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It is a layer 2 solution for Ethereum as the most popular layer 1 blockchain. The Optimism blockchain is a separate blockchain that runs on top of the Ethereum blockchain. Optimism’s mission is to help end users access Ethereum decentralized applications with cheaper transactions and a smoother user experience.
According to DefiLlama, Optimism currently ranks eighth among the most popular chains in terms of TVL with approximately $850 million in locked assets. This network acts as a group Optimism Group, having an ambitious goal, intends to coordinate the motivation to achieve more profit with the motivation to create a positive impact on the network.
Who are the founders of optimism digital currency?
Optimism is led by Optimism Foundation. The foundation is a non-profit organization dedicated to growing the Optimism ecosystem. Similar to Ethereum, Optimism aims to become a fully decentralized public commodity that is not profit driven. Optimism Digital Currency is funded through donations and is committed to producing infrastructure that will grow and sustain public goods.
Solving Ethereum’s scalability problem with optimism
Ethereum was originally born as a network that combines scalability, security and decentralization. In Ethereum’s white paper, founder Vitalik Buterin describes these three features as the Blockchain Triad. However, it states that you can have scalability, security and decentralization, but not all three at the same time.
So Ethereum was launched with a flaw in the first place. This defect led to its own set of problems. The most prominent of these problems included network congestion followed by an increase in user demand. Such mutations fuel bidding wars between users who want to execute their own transactions over others’ transactions.
Over time, layer 2 solutions came into play to solve Ethereum’s scalability problem. This is where optimism comes into play.
Optimism provides a scalable solution for the Ethereum network that results in faster transactions on Ethereum without sacrificing decentralization and security. Optimism conducts transactions outside the Ethereum blockchain while leveraging the Ethereum infrastructure. During a transaction, Optimism continues to communicate with Ethereum’s Layer 1, ensuring that it will continue to provide the same security and decentralization guarantees. Layer 1 of Ethereum will manage security, decentralization and data availability, while Layer 2, which is the Optimism digital currency, will manage scaling.
During this process, no changes are made to layer 1. In a way, Optimism takes the burden of financial transactions off the shoulders of Ethereum. Removing this burden from the Ethereum blockchain eliminates network congestion and solves its scalability problem.
What are Ethereum layer 2 scalability solutions?
Regardless of their size, computer networks can only handle a limited amount of traffic. As soon as a network becomes popular, it inevitably becomes crowded. The Ethereum network can be more scalable with the help of layer 2 networks. These layer 2 networks connect themselves to the Ethereum core, the layer 1 chain. Optimism digital currency is one such scaling solution, but it is not the only solution.
Some of these solutions are called sidechains because they act like roads connecting to the main Ethereum network. Below is an overview of three common Ethereum Layer 2 scaling solutions.
1. Comparison of Optimism with Arbitrum
Arbitrum is a technology similar to Optimism. It is often said that Arbitrum optimized Optimism’s source code to create a distinct Layer 2 scalability solution. The major difference between Optimism and Arbitrum is how they handle proof of fraud. While the Optimism cryptocurrency uses one anti-cheat round, Arbitrum uses multiple rounds.
Using single-round proof, Optimism provides instant confirmation because it relies on Ethereum’s Layer 1 to complete a transaction. Transaction is almost instantaneous, but this approach suffers from higher gas cost. In contrast, Arbitrum offers a detailed approach to conducting transactions mainly in layer 2. Validation takes time due to multiple rounds of anti-cheating, but helps reduce gas costs.
2. Comparison of Optimism with Polygon
Polygon is a scalable DeFi solution. Unlike Optimism, Polygon is a sidechain, not a layer 2 solution. Sidechains run parallel to Layer 1 and have a built-in security framework that does not rely on Ethereum. This network is completely different from Optimism digital currency, which relies on Ethereum layer 1 for transaction security.
OP token
Polygon uses the same virtual machine as Ethereum, so it’s easy to outsource smart contracts to Polygon. The Polygon model relies on MATIC tokens to secure the Polygon network and pay transaction fees. Therefore, users must exchange Ether with the native MATIC token of the Polygon protocol.
While Polygon’s model has attracted significant attention from the crypto community, some users have complained about the long transfer times and how few actors maintain the security of the blockchain.
3. Comparison of Optimism with zkSync
zkSync is a variant of ZK-Rollup. The letters zk stand for zero knowledge, meaning that one party can prove to the other that it has certain information.
not to disclose that information. To prove validity, each batch of transactions is sent to an off-chain validator who produces a cryptographic proof, known as SNARK, which stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.
Although zkSync and Optimism are somewhat similar, zkSync uses a more sophisticated method to validate a batch of transactions. This model is not suitable for building DApps and different ZK-Rollup applications cannot interact with each other in layer 2. It should be noted that zkSync guarantees much higher output and lower cost than Optimism digital currency without compromising security.
What are the most important features of Optimism digital currency?
Here are just a few of Optimism’s most important features:
Scalability: Optimism can greatly increase scalability depending on the nature of the transaction.
Reduced fees: Optimism can greatly reduce the cost of doing a transaction. Rolling technology combines multiple transactions into a single transaction, which leads to a reduction in transaction costs.
Security: As Optimism is built on top of Ethereum, transactions are settled on the Ethereum mainnet, allowing users to benefit from the security and decentralized environment of the Ethereum blockchain.
Enhanced User Experience: New projects benefit from lower costs, faster transactions and a better overall user experience using Optimism’s Tier 2 scaling solutions.
