s token热度 lagged behind ARB.
Figure: OP Token Allocation Framework
Figure: OP Token Unlock Schedule
OP aims to bring blockchain infrastructure to the broader internet by focusing on L2 networks and public goods, backed by compelling narrative and token-driven incentives. Evidence from RetroPGF (*Round 2 funded projects like L2BEAT and EIP-4844) shows OP delivering on its promises. On June 22, RetroPGF announced Round 3, allocating 30 million OP tokens to ecosystem builders and projects.
3. Significant Reduction in On-chain Fees
Since its launch, OP Mainnet has dramatically reduced Ethereum usage costs, cutting fees by over 90%. In its early stages, OP Mainnet achieved greater fee savings than Arbitrum One. Future technical upgrades may either narrow or widen this gap further.
Figure: Transaction Fees
Figure: Fee Savings Relative to Ethereum L1
3. Challenges Facing OP Mainnet
1. Centralized Sequencing
OP’s network architecture consists of four key modules: Sequencer (*sequencer), Verifier (*verifier), CTC (*Canonical Transaction Chain), and SCC (*State Commit Chain). Among these, the Sequencer and Verifier are physical Layer 2 nodes forming the backbone of the L2 node network, while CTC and SCC are smart contracts deployed on Ethereum.
Figure: Four Key Modules in Architecture
The Sequencer acts as a centralized mining pool node responsible for producing blocks locally on Layer 2 (*similar to mining). It determines transaction inclusion order. A healthy system requires decentralized sequencers, with misbehavior penalized when successfully challenged by verifiers. Currently, however, the Sequencer is operated solely by the Optimism team, raising serious centralization concerns inconsistent with blockchain decentralization principles (*Decentralization of sequencing is planned for Milestone 10 on Optimism’s roadmap).
2. Broken Optimistic (Fraud) Proofs – Users Must Trust the Process
In a standard Optimistic Rollup design, the L2 Sequencer initially assumes transactions are valid. After submitting rollup data to L1, there is a challenge period during which anyone can submit fraud proofs to dispute transaction results. If fraud is proven, the protocol re-executes the transaction and updates the rollup state accordingly.
However, as a trade-off for achieving EVM equivalence, OP Mainnet temporarily disabled its fault proof mechanism. This means users must currently trust the Sequencer to publish correct state roots to Ethereum. For several months, the so-called Optimistic Rollup operated without actual fraud verification capability—no one could verify whether fraud occurred (*This issue will be resolved with the upcoming Cannon upgrade).
3. Lack of Native Popular Projects; Key Metrics Lag Behind Arbitrum One
Within the L2 landscape, Arbitrum One and OP Mainnet dominate, collectively holding over 83% of the market share. Yet, OP Mainnet trails significantly behind Arbitrum One, with TVL amounting to only about 40% of Arbitrum One’s.
Figure: TVL Across L2 Ecosystems
Comparing projects on each L2, Arbitrum One hosts more high-TVL applications and numerous trending native projects such as GMX, Radiant, Camelot, and Arbdoge AI. In contrast, OP Mainnet appears weaker, with fewer popular projects. Top-ranking apps like Velodrome and Synthetix have TVLs at only 50% or less of their counterparts on Arbitrum One.
(*Note: L2BEAT and DefiLlama differ in TVL calculation methodology. L2BEAT includes all assets locked in Ethereum contracts, including native L2 governance tokens like ARB and OP; DefiLlama focuses only on assets actively engaged in dApps on a specific network. Thus, L2BEAT’s TVL figures are generally higher.)
Figure: DeFi Project TVL on Arbitrum One
Figure: DeFi Project TVL on OP Mainnet
Across other key metrics, OP Mainnet consistently underperforms compared to Arbitrum One. This stems largely from a lack of high-quality projects capable of attracting users and driving activity. Consequently, OP’s market cap remains below ARB’s. Based on MC/TVL and FDV/TVL ratios, ARB currently holds greater growth potential. That said, OP Mainnet benefits from lower fees, thanks to the recent Bedrock upgrade. Going forward, OP retains technological advantages and cost competitiveness but must focus on attracting superior projects and users.
Figure: Comparison of Key Ecosystem Metrics (*Data截至 June 27, 2023; missing daily values replaced with nearest available data from June)
Figure: Token Metric Comparison (*Data截至 June 27, 2023; TVL calculated using L2BEAT standard)
Regarding token unlocks, investor and core contributor tokens have begun unlocking, releasing 0.562% monthly (~24 million OP per release), indicating sustained selling pressure on OP.
