ETH Layer 2 protocols Arbitrum and Optimism carries on to receive traction

• Arbitrum and Optimism have witnessed constant growth.
• Arbitrum has about 50% market share, while Optimism possesses 30%.

Arbitrum and Optimism, optimistic rollup protocols based on Ethereum, have witnessed constant growth in terms of transactions from the start of the year 2022. In September 2022, the protocols witnessed a new all-time high on the basis of transaction counts. 

The main difference in both protocols is that Arbitrum does not possess a governance token, whereas Optimism has officially publicized the introduction of its token in April 2022 and issued it in May 2022. 

After the publicization of the governance token, the transaction count of Optimism started increasing swiftly. As a result, the protocol witnessed growth after the token went officially live over exchanges on May 31. The move resulted in interest and belief in a potential Arbitrum token launch. 

After that, both protocols have witnessed a constant increase in transactions and have carried on an upward track.

At present, Arbitrum holds the highest Total Value Locked (TVL) over every Layer 2 network, with almost 50% market share. If we talk about Optimism, it has a market share of almost 30%, as per the data from L2Beat. 

As compared to the protocols, the next nearest Layer 2 by market shares is held by Metis, which has a 2.71% market share. Metis publicized a 26-week-long incentive program on July 26, which resulted in an almost 60% hike in its TVL. Although, it has since declined to just above the level it was at before of the publicization. 

Layer 2 networks acquire security from Ethereum and are expected to minimize the cost of transactions. 

Difference between both protocols

As both protocols are defined as Optimistic rollups, they also possess some fundamental differences. 

For validating transitions, Optimism uses single-round fraud proofs implemented on layer- 1, similar to that Artibrum uses muli-round fraud proofs performed on off-chain. If we compare, then the fraud proofing of Arbitrum is more efficient and cheaper.

Also, as both the protocols are EVM compatible, Optimism uses Ethereum’s EVM while Arbitrum uses its own Arbitrum Virtual Machine. As a result, Optimism has only a Solidity compiler, and Arbitrum backs all EVM-compiled languages. 

Optimism and Abitrum both were launched in 2021. At present, Optimism has 15 dApps, with the most popular one being Synthetix ecosystem having $147 million in TVL, and Lyra, with $67,43 million in TVL.

While Arbitrum has 228 live projects, with the most prominent classifications being swapping and lending, some of its exciting projects are Curve, Cream Finance, and Uniswap. 

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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