Ethereum is suffering from criticism due to its sub-optimal scalability and high gas prices. There has long been talk of increasing the scalability of the Ethereum mainnet.
However, the Ethereum ecosystem needs a scaling solution right now, and if Ethereum cannot provide these new applications with a platform with sufficient scalability, they may look to alternatives such as BNB Chain or Cardano. The Optimism deployment was created specifically to address Ethereum’s scalability issue.
The Optimism Rollup Network is one of several solutions trying to solve the Ethereum congestion problem. The Ethereum network often overloaded to near maximum capacity, and until upgrades to the main blockchain are made, scaling solutions like Optimism allow Ethereum’s transactional capabilities to remain usable without spending a fortune on gas fees.
In short, Optimism uses advanced data compression techniques to speed up and reduce the cost of Ethereum transactions. They do this through a method known as Optimistic Rollups, where multiple transactions are “rolled up” into one transaction and settled on another cheaper blockchain. The verified transactions are then returned to the main Ethereum blockchain. The biggest benefit of Optimistic Rollups is the fact that they don’t perform calculations by default, which theoretically results in increased scalability. It is estimated that Optimistic Rollups can sentence 10-100x improvement in scalability. The downside, however, is the existence of a “challenge period”, which is a time window in which anyone can challenge the assertion and extend the withdrawal time.
Now the natural question is: how is this different from the widely used zero-knowledge (zk) rollups?
Zk-Rollups rely on zero-knowledge proof for all state transitions to work properly. After that, each transaction is compared with a smart contract in the main chain. Meanwhile, Optimistic Rollups depend on the user submitting a new state root to the sidechain without checking the rollup contract.
When it comes to application, perhaps the biggest difference between the two is the cost, as optimistic folds require nodes to simply execute contracts, while zk folds need to create a complex cryptographic proof that requires hundreds or thousands of expensive elliptic curve operations. into proof. This makes zk-Rollups significantly more expensive to use than Optimistic Rollups. However, zk systems take precedence when connected to layer 1.
There are two main players in the world of Optimistic Rollups: Optimism and Arbitrum. The main difference between the two is how they generate fraud proof for the network. While the current version of Optimism requires a non-interactive proof of fraud, Arbitum uses an interactive method. Other differences relate to their compatibility with the Ethereum Virtual Machine (EVM) and Ethereum tools.
There are currently over 1000 projects using Optimism and the total cost is locked in this chain. according for DefiLlama, is $364.7 million at the time of writing. One of their biggest backers seems to be Synthetix, which has over $120 million locked into Optimism. When asked about their trust in Optimism, a spokesperson for the Synthetix team told Cryptooshala:
“Synthetix was one of the first to implement Optimism and back in 2020 decided on a protocol based on this Ethereum scaling solution. At the time, it was a matter of making a determined decision. We realized early on that we absolutely needed to scale as we are a very complex set of smart contracts. Perpetual futures and low latency oracles should not have appeared on L1.”
When asked by Cryptooshala why Sythethix chose Optimism over Arbitium, given that Arbitium was ready to hit the market before Optimism, they responded:
“Both Arbitrum and Optimism had a lot of work to do, but we made the decision to make a commitment to work with a specific team, which was Optimism, and incur the high costs that would be required to access the mainnet. We chose Optimism because they have some of the best researchers in the Ethereum community and we were confident that they would be able to realize their vision.”
In many ways, Synthetix has taken a similar approach to what they did with Chainlink in their pre-mainnet process. Synthetix has invested heavily in protocol transition from a custom protocol, allowing direct transactions and exchanges to the Optimism base layer so that other protocols can build on top of it. Since the launch of Optimism, the Synthetix team has seen several other protocols integrate with Synthetix to create the backbone of the Synthetix ecosystem, which enables the unique and efficient trading of multiple financial derivatives.