Figure: Token Unlock Schedule
Figure: Next Release Schedule
4. New Narratives
1. Modular OP Stack Technology Stack
OP Stack is a universal development framework for building L2 blockchain ecosystems. Embracing modularity, it comprises interoperable modules forming a coherent and reliable blockchain, powering the next-generation architecture of OP Mainnet. The recently completed Bedrock upgrade marks the first official version of OP Stack.
Each layer of OP Stack is built with well-defined APIs, enabling developers to easily modify existing modules or create new ones tailored to specific application needs. This architecture also seamlessly supports the future vision of the OP Superchain.
Figure: OP Stack Architecture
Breaking down the layers: At the base is the Data Availability (DA) layer, defining where raw inputs for OP Stack-based chains are published. OP Stack chains can use one or more DA modules. Ethereum DA is currently the most widely used module, forming the foundation for all current L2s. When using Ethereum DA, source data can be drawn from any information accessible on the Ethereum blockchain—including call data, events, and EIP-4844 blobs. The explicit mention of EIP-4844 in the architecture diagram signals strong future compatibility.
Above the DA layer lies the Sequencing layer, responsible for collecting user transactions from OP Stack chains and publishing them to the active DA module (*what the Sequencer does, as mentioned earlier). This layer holds immense strategic importance, especially for the future Superchain vision. However, today’s Sequencer remains operator-controlled—a critical area needing optimization.
-
Derivation Layer: Processes raw data from the DA layer into structured inputs, primarily handling data packaging—for example, aggregating Rollup data before passing it up to the sequencing layer and then to DA.
-
Execution Layer: Defines the state structure within the OP Stack system and the state transition function. It triggers state changes upon receiving inputs via the engine API from the derivation layer. Responsible for cross-layer data translation—e.g., using EVM-equivalent state representation and transitions.
-
Settlement Layer: Acts as the verifier, a crucial component of consensus. Once transactions are published and finalized on the corresponding DA layer, they are considered settled on the OP Stack chain. They cannot be altered or deleted unless the underlying DA layer is compromised. This section references OP’s next-gen fault proof—Cannon—and hints at future ZK-proof compatibility with OP Stack.
-
Governance Layer: A suite of tools and processes for managing system configuration, upgrades, and design decisions—e.g., voting, token-based governance. An abstract layer encompassing OP Stack’s own management and mechanisms on third-party chains potentially affecting other OP Stack layers.
With this modular stack now live, developers can easily abstract and customize blockchain components by swapping modules. For instance, an Optimistic Rollup could transform into a ZK Rollup simply by replacing its fraud proof module with a validity proof module in the settlement layer. This modular architecture opens vast possibilities for OP Mainnet’s ecosystem (*provided OP completes the decentralized sequencer and Cannon fault proof).
2. Next-Gen Fault Proof – Cannon
As a side effect of the EVM-equivalence upgrade, OP lost its core optimistic proof capability. Per the roadmap, the next step after Bedrock is deploying the next-generation fault proof—Cannon—to restore this functionality. Currently, Cannon remains in development and testing, with a long path ahead before production deployment.
According to official OP documentation, Cannon will be the world’s first EVM-equivalent fault proof method. Instead of reimplementing EVM on L2, it leverages the existing EVM by introducing minigeth—a minimal, modified subset of go-ethereum (*without JSON-RPC, PoW)—compiled into MIPS. This simple abstraction allows the fault prover to access any content within L1 or L2 states, with on-chain overhead independent of state size. Other L2 implementations, like Arbitrum’s AVM, require rebuilding state management from scratch to achieve similar results.
Cannon theoretically enables the lowest possible ETH-calldata gas costs, benefiting from OP Mainnet’s EVM equivalence. Post-Bedrock, it will further reduce L2 transaction fees and represents a critical piece of the OP Stack architecture. Watch closely for its deployment timeline.
Figure: OP Roadmap
3. Platform for All Chains – The Superchain
Leveraging the OP Stack architecture, OP is articulating a bold vision: the Superchain. Conceptually, the Superchain is a horizontally scalable network of chains sharing security, communication layers, and open-source development stacks, highly compatible with explosive growth in L2 and L3 ecosystems.
The Superchain relies on the modular OP Stack technology stack. Other chains can share and contribute back to a hardened, standardized, modular codebase, becoming OP-chains without custom adapters for each chain.
