Optimism is another solution for the troublesome scalability challenge of Ethereum. It is considered a second-layer solution, meaning that it has offered some innovations for transferring the load off the Ethereum’s main chain. If you want to know how Optimism does this, stay with us up to the end of this article.
What is Optimism and how does it work?
Today almost everyone knows that Ethereum is suffering from low scalability. Of course, this low scalability may be considered a good sign. It shows the high demand for this popular blockchain. This high demand leads to network congestion, and network congestion leads to high fees and slow transactions. Many people are waiting for Ethereum 2.0 to solve these problems, but some other solutions also exist that can help us overcome this challenge. Second-layer solutions are among the most famous ones. By a second-layer solution, we mean a solution that transfers the load off the main chain and into another space. Optimism is a such a solution.
Optimism increases the speed and reduces the fees by compacting the required data and transferring it into another chain. Optimism classifies the transactions, sends them to another chain, and finally reports the results to Ethereum’s main network.
Optimism, as its name suggests, considers all transactions valid, unless the opposite is proved. Since not all transactions are going to be checked and validated independently, they are processed and blocks are created more quickly. As we previously mentioned, transactions are classified and categorized. They are also investigated in groups. Validators investigate different categories and in case they find a problem in a group, they look for the problematic transaction.
Optimism and Ethereum are completely compatible. In fact, all layer 2 solutions are compatible with Ethereum. For this reason, you can easily transfer your Ethers or other ERC-20 tokens between these two networks.
It’s important to know that Optimism is a subcategory of Optimistic Rollups. Optimistic Rollup is a broader term and it is a technology developed to overcome Ethereum’s scalability challenge. Arbitrum is another famous Optimistic Rollup. “Being optimistic” is what all Optimistic Rollups have in common, but they may be different in other technological and conceptual details.
Famous Defi projects using Optimism
Today, a lot of famous Ethereum-based projects are using Optimism. This seems logical since these projects have to handle great deals of transactions and they need a faster and cheaper way. Some of the most famous Defi projects using Optimism include:
- Brave Wallet
The OP token; Optimism’s native token
Unlike Arbitrum, Optimism has a native token called OP. The price of each unit of OP (at the time of writing) is $1.06. Its market cap is also more than $222B. It is the one-hundred-twenty-seventh-largest cryptocurrency by market cap. OP’s all-time high goes back to September 2022 when its price went over $2.
Optimism is an appropriate solution for increasing the speed of transactions and decreasing their fees. These two factors are of crucial importance for Ethereum. However, if you remember blockchains’ scalability trilemma, you figure out that achieving higher speed usually comes at the cost of victimizing decentralization. We can’t say that Optimism is centralized, but it is for sure more centralized than a network like Ethereum, and this may be considered a drawback.