Optimism vs Arbitrum: Which Ethereum Layer 2 is Best?

• Optimism and Arbitrum are prominent layer-two networks on the Ethereum network.
• Both protocols work by deploying optimistic rollups to combine hundreds of transactions into one.
• Despite their similarities, both networks imbibe unique attributes that differentiate them.

Optimism and Arbitrum are prominent layer-two networks that enable scalability on the Ethereum network. Both protocols work by deploying optimistic rollups to combine hundreds of transactions into one, relieving Ethereum of significant traffic. Despite their similarities, both networks imbibe unique attributes that differentiate them, and users tend to compare them when considering which protocol is suitable for their projects.

The main technical difference between Optimism and Arbitrum is that Optimism uses single-round fraud proofs, while Arbitrum uses multi-round fraud proofs. It implies Optimism would enable faster transactions, but that comes at a cost. The transactions are relatively more expensive due to higher gas fees. 

Single-round fraud proofs are more expensive because they execute on Layer-one. However, the system is different for Arbitrum, which takes more time to process transactions but in a more cost-effective way. Hence, on technical grounds, Optimism provides a faster transaction method while Arbitrum makes room for cheaper transactions.

Still, on technical differences, Optimism runs on the Ethereum Virtual Machine (EVM). That implies that the programming language for the protocol is limited to Solidity. Arbitrum uses a native Arbitrum Virtual Machine (AVM) and supports all EVM programming languages. 

Using total value locked (TVL) to compare the level of adoption between both projects shows that Arbitrum has received nearly three times the adoption of Optimism. Data from DeFiLlama, the digital assets data aggregation platform, show that Arbitrum has a TVL of $1.733 billion, while Optimism’s TVL stands at $655.13 million.

DeFiLlama’s data also shows that as of September 1, 2023, Arbitrum had 44 core developers within its ecosystem, nine more than those on the Optimism network, 35. Also, 397 projects are running on Arbitrum, each contributing to the network’s TVL. That is more than twice the number of projects running on Optimism, 164 solutions in total.

Arbitrum appears to be leading between the two compared solutions based on the metrics considered. However, project developers would choose their preferred solution based on the suitability of their projects and the unique attributes of the layer-two networks.