Optimism token price plunges 25% as Coinbase cuts off DAO from millions in revenue

Coinbase just broke up with the Optimism Collective — to the tune of tens of millions of dollars.

The US’ top crypto exchange is overhauling its nearly three-year partnership with the layer 2 software developer, saying that Coinbase’s Base blockchain will use in-house code moving forward, rather than Optimism’s OP Stack.

A spokesperson for Optimism confirmed that Coinbase will stop sharing Base revenue with the Optimism Collective. That revenue has topped $16 million over the course of the partnership.

“This is a hit to near-term onchain revenues,” OP Labs CEO Jing Wang said on X. “But as cryptotwitter has been saying for ages, we needed to evolve our biz model.”

Coinbase will instead remain as a customer of OP Labs’ “OP Enterprise” service, Wang added.

Base’s withdrawal hammered the price of Optimism’s token, OP. It has lost a quarter of its value since Wednesday, and was trading just under $0.14 as of this writing, down from its all-time high of $4.84 in 2024.

Coinbase has long shared 15% of Base revenue with the Optimism Collective, the digital cooperative that manages the OP Stack. To date, Base has contributed 8,387 Ether, worth about $16.4 million at Wednesday’s prices.

That’s 41% of the Optimism Collective’s lifetime revenue. But Base’s share of that revenue has shot up in recent months. In January, it hit 90%.

The move could, therefore, have significant ramifications for the Superchain, the collection of blockchains using the OP Stack. That list includes Sony’s Soneium, Uniswap’s Unichain, Kraken’s Ink, Worldcoin’s World Chain, and Optimism’s own OP Mainnet.

Wang and Coinbase didn’t return DL News’ requests for comment.

“We’re grateful for our three-year partnership with Base and proud to have helped it become one of the most successful Layer 2 deployments in history,” an Optimism spokesperson said in a statement shared with DL News.

“Our focus remains on delivering enterprise-grade blockchain infrastructure to our ecosystem, and we will continue to serve Base as an OP Enterprise customer while they build out their independent infrastructure.”

‘Disappointing’

OP Labs, a privately held company, has raised more than $175 million from the likes of Andreessen Horowitz and Paradigm. Its software engineers are responsible for maintaining and improving the OP Stack, though any changes they propose must be approved by the Optimism Collective.

A related entity, the Optimism Foundation, recently said it would seek to shift to the Collective at least some responsibility for funding Labs’ operations.

Superchain members’ tithe is denominated in Ether. That multimillion-dollar pot of crypto initially sat dormant, with the Collective instead issuing grants denominated in OP.

Those grants are intended to lure software developers to the Superchain — more developers means more applications, and more applications means more users.

But Optimism recently began putting that Ether to work.

Last March, The Collective approved staking most of the Ether in order to earn passive yield.

And, just last month, the collective approved a buyback programme meant to tie the value of OP to the Superchain’s success. Half of all the revenue flowing into the Collective is now being used to purchase OP. The Foundation was given permission to actively manage the other half.

Why Superchain?

“It’s disappointing, but in many ways unsurprising,” PaperImperium, a pseudonymous member of Optimism Collective delegate GFX Labs, told DL News. “Base has to answer shareholders and do what is best for them.”

The OP Stack is open-source: that means anyone can use the code for any reason, without seeking permission from Optimism.

“So why do chains like Base, Mode, Worldcoin, Zora, and all others in the Superchain choose to contribute shared revenue?” Optimism wrote in a 2024 blog post. “The answer lies in the network structure designed to benefit the entire Collective.”

Improvements to the OP Stack were supposed to turn the Superchain’s various members from a federation of siloed blockchains into a single, interoperable network.

“That unfortunately has not materialised despite years of technical work,” PaperImperium said.

Coinbase said it was making the move in order to speed its upgrade cadence, simplify its code, and pilot changes that could eventually appear on Ethereum.

“We could not have gotten so far so quickly without the world-class technology underpinning the OP Stack and are grateful for the collaboration over the last three years,” Coinbase said in a blog post.

When Base joined Optimism in 2023, it was given “the opportunity” to earn up to 118 million Optimism tokens over a six year period. It was not immediately clear how many of those tokens Base had earned or what would happen with the remainder.

Optimism did score a victory on Wednesday, when Ether.fi said it would move its crypto-based credit card from layer 2 blockchain Scroll to OP Mainnet.

“Over the coming months, ~70,000 active cards, ~300,000 accounts, and millions in user TVL are moving to Optimism,” Optimism said in a blog post. “For Optimism, this positions OP Mainnet as a leading chain for payments activity.”

As for Coinbase, Wang said it would remain as a customer of OP Labs’ “OP Enterprise: Mission-Critical” service, given Base’s ongoing reliance on Optimism-built code.

“If Base makes so many changes that it’s no longer recognizable as the OP Stack then they will no longer require ‘Mission Critical’ support from us,” she wrote.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at [email protected].