Figure: OP Superchain Architecture Concept
Multiple OP-chains will share a sequencer. A single sequencer generating blocks across multiple chains ensures atomic interoperability between them. This is feasible because a single entity controls block production on each chain—no reliance on external validators to include atomic transactions. OP-chains opting into the Optimism Collective’s shared Sequencer Set become part of a unified system, blurring chain boundaries.
If OP successfully advances the Superchain vision, OP’s token and ecosystem could experience explosive growth. The Optimism Collective’s resources would extend beyond Optimism itself to all integrated OP-chains, enabling collaborative development atop OP’s foundational infrastructure. This further amplifies OP Mainnet’s resource advantage: U.S. crypto exchange giant Coinbase has already joined OP Stack development, launching its own “OP-chain” called Base. On June 19, BNB announced the testnet launch of opBNB, built on OP Stack.
Figure: opBNB Testnet Launch
4. Summary
OP’s future vision is ambitious: to become Ethereum itself at the L2 level, providing scalable, standardized, modular, customizable infrastructure to support all Ethereum-based chains and protocols. If OP can swiftly complete key milestones, it may truly emerge as Ethereum’s phoenix—a transformation contingent on breakthroughs in OP Stack technology and its ability to outpace competitors.
5. Revisiting the Bedrock Upgrade
1. What Is Bedrock?
Bedrock is the name of the first official version of OP Stack, finalized and upgraded on June 6. It contains the core software required to run an L2 blockchain, designed for modularity, upgradability, reuse of existing Ethereum code, and near-perfect Ethereum equivalence.
Key improvements introduced by Bedrock:
(1) Closer to EVM Equivalence: Pre-upgrade, OP’s client code diverged from Ethereum by ~3,000 lines; post-upgrade, differences are reduced to under 500 lines.
(2) Fees Further Reduced: Bedrock implements optimized data compression to minimize data costs, eliminates all L1 execution gas, and reduces L1 data fees to theoretical minimums—cutting overall fees by an additional 10% versus prior versions.
(3) Shorter Deposit Time: Bedrock adds support for L1 reorgs in node software, drastically reducing deposit confirmation time. Earlier versions required up to 10 minutes; Bedrock achieves confirmations in ~3 minutes.
(4) Improved Proof Modularity: Bedrock abstracts the proof system from OP Stack, allowing rollups to use either fault proofs or validity proofs (*e.g., zk-SNARKs) to verify correct execution. This sets the stage for future integration of Cannon.
(5) Two-Step Withdrawals: Introduces a pre-commitment step requiring users to publish withdrawal proofs in advance. Users must wait for a valid output root to be proposed before their proof can be validated on-chain. After the 7-day challenge period ends, they can complete the withdrawal and claim funds. By pre-publishing proofs, this gives on-chain monitoring tools sufficient time to detect fraudulent withdrawals and respond. Ordinary users can also participate in monitoring.
Figure: Visualized Flow of Optimized Withdrawal Process
2. Token Movement Before and After Bedrock Launch
On the day of the Bedrock upgrade, OP saw a brief price increase following massive token unlocks, but soon entered a prolonged downtrend, recovering only after new positive developments emerged around June 20.
Figure: Recent Price Trend of OP
Reviewing recent price movements: According to OP’s tokenomics, 286 million tokens were scheduled to unlock on May 30, 2023, primarily held by core developers and investors, creating strong sell-side pressure. From May 29 onward, the token price declined for nearly seven days, losing nearly 25%. On June 6, OP Mainnet announced the completion of the Bedrock upgrade, and the token rose 10% intraday. Unfortunately, that evening the SEC sued Coinbase, followed by a June 8 announcement listing 19 tokens as securities (OP not included). Amid growing regulatory fears in the U.S., many institutions and investors sold off holdings. The broader market fell sharply for four to five consecutive days, impacting OP—especially given its close ties to Coinbase—with prices dropping nearly 40%. After about a week of consolidation, positive news returned on June 20: Wall Street began backing new U.S.-based crypto exchanges. Over two days, led by BTC gains, OP’s price rebounded to pre-SEC levels.
Figure: Large Amounts of OP Transferred to Coinbase Post-SEC Action
3. What Changes Did Bedrock Bring to the Ecosystem?
Post-Bedrock, the most noticeable change is further reduced fees. After the upgrade, average L1 cost savings per transaction increased by 54.5% compared to pre-upgrade levels. In detail, savings for NFT minting, ERC-20 transfers, ETH transfers, and DEX trades improved by over 60%. The line charts below illustrate the impact more clearly.
