Optimism (OP) is a crypto project that seeks to address one of the most pressing challenges in the cryptocurrency space: the scalability of Ethereum. In this article, We will explore in detail what Optimism is, how it works and what is its potential to revolutionize the cryptocurrency industry, as well as alternatives What exists in the market.
What is Optimism?
Optimism is a scalability solution designed specifically for the Ethereum network, known as layer 2 (L2). Its main objective is to significantly increase transaction processing capacity on the Ethereum blockchain, allowing a greater number of operations per second and reducing transaction costs.
This platform uses a technique known as “rollups” to achieve these objectives. Rollups are a way to group multiple transactions into a single record, reducing the load on the main Ethereum blockchain.
History and Founders
In 2019 Benjamin Jones, Jinglan Wang and Kevin Ho founded a scalability solution called Optimism.
Jinglan Wang, co-founder of Optimism.
In February 2020, the Optimistic Virtual Machine (OVM), compatible with EVM, was launched in the testing phase. In September, the testnet was launched with the Optimism Rollup solution.
In January 2021, Optimism released its Alpha version. In October, the upgrade to its core network for EVM was released. In August, a full blockchain bridge between Ethereum and Optimism was launched. Previously, the bridge only allowed the transfer of ERC-20 enabled tokens. In December, the crypto world celebrated the launch of the Optimism mainnet.
In April 2022, it was announced that the Optimism Collective (a governance experiment) had been created and that several air launches had been carried out. Because of this change of government, a non-profit organization, the Optimism Foundation, was created. In May, the distribution of the $OP coin began.
How does it work?
Optimism works by using what is known as Optimistic Rollups, a technique that takes advantage of the security of the Ethereum main chain (Layer 1) to support and verify transactions made outside the main chain (Layer 2).
Optimistic Rollups: This is the cornerstone of the Optimism solution. Rollups are additional layers (Layer 2) that process and record transactions outside the main chain, allowing for greater scalability. In the case of Optimism, transactions are carried out in an “optimistic” manner, meaning that they are supposed to be valid unless proven otherwise.
Offchain processing: Most of the transaction processing in Optimism takes place outside the main chain. This means that transactions do not take up space in the Ethereum block and are not subject to the processing capacity limitations of the main network.
Onchain Verification: Even though most processing is done off-chain, Optimism uses the Ethereum main chain to ensure data integrity. The sequencer node publishes the Merkle root of the chain state to the main layer (Layer 1). This provides proof that the transactions have been successfully processed.
Economic Incentives: To promote honesty and security, Optimism uses economic incentives. Sequencers are rewarded for publishing correct state roots, while verifiers can pose challenges if they think there is an error. This ensures that transactions are processed accurately and securely.
Retreats and Challenges: In the case of disputes over the validity of a transaction, a challenge period is allowed. During this time, the validity of the transaction in the main chain is verified. Withdrawals of funds from layer 2 to the main chain are also subject to a challenge period, ensuring asset safety.
Bridges and Interoperability: Optimism offers bridges that facilitate the deposit and withdrawal of funds between Ethereum layer 1 and Optimism layer 2. This improves accessibility and interoperability between different parts of the crypto ecosystem.
Select a Compatible Wallet: Make sure you have a wallet that's compatible with Optimism. Some popular options include MetaMask and Trust Wallet.
Set up your Wallet: If you haven't already done so, set up your wallet and make sure it's connected to the Ethereum network.
Access a dApp Compatible with Optimism: Find a decentralized application (DApp) that is compatible with Optimism. Some popular applications have implemented support for this scalability solution.
Switch to the Optimism Network: In your wallet, select Optimism as the network you want to operate on. This usually involves switching from Ethereum Mainnet to Optimism in your wallet settings.
Make Transactions: From this point on, you can use the DApp the same way you would on the Ethereum network. Transactions on Optimism are faster and cheaper compared to the Ethereum main chain.
Verify Transactions in the Optimism Explorer: If you want to track your transactions, you can use an Optimism block explorer to see the status of your operations.
