Exploring Optimism Blockchain: A Layer 2 Scaling Solution for Ethereum
- Antonio Anderson
- April 8, 2023
- Review
- blockchain, ethereum, layer 2, optimism blockchain, security
- 0 Comments
Ethereum, a popular blockchain for smart contracts, processes a whopping 1.2 million transactions every day. As more and more people join the network, it becomes slower and costlier to use.
That’s where Layer 2 (L2) solutions come to the rescue! They help improve scalability and user experience.
What are Layer 2 Chains?
Layer 2 chains, or simply L2, are like helpers for existing blockchains such as Bitcoin or Ethereum. They tackle the problem of these blockchains being slow and costly when handling lots of transactions at once. Layer 2 solutions help by improving the speed and efficiency of these existing blockchains.
Layer 2 chains don’t replace the original blockchains(L1). Instead, they work alongside them. Think of layer 1 as the main chain that provides security, and layer 2 as the assistant that offers faster transactions, lower fees, and the ability to handle many transactions every second.
What Is Optimism?
Optimism L2 is an innovative scaling solution that has the potential to transform the Ethereum landscape. It is a layer 2 scaling solution for Ethereum that utilizes Optimistic Rollups to increase transaction throughput, reduce fees, and improve the user experience for decentralized applications (dApps) source.
With more than $1.91 billion locked in its smart contract as of this writing, Optimism is the second-largest layer.
How Does it Work?
Optimism employs an advanced data compression technique called Optimistic Rollups, developed by the talented team at the Optimism Foundation. Rollups come in two varieties: optimistic rollups, created by the Optimism Foundation, and zero-knowledge rollups, also known as ZK rollups.
By moving a significant amount of transaction data off-chain, rollups substantially improve processing speeds. Despite this, optimistic rollups maintain a degree of security by posting a small amount of data on the decentralized layer 1 network for validation.
Unlike zero-knowledge rollups, which provide cryptographic proofs of validity for off-chain transactions, optimistic rollups assume off-chain transactions are valid and do not publish proofs. To prevent invalid state transitions, optimistic rollups rely on fraud proofs, which require executing an Ethereum Optimism transaction. In simpler terms, the Optimistic Virtual Machine (OVM) serves as a sandboxed environment between Layer 1 and Layer 2, ensuring deterministic smart contract execution.
The OVM and Ethereum Virtual Machine (EVM) share similarities, as both execute computations. However, the OVM primarily functions as an interface for the EVM. Comparing EVM and OVM execution reveals that virtualization occurs through the Execution Manager.
When compiling Solidity code, the Solidity compiler first converts it into Yul, then into EVM instructions, and finally into bytecode. After compiling to EVM assembly, any necessary OVM variant of each opcode can be “rewritten.”
What is OP Stack?
The OP Stack is a collection of software components that power Optimism. It’s created and managed by a group called the Optimism Collective. The main goal of the OP Stack is to make it easier to create new Layer 2 blockchains that can work together in a network called the Superchain.
Imagine the OP Stack like a set of building blocks that can be used to create new, faster blockchains. This set of blocks is open-source, meaning anyone can use them and contribute to their development.
Right now, the OP Stack focuses on making it simple to launch an Optimistic Rollup blockchain, which is a specific kind of Layer 2 solution. Over time, the OP Stack will evolve and include more components, making it even more versatile.
The Optimism Collective aims to have different blockchains work together seamlessly within the Superchain. By using the OP Stack, developers can create blockchains that are ready to join the Superchain when it launches.
The OP Stack will keep growing and changing based on what the Optimism community needs. As the Superchain develops, the OP Stack will adapt and include new components to help different chains work together more efficiently.
Optimism’s dApp Ecosystem
Optimism is home to hundreds of dApps that were originally built on Ethereum. These dApps cover a wide range of services, including lending platforms, NFT marketplaces, wallets, DAOs, and various blockchain tools. You can explore the Optimism ecosystem to discover all the available dApps.
Since Optimism helps reduce gas fees, many of its most popular dApps are focused on finance. For instance, Aave is a leading lending platform, while Synthetix allows users to trade derivatives of underlying assets more efficiently. These two dApps make up a significant portion of Optimism’s total value locked (TVL).
How to Use Optimism?
Using Optimism is quite similar to using Ethereum’s main network. Your Optimism address is the same as your Ethereum address, which starts with “0x”. The blockchain explorer for Optimism is also like Etherscan, which is used for Ethereum.
Many decentralized finance (DeFi) wallets work with Optimism, including the popular MetaMask wallet. To set up your wallet for Optimism, you can simply visit a DeFi app like SushiSwap and select Optimism as your network. This will automatically add the network to your MetaMask and switch you over to Optimism.
However, just like with Ethereum, you’ll need Ether (ETH) to pay for gas fees on Optimism. To start using Optimism, you can send ETH to your MetaMask wallet from another blockchain like Ethereum’s main network or another Layer 2 like Avalanche. You can use bridges that support Optimism to transfer funds between chains.
Another option is to fund your Optimism address with ETH from a centralized cryptocurrency exchange. But, always make sure the exchange supports withdrawals to Optimism before sending funds. If the exchange doesn’t support the chain, you might lose your funds permanently. Currently, Binance, Bybit, and Huobi allow withdrawals to Optimism.
Conclusion
The primary goal of this article was to offer a brief introduction to the Optimism blockchain and its relationship with Ethereum.
Optimism has demonstrated impressive growth and development over the past year, positioning itself as a crucial part of Ethereum’s scaling efforts. By utilizing Optimistic Rollups, Optimism provides a scalable and efficient solution for dApps, addressing Ethereum’s well-known challenges of high fees and slow transactions.
As the blockchain space continues to mature, it is likely that we will see further adoption of Optimism and other L2 solutions. Looking forward, the continued success of projects like Optimism will be crucial to the overall growth and evolution of the Ethereum network and the broader blockchain ecosystem.
