What is Optimism?
TL;DR: Optimism is the team behind the development of Optimistic Rollup (OR). OR is an Ethereum L2 scaling solution that promises an order of magnitude improvement in transaction throughput while preserving the L1 smart contract developer experience.
How does OR work? OR increases the network throughput by allowing staked validators to compute state updates (latest activity) off-chain and post state roots (minimum viable data of the updates) on-chain. The validity of OR blocks can be challenged by anyone.
The OVM translates OR smart contracts for the EVM; The Optimistic Virtual Machine (OVM) makes sure that the L2 contracts can be correctly interpreted and executed on L1 by the Ethereum Virtual Machine (EVM).
Why is now the time for OR? Ethereum needs to scale to support the growth of its application ecosystem. Unipig and the Synthetix demo showcased the promise of OR as a scaling solution for Ethereum.
Unipig demo The demo was built in collaboration with Uniswap and included custom-built components. Unipig got to ~250 TPS. The team calculated that an optimized production version would be capable of ~2000 TPS.
Synthetix demoSynthetix organized a trading competition, where DeFi users got to experience the near-instant and cheap Ethereum transactions of the OVM. Unlike Unipig, the demo ran on a generalized system meant to work for any Ethereum dApp.
Synthetix Exchange Demo results.
History of Optimistic Rollup and Plasma: OR has much in common with Plasma. Both use staked validators that commit blocks on-chain. Tradeoffs:
- Plasma can achieve near-infinite scalability with a limited validator set.
- OR improves scale while enabling anyone to dispute a block’s validity.
What is Optimism’s business model? Miners on L1 make money on transaction fees, block rewards, and transaction ordering (this applies to block proposers on L2 as well).
Optimism has presented a proposal where the right to reorder transactions within a block would go to the highest bidder.
Token Terminal provides financial and business metrics on crypto protocols — metrics we’re used to seeing applied to traditional companies, e.g the P/E ratio. Crypto protocols operate like traditional businesses, only they do it directly on the Internet.
The authors of this content, or members, affiliates, or stakeholders of Token Terminal may be participating or are invested in protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Token Terminal does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only, and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Token Terminal at any time without notice. Token Terminal accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.
Stay in the loop
Join our mailing list to get the latest insights!
- Re7 Capital: investing in DeFi, yield, liquid venture, risk management, data, valuation | Fundamentals ep.79
Re7 Capital: investing in DeFi, yield, liquid venture, risk management, data, valuation | Fundamentals ep.79
In this episode, we’re joined by Evgeny Gokhberg – the founder of Re7 Capital – a fund that specializes in DeFi R&D and liquid crypto investment strategies. We delve into the vast arena of DeFi, exploring everything from generating yield to managing risks.
- The fundamentals of Avalanche
The fundamentals of Avalanche
In this week's research piece, we focus on the current state of Avalanche's product, business model, financials, usage, competition, and more! Avalanche is a smart contract platform for decentralized applications (a blockchain). Avalanche was founded by Emin Gün Sirer and launched in 2019.
- Angle's stEUR: Earn the Euro risk-free rate onchain
Angle's stEUR: Earn the Euro risk-free rate onchain
Pablo Veyrat, the Co-Founder of Angle, walks us through how stEUR is critical in the vision Angle is trying to push for, by laying down the permissionless and fully transparent foundations for a Euro risk-free rate onchain.