Recent: Different energy narratives of bitcoin and banks are a matter of perspective
However, many in the industry are of the same opinion. Jagdeep Sindhu, lead developer and president of Syscoin, told Cryptooshala that Optimism’s popularity is short-lived and Arbitium could have an edge over it in the long run. He elaborated:
“The optimism is with EIP-4844 (blob tx data) and also with Cannon which is inside the new base version. This means that it removes the OVM interpreter and directly relies on the EVM execution for evidence of fraud. Nitro of Arbitrum does the same. However, Arbitrum is a bit more silent on release planning. We believe that Arbitrum is closer to release, but it works more on a closed source methodology, which makes it difficult to understand until all the tools are released.”
Jagdeep believes that the release of Nitro and the pendulum will return in favor of Arbitium is only a matter of time. He continued:
“We set a release schedule for Nitro in about 1-2 months and Cannon in about 3-6 months, given the current state of the codebases. We don’t think Optimism outperforms Arbitrum in the long run because once Nitro is released, it will be considered for adoption.”
A growing pull of optimism
Optimism received institutional support from Andreessen Horowitz (a16z) and Paradigm. In March 2022, they raised a total of $150 million in a Series B funding round at a $1.65 billion valuation.
In a press release ad Serie A funding for Optimism, a16z said:
“One of the most exciting things about what Optimism has created is that it can be seen as an extension of Ethereum in many ways, from its philosophy to its tech stack. This close commitment to the Ethereum development paradigm results in a very easy transition for developers, wallets, and users: no new programming languages, minimal code changes to existing contracts, and out-of-the-box support for most existing Ethereum tools. ”
Ethereum co-founder Vitalik Buterin also recently praised the alignment aspect of the core philosophies of both Optimism and Ethereum:
This is a great example of why I’m so proud @optimismPBC to add non-token control (Civil House).
Optimism clearly has *other* purposes than just “make OP grow”, and the only way to do that in the long run is by explicitly representing the interests of non-token holders. pic.twitter.com/vofVVx53mC
— Dolphin vitalik.eth (@VitalikButerin) June 3, 2022
Token House, which is already active, manages technical decisions related to Optimism, such as software updates. It is planned that the “Civil Chamber” will begin its work at the end of 2022 and will manage decisions on the financing of public goods.
Speaking about the governance of Optimism, Wealth Mastery founder Lark Davis, commonly known as TheCryptoLark, told Cryptooshala:
“Management is most often a whale game. And the level of participation in governance is often very low. So using the tokenless model really makes sense. So the smaller, more active members of the community really matter, and the big, lazy whales matter less.”
The Optimism roadmap includes updates to the Optimism protocol such as next-generation crash protection, segmented summaries, and a decentralized sequencer. The decentralized sequencer, which is the technology responsible for creating blocks in Optimism, provides the ability to move most transactions off-chain.
Optimism Token and Airdrop
Optimism launched its native OP token on May 31, 2022, where a total of 231,000 addresses were eligible to claim 214 million OP tokens in their first airdrop. This was one of the most notable events in the history of Optimism in terms of tokenomics as the 214 million OP tokens accounted for 5% of the total 4.29 billion. However, 95% of the tokens have not entered the market yet.
Recent: DeFi lifts the veil on financial magic, says EU Blockchain Observatory expert
OP tokens were distributed as follows:
- 19% of the initial OP token supply is reserved for custom airdrops.
- 25% of the initial OP token supply is allocated to proactively fund the project.
- 20% of the initial supply of OP tokens plus inflation is set aside for retroactive funding of public goods.
- 19% of the initial OP token supply is allocated to the main contributors.
- 17% of the initial supply of OP tokens is allocated to OP investors.
Projects based on optimism have aroused the interest of both developers and people interested in the monetary value of the token. However, despite institutional interest from prestigious firms like a16z and industry leaders like Buterin, the price of the OP token dropped from $4.50 to just over $1.00. Much of this can be attributed to market conditions in general and the current limited use of OP tokens. However, as the market turns bullish and the Ethereum network becomes more congested, interest in optimism is bound to increase.
Credit : cointelegraph.com