What is Optimism Blockchain Network?
Optimism blockchain network is a project created to solve a major issue of the biggest smart contract platform Ethereum (ETH) - scalability - which causes transactions to be more expensive as its user activity increases. How Optimism solves scalability? This is what this article will unravel.
The Optimism Blockchain Network
The Optimism blockchain network is an Ethereum layer 2 scaling solution built by Ethereum developers, for Ethereum developers. As a layer 2 network, the network was built on top of the Ethereum network (layer 1 or L1) but remains autonomous.
Optimism was launched in 2019 by Jinglan Wang, Karl Floersch, and Kevin Ho. Wang now serves as the CEO of the Optimism Foundation and Floersch as its CTO.
Unlike most cryptocurrency projects governed by a few individuals, the project is managed by Optimism Collective.
The Collective is a group of companies, communities, and developers working to build a sustainable future for Ethereum. As such, the code for its blockchain is open-sourced and MIT licensed.
The Citizens House is the core of Optimism’s non-plutocratic governance model. The main function of the Citizens House is the retroactive public goods funding and public goods experiments.
Why was Optimism Created?
As DeFi (decentralized finance) applications, dApps (decentralized applications), and NFTs (non-fungible tokens) became more popular, the problem of scalability and affordability became more prominent on Ethereum.
To fix this problem of scalability and expensive transactions on the Ethereum network, the Optimism Blockchain Network was born.
The goal of the Optimism network is to solve the scalability and affordability problems of Ethereum. The network was built to make it cheap and easy to operate Ethereum.
The network was designed to help Ethereum run more smoothly by taking some of the transactional load off of the blockchain and processing them on its own blockchain.
How Does Optimism Blockchain Network Work?
The Optimism network is built around four major pillars; simplicity, pragmatism, sustainability, and optimism.
To achieve its goal of optimizing the Ethereum network, Optimisn uses a technology called rollups.
The Optimistic rollups literally roll up the data of hundreds of transactions (NFT mints, staking, token swaps, sending crypto) into a single transaction and submitted to the Ethereum network.
The transactions submitted from Optimism have no mempools, meaning they are immediately accepted or rejected.
This allows the Ethereum network to process more transactions with less processing power, making the network more scalable.
The main difference between Optimistic rollups and zero knowledge is that Optimism posts all transaction data on-chain to finalize transactions while the latter only requires validity proofs on-chain.
How the Optimism System Helps Ethereum
Because Ethereum processes the transactions submitted from Optimism (which contains hundreds of transactions) as a single transaction, the “gas fees” required for each transaction become very cheap.
These rollups allow the network to process more data and can be between 5x to 200x cheaper than transactions performed directly on the Ethereum L1.
What Makes Optimism Unique?
After its introduction in June 2019, it took until October 2019 for a testnet to be released. It wasn't until January 2021 that an alpha mainnet launched, with the Mainnet finally launching in December 2021.
Optimism was not only built on top of Ethereum but it was also built to support all of Ethereum dApps. It can also do this while remaining scalable and cheap because it runs all the required computation off-chain.
Everything on the Optimism network works in the same way it would on the Ethereum blockchain.
In addition, developers designed the ecosystem to use proven Ethereum codes and infrastructure whenever possible.
The similarity allows Ethereum developers to build on Optimism without needing to learn new programming languages or overhaul their existing code.
The project is funded by donations and grants from individuals and organizations. Data from Crunchbase shows that the project has received over $179 million in funding since its launch.
Optimism also receives pledges from projects to produce infrastructure that promotes the growth and sustainability of public goods.
Optimism Forges Superchain for the Future
Optimism has seen significant success since its launch and is now the second-biggest layer-2 protocol, with over 300 decentralized applications (dApps) and developer tools designed to assist developers building on Ethereum.
The project has a total value locked (TVL) of over $942 million, only behind Arbitrum with a TVL of $2.2 billion, according to data from DefiLlama. However, Optimism wants more.
In February, the team announced developments to convert all the parallel layer 2 chains into an interoperable and composable system, called Superchain.
Superchain will allow Optimism to become a platform of multiple chains. This unified chain will ready the network for the next wave of adoption.
What is Optimism Crypto OP?
Optimism is governed by its native token, OP, which was first launched in May 2022.
Through an airdrop, the native token was distributed to hundreds of thousands of wallet addresses that participate in community-oriented activities.
The Optimism Token House was put together, a Governance Fund directed by OP token holders to incentivize the sustainable growth of projects in the ecosystem.
Members of the Token House are saddled with the responsibility of governing the network by deliberating, submitting, and voting on various proposals that will bring changes to the network.
Tokenomics of Optimism OP
At its launch, the foundation revealed that there will be a supply of 4,294,967,296 OP tokens, at an inflation rate of 2% a year.
Distribution of Optimism OP
The tokenomics of Optimism OP reserves 25% for the Ecosystem fund (5.4% governance fund, 5.4% for the partners, 5.4 seed fund, and 8.8% is unallocated) and 20% for Retroactive Public Goods Funding.
The foundation also decided to allocate 17% of the total supply of OP tokens to investors, 19% to core distributors, and 19% to airdrops.
Optimism OP Airdrop
In the first airdrop of Optimism OP, 5% of the token’s max supply was distributed to DAO voters, Multi-Sig signers, repeat users, and Gitrcoin donors.
The remaining 14% of the total supply earmarked for airdrops will be sent to qualified users and core contributors.
How Many OP Are in Circulation?
At this time, only 7% of the total OP supply or 314,844,141 OP is in circulation. An agreed percentage of OP tokens will be released into the market every year.
Where to Buy OP?
OP is one of the more popular tokens on the market. You can buy, send, and receive OP on Atomic Wallet, which is one of the most secure non-custodial wallet. The Atomic Wallet also allows you to exchange OP with over 500 cryptos you can also manage within the app.
FAQ
What is Optimism?
Optimism is an Ethereum layer-2 scaling solution that provides cheaper and faster transactions using rollups.
How Does Optimistic Rollups Work?
The Optimistic rollup combines the data of hundreds of transactions into a single transaction, then sends it as one transaction to the Ethereum network.
What is OP?
OP is the governance token of Optimism and helps fund third-party development proposals on the network.
What is OP All-time High?
Optimism (OP) was initially valued at $4.57 at its launch, but quickly fell to $0.79 hours after its airdrop. However, it is worth the note that OP has recovered and now trades close to its all-time high.
What is OP All-Time Low?
The sell-off in the market just after the airdrop of the OP tokens continued in the following weeks, causing the price of the token to fall as low as $0.4005 in June 2022.
What is OP Market Cap?
OP has a current market cap of $725 million, making it the 65th biggest crypto when ranked by market capitalization. At its current price of $2.3, OP will have a market capitalization of $9.9 billion if its total supply is taken into question.
Resources
Optimism Website
For more information on the project, visit the Official Optimism Website
Optimism Blockchain Explorer
Track all OP transactions using the Optimism Blockchain Explorer.
Optimism Twitter
To get all the updates about the project, follow Optimism's Twitter.
Optimism Twitch
Join Optimism Twitch to discuss the project with the community
Optimism Github
Join Optimism Github to collaborate with ecosystem developers.
