Unlocking Ethereum’s Scalability With Optimism: The Layer-2 Solution You Need To Know


Optimism, one of the top Layer 2 scaling solutions for Ethereum, has rapidly increased its total value locked (TVL) since its June 2022 airdrop. With over $1.72 billion TVL, Optimism is quickly gaining ground on its competitor Arbitrum, which currently holds $2.85 billion TVL. As the demand for Layer 2 solutions continues to rise, Optimism’s unique features and advantages over other solutions make it a promising candidate for the future of Ethereum’s scalability. In this article, we will explore Optimism’s key features and examine its potential impact on the future of the Ethereum network.

What is Optimism

Optimism is a Layer 2 scaling solution for Ethereum that enables fast and cost-efficient transactions through the “rollup” technology. It operates transactions off-chain from the Ethereum blockchain while utilizing Ethereum’s infrastructure. During a transaction, Optimism maintains communication with Ethereum’s Layer 1 to ensure the same level of security and decentralization guarantees.

Optimistic rollups and ZK-rollups

There are two main categories of rollups: Optimistic and Zero-Knowledge (ZK). Optimistic rollups provide greater scalability and lower costs by bundling hundreds of transactions into a single transaction on Ethereum’s main network, therefore reducing the gas fee required to pay. Transactions on Optimistic rollups are assumed to be valid unless proven otherwise, and there is a designated time frame for potentially invalid transactions to be challenged.

On the other hand, Zero-knowledge rollups (ZK-rollups) use another way to speed up transactions on Ethereum. Instead of posting every transaction to the Ethereum Mainnet, ZK-rollups bundle many transactions into one, and only post a summary with proof of validity to the Mainnet, which makes it faster and cost-effective to confirm transactions.

Compared to Optimistic rollups, ZK-rollups are faster in processing but require more computational power to verify the validity of the transactions. Another significant difference is that ZK-rollups can’t run smart contracts directly on the Mainnet as Optimistic rollups do.

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Benefit that Optimism Brings

Reduced Gas Fees

In addition to enabling fast and scalable transactions, Optimism also benefits in terms of transaction costs. According to Dune Analytics, as of writing this article, the average transaction cost on Ethereum Layer 1 is $9.59, while the transaction cost on Optimism is only about $0.23, a difference of almost 42 times.

The technology of Optimistic rollup allows users to pay lower gas fees, as they do not have to pay for the entire transaction execution on Layer 1. Transactions occur on the second layer of Optimism, using the same amount of gas as a regular Ethereum transaction. However, Optimism’s standard gas cost is only 0.001 gwei, which is significantly lower than the cost on Ethereum Layer 1.

Seamless Integration

Optimism is designed to seamlessly integrate with existing Ethereum dApps, making it easy for developers to adopt and implement the solution. Developers can use the same tools and frameworks they are familiar with to build and deploy their dApps on Optimism.

Also, the Optimism Foundation has recently announced the proposal of the first protocol upgrade, called “Bedrock,” which aims to improve performance, lower transaction costs, and integrate various proof mechanisms, including ZK proofs, to enhance the scalability of the Optimistic ecosystem. The upgrade is expected to occur in March if the proposal is approved.

Native token $OP

The native token of Optimism, $OP, is governed by the Optimism Collective through the Token House and the Citizens’ House. The Token House, consisting of $OP holders, votes on proposals such as upgrades and funding, while the Citizens’ House funds public goods retroactively.

Optimism and Arbitrum

Compared to Arbitrum, the Layer 2 solution with the largest TVL, the data shows that the average cost per transaction on Optimism is about $0.236, which is still more expensive than the cost on Arbitrum, about $0.149. In January 2023, Optimism’s incentive program, Optimism Quest, brought it to an all-time high in daily transaction volume and active addresses, briefly surpassing Arbitrum. In addition, the value of its native token, $OP, has been steadily increasing since its launch in 2022, while Arbitrum has yet to release its own native token.

More Story: Arbitrum: The Ultimate Layer-2 Scaling Solution for Ethereum

Bottom line

Optimism’s benefits, such as lower transaction costs and scalability, demonstrate its strengths and have gained the favor of many users. With a potential protocol upgrade coming soon, Optimism will become a more robust network, providing a more efficient and cost-effective solution in the Ethereum ecosystem.

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GMO-Z.com Trust Company
GMO-Z.com Trust Company

Building Financial-Grade Digital Assets. The World’s First Regulated JPY-Pegged Stablecoin Issuer.