Optimism Governance Approves OP Buybacks Using Protocol Revenue

The Optimism governance community has approved a major change to the OP token’s economic model, voting to allocate 50% of net protocol revenue toward recurring OP token buybacks.

The proposal was finalized on January 29, 2026, passing with 84.4% support. It introduces a direct link between protocol activity and OP token demand, marking a shift away from OP being used solely as a governance asset.

How the Buyback Program Works

The approved framework establishes a 12-month pilot program scheduled to begin in February 2026. Under the plan, Optimism will use half of its net sequencer revenue to repurchase OP tokens on a recurring basis.

To limit price disruption, buybacks will be executed through monthly over-the-counter (OTC) swaps rather than open-market purchases. This approach is designed to reduce slippage and avoid sharp spot-market volatility.

Based on historical data, the Optimism ecosystem generated 5,868 ETH in sequencer revenue over the prior year, equivalent to roughly $17.6 million at current prices. If revenue remains at similar levels, approximately $8 million per year, or around 2,700 ETH, would be allocated to OP buybacks.

Superchain Revenue as the Funding Source

The revenue used for buybacks is collected from sequencer fees across the growing “Superchain” ecosystem. This includes OP Mainnet alongside partner chains such as Base, developed by Coinbase, Unichain by Uniswap, World Chain, Soneium backed by Sony, and Ink supported by Kraken.

As Superchain activity expands, governance participants expect sequencer revenue, and by extension buyback capacity, to scale alongside network usage.

Treasury Handling and Future Decisions

All OP tokens repurchased under the program will be transferred to the Optimism Collective treasury. The proposal does not mandate an immediate burn or redistribution.

Instead, future governance votes will determine how these tokens are ultimately used. Options include permanent burns, distribution through staking or incentive programs, or redeployment toward ecosystem development initiatives.

To manage downside risk, the framework includes built-in safety mechanisms. Monthly conversions will be paused if protocol revenue drops below $200,000 or if OTC counterparties cannot execute trades within predefined fee limits. Any skipped conversions would roll over to subsequent months.

Market Context and Token Implications

The decision directly addresses long-standing criticism that Layer-2 tokens often lack clear value accrual mechanisms. By tying OP demand to real protocol revenue, Optimism is positioning its token model closer to cash-flow-linked infrastructure assets.

Despite the governance approval, OP has continued to face broader market pressure in early 2026, trading near $0.30 and well below its historical highs. Still, the introduction of structural, protocol-driven buy pressure has been viewed by governance participants as a stabilizing long-term development rather than a short-term price catalyst.

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