Optimism is an Ethereum Layer 2 scaling solution. It helps solve the scalability problem and reduces transaction fees on the Ethereum blockchain.

Ethereum is known to be one of the most secure and decentralized blockchains. However, the network was able to scale beyond 30 transactions per second despite Ethereum 2.0 promising 100,000 tps on the native layer.

As a result, Ethereum has limits in the number of transactions it can handle per day. When it reaches its maximum capacity for the transaction, congestion occurs and the network can no longer scale.

When block space becomes scarce, users on the Ethereum network tend to enter a war race to get their transaction on the next block. This leads to an increase in the price of gas that is sometimes beyond the means of retail users. Apart from the high gas price, users of the Ethereum network also have to wait long hours for their transactions to be processed.

It is for this problem; the idea of ​​optimism comes into play. Optimism solves the problem of scalability without affecting decentralization and security.

Basically, Optimism transacts off the Ethereum blockchain while leveraging the Ethereum infrastructure. Layer 1 handles data decentralization, security, and availability, while Layer 2 handles scaling. During the transaction, Optimism communicates with layer 1 of Ethereum to ensure that layer 1 always offers guarantees of decentralization and security.

In a way, optimism absolves some of the transaction burden from the Ethereum blockchain, thereby minimizing network congestion.

How does Optimism work?

Optimism uses rollups to perform transactions in clusters. This helps eliminate network congestion and reduce gas charges. Rollups can help users save up to 100 times the gas charges that would have been used in the Layer 1 protocol.

Roll-up technology optimism works by combining a series of Ethereum Layer 1 transactions into a single transaction. While rollup is performed on Optimism layer 2, transaction data is processed on Ethereum layer 1.

Optimistic rollups are “optimistic” because each transaction is presumed valid on layer 2 of Optimism. If the system suspects fraud, it performs a fraud-proof check.

Optimistic syntheses and ZK-rollups are the two types of deployment solutions on Ethereum. Although both rollups move transaction data off-chain for processing, the process involved in transaction verification is different.

For optimistic rollups, all transactions are assumed to be valid, so they don’t undergo a lot of computation on layer 2. What they do is move the transaction to layer 1 without verifying it, which results in a significant increase in scalability. If fraud is suspected in a transaction, the validity of the transaction can be challenged within one week. Then the optimistic roll-ups will run tamper protection, which verifies it using data on Layer 1.

Whereas ZK rollups, on the other hand, during any transaction generate proof of validity for each transaction after moving them to layer 2. The proof of validity is then moved to layer 1 acting as a stand-in for the corresponding transaction. Since validation takes place on layer 2 of Optimism, it helps reduce gas prices and validation times on layer 1.

Each of these technologies has its advantages and disadvantages. For example, optimistic rollups are preferred for executing a smart contract, while ZK rollup is relegated to executing simple transactions. Withdrawal times are longer for Optimist stacks, while ZK stacks have a faster withdrawal policy, making them suitable for applications that require simple payments.

Optimism and Other ETH Layer 2 Scaling Solutions

Computer networks are susceptible to congestion once they receive a lot of traffic, regardless of the size of the network. This leads to the idea of ​​different layer 2 networks. Various layer 2 networks help solve the scalability problem of Ethereum. And optimism happens to be one of those scaling solutions.

There are also other scaling solutions, some of which are called side chains as they serve as routes connecting to the Ethereum mainnet.

Below are some of the most popular ETH Layer 2 scaling solutions:

Arbitration

Arbitrum is an optimistic deployment technology very similar to Optimism. Arbitrum is believed to have refined the Optimism source code to form a separate Layer 2 network.

The main difference between Optimism and Arbitrum is how they handle fraud evidence. Optimism uses a single cheat-proof round, while Arbitrum uses multiple cheat-proof rounds. With one-trick fraud protection, optimism performs instant verification as it relies on Layer 1 to complete the transaction. Thus, this approach makes it possible to close deals quickly, but the consequence is high gas costs. Although multi-round fraud protection takes time with validation during transactions, it helps reduce gas costs.

Polygon

Polygon is one of those scaling solutions called sidechains. This is a Defi scaling solution. And unlike Optimism which relies on Ethereum Layer 1 for transaction security, this scaling solution works alongside Layer 1 and has a built-in security framework.

Polygon uses the same virtual machine as Ethereum, so it’s easy to outsource smart contracts to Polygon. Polygon uses Matic tokens to secure its network and pay transaction fees, so users will need to exchange Ether for the protocol’s native MATIC token.

zkSync

zkSync is a type of ZK-Rollup. “zk” stands for zero-knowledge, which means that a party can prove to another party that they have certain information (in this case, transaction details) without revealing the details. To confirm validity, each transaction is moved to an off-chain prover which generates a cryptographic proof called ZK-SNARK. SNARK is short for Succinct Non-Interactive Argument of Knowledge. The generated proof is then posted on layer 1.

Optimism and zkSync are closely related, but zkSync’s method of transaction validation can be somewhat complex. It provides higher throughput and lower cost without giving up security. On the other hand, ZkSync is not an ideal model to create DApps and the various ZK-Rollup applications cannot interact with themselves on layer 2.

Conclusion

Optimism took a big step towards decentralization in April 2022 by launching a DAO known as Collective Optimism. The Optimism Collective is a unique project that serves as a springboard to create other unique projects that will help fund public goods and govern protocol. It has the support of a good team, a great community and a good number of dedicated investors. It has also started releasing newly minted OP tokens to Optimism users and others who could help advance Optimism’s decentralized future.

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