Governance
Optimism's blockchain governance is based on the core cryptocurrency $OP. This currency is used to vote, delegate, award rewards to validators and participate in the staking mechanism.
Governance is organized into two “chambers” within the Optimism Collective: the Token Chamber, comprised of $OP holders, and the Citizens Chamber, made up of members recognized for their participation and contribution to the community.
The objective is to balance short-term and long-term incentives to promote the growth of Optimism. Although the blockchain seeks to decentralize in the future, transaction approval is currently overseen by Optimism. Future updates are expected to add more validators to maintain the security and integrity of the blockchain.
Tokenomics OP
The initial distribution of the OP coin was as follows:
OP token distribution.
25% allocated to the ecosystem fund.
20% allocated to the RPGF (Retroactive Public Assets Fund).
19% for air launches.
19% allocated to major contributors.
17% awarded to investors.
The total amount of OP coins will be 4,294,967,296 by the year 2026. Currently, there are 798,517,235 OPs in circulation. The OP currency is an inflationary currency with an inflation rate of 2% per year.
OP token supply schedule.
How to buy OP?
Optimism (OP) can be purchased through multiple cryptocurrency exchange platforms, such as Binance, Coinbase, Gate.io, KuCoin or Huobi, among many others.
We recommend that you first compare the conditions offered by cryptocurrency exchange platforms, such as additional fees, customer support, exchange security, account requirements, among others.
Once you've decided, all you have to do is register and buy your tokens. Then you have the option of leaving it on the exchange or sending it to a hot wallet like TrustWallet or cold wallet like Ledger, among others.
Alternatives to Optimism
In the current landscape of scalability solutions for Ethereum, Optimism shares the scenario with other promising alternatives that seek to lower costs and improve network speed. Two of the main competitors are Arbitrum and Polygon.
Arbitrum, like Optimism, stands as a layer of scalability that aims to improve the efficiency of Ethereum. This solution offers faster confirmation times and considerably lower transaction rates, making it an attractive option for developers and users looking for a smoother network experience.
Polygon, for its part, has gained a prominent position in the Ethereum ecosystem by providing a multifaceted scalability solution. Polygon has proven to be a solid alternative, providing fast and inexpensive transactions.
Currently, if we look at the Total Locked Value (TVL), Optimism is positioned as the sixth network with the highest TVL among all networks, representing 1.72% of the market share. This figure, while still growing, places Optimism as one of the most promising options for Ethereum's scalability.
Total Value Locked in the different Blockchains.
It should be noted that Oenters behind giants such as Ethereum, Binance Smart Chain (BSC), Tron, Arbitrum, and Polygon, underscoring the competitiveness in this space and the growing demand for scalability solutions in the blockchain community.
Investment Challenges and Considerations
The L2 sector shows promising potential as a long-term investment option. Existing L2 protocols, such as Polygon, have demonstrated consistency with the number of users and transactions increasing steadily. Meanwhile, new L2 protocols such as Arbitrum and Optimism have captured the attention of participants in the world of cryptocurrencies with their exponential growth.
Intense competition in the L2 sector will lead to each protocol continuing to innovate to increase the number of users and transactions. However, it's crucial to recognize that, given the relatively recent emergence of L2 as a technology, there are security risks that need to be considered.
The failure of development teams to address these problems could potentially diminish the attractiveness of their protocols. We recommend that you follow very closely any project in which you invest or use and be careful, as remember that there is a lot of volatility in these projects and no one assures you that they will still exist a decade from now. Invest at your own risk.
Conclusions
In this article, we've explored the Optimism cryptocurrency in depth and its impact on the blockchain ecosystem. Since its launch, Optimism has proven to be a scalable and efficient solution for Ethereum, opening up new possibilities for decentralized applications and smart contracts.
In short, Optimism represents a significant step towards scalability and efficiency in the Ethereum ecosystem. Their adoption and continuous development will play a crucial role in the future of decentralized applications and smart contracts. As technology advances, it will be interesting to follow the positive impact that Optimism and similar solutions can have on the mass adoption of blockchain and global decentralization.
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