A Quick Dive Into Optimistic Ethereum
The daily issuance of ether (ETH) is often becoming negative post-implementation of the Ethereum network's EIP-1559 upgrade nowadays. The upgrade brought changes to the monetary policy of Ethereum by burning a part of transaction fees in every new block. EIP 1559 was activated on August 5 and about 258,955 ETH has been burnt till now. The burning rate of ETH as of now is 5.10 ETH/min in the last 35 days. While this establishes ETH as a sound store of value, the gas fee issue of the blockchain remains unsolved. With the growing popularity of NFTs, the fees have again gone out of control. Ethereum is the most widely used blockchain now and the base layer is really congested. Many Layer 2 protocols have come up recently with the objective of scaling up Ethereum and Optimism is one of them. The project was founded by some former Plasma group researchers in 2019 and they started their research on Optimistic Rollup, an Ethereum scaling solution. The organization raised significant capital from a few VC funds but remained focused on open-source developmental work.
“Optimism is a Public Benefit Corporation (PBC): a for-profit corporation intended to produce a public benefit and operate in a responsible and sustainable manner. This means that we are obligated to balance the pecuniary interests of our stockholders with the best interests of those materially affected by our conduct, as well as a specific "public benefit charter" we incorporated with.” – Optimism Philosophy
What is Optimistic Ethereum?
Optimistic Ethereum is an Optimistic Rollup based scaling solution that stores funds in a smart contract on the Ethereum blockchain. The end users can enjoy cheap and fast transactions on Layer 2 which acts like a ‘parallel universe’. The Layer 2 structure can provide up to 200-2000 transactions per second (TPS) as it takes the transactions off-chain and thus provides better scalability. Optimistic Virtual Machine or OVM plays a very significant role by making anything possible on Ethereum mainnet possible in the OVM. Moving a DAPP from the Ethereum base layer to L2 becomes a simple matter of deployment due to the presence of the OVM and this is the biggest accomplishment of Optimism.
The Alpha launch
Optimism launched its Alpha Layer 2 solution for Uniswap via the Optimistic Ethereum (OΞ) mainnet in July 2021. Unlike L1, the transactions on the Optimistic Ethereum get confirmed instantly. How much can Optimistic Ethereum reduce your gas pain? You can check with an Etherscan transaction link or by selecting a preset transaction here.
“Imagine not needing to make any changes to your solidity smart contracts to have a DAPP work natively on an Ethereum L2 with security from Ethereum, massive scaling, no data availability issues, and synchronous interoperability with other DAPPs on L2." - Hayden Adams, Uniswap Founder & CEO
Savings with Optimism - Uniswap v3 swap | From Optimism gas comparison calculator
Using Optimistic Ethereum
To use Optimism, the network will have to be added to your wallet firstly. You can easily add the network to your Metamask by using this tool or you can do it manually. If you have used any EVM compatible chain like Avalanche, Polygon or Fantom with Metamask earlier, the process should be found smooth. After adding Optimism to Metamask, you need to deposit funds from Ethereum via this bridge. This bridge or gateway transfers your fund from Ethereum to Optimism. You need to pay a regular Ethereum gas fee while depositing (all tokens are not supported yet). After depositing the fund, you can check the transaction details in Optimistic Etherscan. Soon, your funds will arrive on Ethereum Layer 2 – Optimistic Ethereum and you will be able to conduct lightning-fast swaps on Uniswap.
Uniswap connected to Optimism – Screenshot by the author
Optimism delivers Web 2 experience in the environment of Web 3. The network is still in a nascent stage but it is working fine. Uniswap Optimism analytics can be found here and the network is drawing decent volume. 1inch Exchange and Synthetix are also supporting the Optimism network. Optimism has $143M TVL including all DAPPs currently as per L2BEAT, a research website for Ethereum Layer 2 scalability solutions. Withdrawal from L2 to Ethereum L1 currently takes 7 days but improved solutions are coming soon. It is undeniable that Ethereum has established itself as the value settlement layer as almost everything in the decentralized finance world is built around it. Optimism can provide a smooth transition from the base layer of Ethereum as it can be considered as an extension of the blockchain and it derives security from the base layer. Will Optimism emerge as a new scalability stack for Ethereum like Polygon? It is too early to have a verdict but the Ethereum developers have already started to deploy their DAPPs on Optimism and the project seems to be committed to consistently demonstrate L1 compatibility.
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