Optimism is an scaling solution for the Ethereum blockchain.
It uses optimistic rollups to process transactions in batches, reducing gas fees.
Ethereum has grown to become the second largest cryptocurrency by market capitalization, thanks largely to its support for smart contracts—which underpins a growing ecosystem of decentralized applications (dapps) and decentralized finance (DeFi) platforms.
But it suffers from a problem: it’s slow and expensive to use, thanks to persistently high transaction fees. While the Ethereum fraternity waits for the roll-out of planned upgrades to the network that will address these issues, scaling solutions have emerged to make Ethereum transactions faster and cheaper.
Optimism is one such scaling solution.
What is Optimism?
Optimism speeds up Ethereum transactions and cuts their costs by settling them on another blockchain using advanced data compression techniques.
The special sauce to Optimism’s scaling methodology is in its name: it uses a technique called optimistic rollups, whereby multiple transactions are ‘rolled up’ into one transaction, settled on another blockchain, with receipts fed back to the main Ethereum blockchain.
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We’ve picked up a ton from our time spent designing, building, and operating an optimistic rollup.
The lessons learned will be synthesized in the protocol’s next major milestone: what we’re referring to for now as ‘OP 1.0’.
Optimistic rollups are a type of rollup that ‘optimistically’ assumes all transactions in the rollup are valid. This saves time, since individual transactions do not have to be submitted with direct proof of their validity. Validators in the rollup have a week to query the entire rollup if they believe that it contains fraudulent data.
A dashboard on Dune Analytics indicates that Optimism cuts Ethereum transaction fees (also known as gas fees) by a staggering 129 times. It’s supported by DeFi platforms like Synthetix and Uniswap. Per Dune Analytics, Optimism secures about $740 million of on-chain value, as of March 2022, down from slightly over $1 billion in January.
Optimism was introduced in June 2019, and a testnet was released in October 2019. It wasn’t until January 2021 that an alpha mainnet launched, and it took until October 2021 for Optimism to launch a version of the Alpha mainnet that was compatible with the Ethereum Virtual Machine. An open mainnet launched in December 2021.