To ensure the safe and secure scaling of Ethereum, it must be able to boost its capacity to scale network latency and throughput without introducing trust assumptions. This is what numerous scaling solutions, such as sidechains and Layer two (L2) rollups, are doing. Optimism is one scaling solution we look at in this guide.
Once believed to be a fringe idea, the first smart contracts platform in the world – Ethereum – has evolved remarkably over the past few years. It currently hosts over 3,000 dApps (decentralized applications) and 4,000 smart contracts, and more than 90,000 transactions occur daily. Still, this surge in activity on Ethereum comes with a cost: scalability. Constraints on block times and block sizes, even though essential for security and decentralization, minimize Ethereum’s ability to accept more users and scale. The final result is a cluster of problems that most Ethereum users are already acquainted with and facing: slow transactions and high gas fees.
What is Optimism?
Optimism is a scaling solution for the Ethereum blockchain and the firm or project behind developing Optimistic rollups, a simplified and hopeful rollup technology. It represents a class of layer 2 rollup solutions designed to make using Ethereum swifter and cheaper.
Simply put, the project’s theme is Optimism, while the primary tool and technology behind it are Optimistic rollups.
Optimism uses optimistic rollups (mainly a collection of Ethereum-based smart contracts) to process transactions in batches, minimizing gas fees and boosting transaction speed. It does this by setting the transactions on another blockchain using progressive data compression techniques.
Per Dune Analytics’s dashboard, Optimism reduces gas fees surprisingly by 129 times. It is supported by decentralized finance (DeFi) platforms such as Uniswap and Synthetix.
How Optimism Works
Basically, Optimism is a significant append-only list of transactions. This particular technology allows numerous transactions to be rolled up into just one. These blocks of transactions are further processed on the Ethereum blockchain.
With multiple transactions being rolled up into just one, the blockchain transaction fee (a.k.a. gas fee) needed to pay comes down to a single transaction that can be easily distributed across all those who are involved. Ultimately, the roll-up blocks will be safely stored on Canonical Transaction Chain, which is an Ethereum smart contract.
Unless users directly submit their transaction to the Canonical Transaction Chain, a sequencer will generate new blocks. This confirms valid transactions instantly and creates and executes blocks on Optimism’s L2 – a blockchain that sits atop Ethereum, the L1 blockchain. These blocks merely refer to “rollups” – batches of Ethereum transactions.
The sequencer compresses information even more to minimize the transaction size, which ultimately saves money, and then submits transaction data back to Ethereum. While sequencers will be rewarded for adhering to the rules and executing transactions as projected, they’re also required to stake funds that will be cut if they act spitefully.
If someone is dubious of fraud, it can be proved by alerting an adjudicator contract on the Ethereum main net, which can conform to the results’ validity or invalidity produced by the sequencer using an Optimistic Virtual Machine.
The L2 software is designed to replicate Ethereum’s code to quite an extent. For instance, it uses the same virtual machine as Ethereum. It charges money for gas similarly, although at a lesser rate, thanks to its optimistic rollup outcome.
The optimistic rollups are centered on the concept of “optimism,” meaning it assumes all transactions in the rollup are valid until they’re proven false. In other words, these transactions are innocent until proven guilty.
Thus, this saves considerable time, as you do not need to submit individual transactions with direct proof of their validity. Validators in the rollup are given a week’s time to inquire about the whole rollup should they think it contains fraudulent data.
What Is The Token For Optimism?
Optimism is regulated by its eponymous token that goes by the name of OP. This is the primary utility token for the network and can be utilized for various things, including paying for smart contract executions, covering gas prices, and sending value. Optimism is a flexible digital asset that developers can easily assimilate into their creations for enhanced functionality.
In a turbulent launch, a fragment of the OP supply was airdropped in late May 2022 to early users of Optimism. In fact, the airdrop was all the rage, so much so that it caused the Optimism blockchain to experience a temporary setback. The developers behind it state more tokens are expected to be airdropped.
Benefits of Optimism
Anyone who uses Optimism is bound to enjoy an array of benefits. The Optimism network expands various capabilities of Ethereum and further enhances its performance. The protocol leverages the robust security assurances of Ethereum without any developer restrictions. Having said that, here are some of the benefits of Optimism:
One significant advantage of Optimism is that it is easily and fully trackable on the Ethereum main net. Moreover, users can observe and process their transactions on the main network in a trustless way.
Optimism was made to be relatively straightforward from use to its coding. It becomes possible to make Optimism more secure using the least amount of coding. The network has already experienced numerous 3rd-party audits. In addition, the Ethereum community has examined it.
The entire team behind Optimism was dedicated to creating a protocol that was as developer-friendly as possible. With this problem, a lot of the developer problems can be solved and simplified for Ethereum users to integrate the system.
The Optimism virtual machine is the same as Ethereum. It barely takes developers to follow a few lines of code to leverage Optimism’s scalability and speed.
The team behind Optimism has played a positive and influential role. Besides, the project is recognized as more than just a way for individuals to profit. Amidst all this, the Optimism network has donated over $1 million to multiple worthwhile causes worldwide.
This approach allows the company to stand out against the decentralized finance protocols that enter the market weekly.
Also Read: Gas Fees 101: Gas Fees Explained
Optimism was created to be sustainable, which is why it leverages cutting-edge DeFi technologies to minimize its carbon footprint. Ethereum, on the other hand, uses a proof-of-work consensus method that utilizes considerable electricity due. It is believed that electricity comes from the use of miners.