Figure: Bedrock Upgrade Impact Data 1
Figure: Bedrock Upgrade Impact Data 2
6. Looking Ahead to the Dencun Upgrade
1. Latest Progress on Dencun Upgrade
Every major Ethereum upgrade is a pivotal event in Web3. This year’s Shanghai upgrade sparked the LSD Summer; at the latest Ethereum developer meeting (*June 15, 111th ACDC), the scope of the Dencun upgrade was finalized. It includes EIP-4844 (*proto-danksharding), EIP-4788, EIP-6988, EIP-7044, EIP-7045, and EIP-4788, with EIP-4844—the scalability-focused proposal—being the most significant.
2. What Is EIP-4844?
Ethereum’s biggest current challenge is scalability. The core mission of the L2 sector is to scale Ethereum, primarily via Rollups that compress and bundle data before sending it to L1. But as blockchain networks grow and ETH prices rise, current L2 fees remain too high for future demands.
To understand why, examine L2 fee composition: L2 gas fee = L1 cost + L2 cost. Since Rollups ultimately write transactions into Ethereum’s calldata—processed and permanently stored by Ethereum nodes—the L1 portion remains expensive. Reducing overall L2 costs requires not just L2-side optimizations but also L1-level improvements.
Ethereum’s long-term scaling solution is data sharding, but full implementation will take years. In the short-to-medium term—and possibly long-term—Rollups remain Ethereum’s sole trustless scaling solution. Two approaches exist: (1) reduce current calldata gas costs, or (2) adopt a format resembling future sharded data without actual sharding. Past Rollups focused on (1); EIP-4844 enables approach (2).
EIP-4844 introduces a new transaction format called “blob,” implementing the future sharding format without actual sharding, ensuring full backward compatibility (*avoiding major rollup upgrades when full sharding arrives). Blobs act as temporary data packets storing information off calldata. A new cryptographic method verifies that nodes have validated a minimal subset of Rollup data, unlike today’s full-data submission. Blobs offer larger storage capacity, lower fees (*with separate pricing), and automatic deletion after a fixed period (*1–3 months), significantly reducing L1 costs.
Figure: Illustration of EIP-4844 Blob Introduction
3. Dencun Upgrade and OP
The Dencun upgrade, centered on EIP-4844, will enhance Ethereum L1 scalability, bringing fee-reduction benefits across the entire L2 sector.
OP completed the Bedrock upgrade in June, further lowering fees and currently boasts the lowest costs among L2s. Official OP documents confirm deep involvement in advancing EIP-4844, reflected in the OP Stack’s modular design. As a project closest to Ethereum core developers, OP is well-positioned to lead in EIP-4844 adoption post-Dencun, achieving even lower fees.
Figure: L2 Chain Fee Comparison
Other L2s, particularly ARB, also stand to benefit significantly. As the L2 ecosystem with the highest TVL, ARB hosts flagship applications like GMX, RDNT, and JOE—high-activity, high-volume projects with volatile prices. These user-facing apps will likely feel the impact of the Dencun upgrade more directly.
7. Conclusion
Currently, OP Mainnet faces challenges including sequencer centralization, broken fraud proofs, and insufficient ecosystem activity. Yet, its new narrative is bold and actively materializing. The roadmap indicates plans to deploy the next-gen fault proof Cannon in 2023, paving the way for network decentralization in 2024, expanding OP’s ecosystem influence through RetroPGF funding and Superchain aggregation. RetroPGF has already entered its third round, and both Coinbase and BNB Chain have launched chains based on OP Stack.
The recent Bedrock upgrade has advanced OP’s narrative, improving efficiency and reducing costs, prompting some market response. The upcoming Dencun upgrade will be a pivotal event for the entire L2 sector. Let us remain cautiously optimistic about OP’s performance in the Dencun era.
Disclaimer
1. The content herein reflects the author’s personal research and synthesis based on publicly available data and information, shared solely for discussion purposes. Under no circumstances does it constitute investment advice for any individual.
2. Under no circumstances shall the author be liable for any losses incurred by any person relying on the content of this article.
3. All data and information referenced in this article are believed by the author to be reliable and derived from publicly accessible sources within reasonable efforts, though accuracy is not guaranteed.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Cycle Capital Research
