The Optimism layer 2 solution: definition, purpose, and token

Optimism is one of the earlier Layer 2 optimistic rollup solutions. It’s essentially an appendage to the mainnet Ethereum, which takes upon itself the task of processing transactions made on Ethereum. As such, you can attach Optimism to your Ethereum operation and decrease the costs of your transactions, improving scalability.

It’s not an independent network, although it does have a governance token called OP. The Layer 2 solution means that it’s attached to Ethereum. It’s EVM-compatible, creating a seamless connection with the main network. That said, it’s also a separate entity and not something like a decentralized app (dApp).

Optimism explained

Optimism is a Layer 2 solution, which means it’s built atop the main network (Ethereum, in this case) to perform special tasks on its behalf. In this instance, Optimism helps Ethereum process its transactions in a cheaper infrastructure. This, in turn, means an increased scalability and cost-efficiency of whatever it is you’re doing on Ethereum.

Created in 2019, it was one of the first optimistic rollup solutions. The concept itself was only formalized a year prior. There have been successive projects that tried to extend and expand what Optimism created. It doesn’t mean Optimism is obsolete — in fact, it never stopped modernizing and updating.

Optimistic rollups

Optimistic rollups is a way to approach data transaction by basically delegating the task to another chain. In this case, that ‘another chain’ is Optimism itself. The transactions are either processed there, in a much cheaper environment, or completely off-chain via dedicated resources. This has only become cheaper over the years.

A rollup works like this:

1. A number of transactions are being shipped off from Ethereum to Optimism.
2. These transactions are bundled up in a single block of data, which makes it cheaper because you basically process data in bulk.
3. When the transactions are processed, they are shipped back to Ethereum, where the transactions are assumed perfectly correct and not re-executed.

You can dispute the process if your transaction was in any way corrupted during the process. It’s not unheard of, although the chances of this are slim. The entire process is automated, with a lot of security measures to prevent the corruption and mixing of data. It is a major worry that your data can be mistaken in this big bundle of numbers, but it doesn’t happen nearly often enough to be a concern.

Optimistic rollup advantages

OP Mainnet, the network responsible for these rollups, has several important advantages that might make it a viable addition to your ETH operation:

• Low cost. The main benefit is that the fees you pay for the processing of your transactions are much lower on Optimism. In fact, you can save as much as 90% without really cutting on anything essential.
• Speed. As of late, Optimism introduced several features that make the processing of transactions faster compared to Ethereum.
• EVM compatibility. Since Optimism is fully compatible with EVM, you can use all the regular Ethereum tools and features on Optimism. The transition between Ethereum and Optimism is seamless.
• Interoperability. Although mainly used with Ethereum, the interoperability of Optimism enables its use with a plethora of other networks, particularly the Ethereum-compatible blockchains.

In the end, you have an environment with much-increased scalability compared to regular Ethereum, which has long struggled with this aspect of data movement. This affordability is achieved through several important aspects of this network, in addition to its nature as a sidechain.

Why Optimism is cheaper

There are several notable reasons why Optimism is about 90% cheaper compared to Ethereum.

Bundling, which refers to the way OP Mainnet groups transactions before processing all of them in bulk, is inherently a cheaper way to handle these things. Rather than paying for each individual transaction, you write a check for the entire package, which is obviously going to be cheaper.

Modular structure is a method of dispersing the functions of a blockchain across several nodes or networks. In this sense, it means that Optimism can handle on-chain transactions and off-chain transactions in separate modules, in addition to pursuing other interests and projects without hindering the data processing capabilities.

Sidechain processing in general is cheaper because the resources that handle the data are specifically created to maximize their performance in one task. They aren’t distracted by anything else. Thus, you can expect L2 solutions like Optimism to be better at their job than the basic Ethereum network.

Other Optimism features

Optimism doesn’t really bother with any other tasks besides transactions, although there are several interesting developments in this platform.

• Superchain is the project meant to bring Optimism closer to other networks besides Ethereum and ETH-aligned networks that can currently accept Optimism. It’s supposed to foster interoperability in such a way that doesn’t split the ecosystem between various smaller infrastructures.
• OP Stack is the project that introduces modular structure to OP Mainnet. It basically enables the platform to split its functions, as well as pursue other interests like zkEVM without compromising the efficiency of its primary function.

It means that Optimism continues to expand without cutting its main feature. Moreover, it remains a worthy competition to other L2 rollup solutions that came after. Optimism is still very much relevant, and a worthy addition to your Ethereum operation, whatever it is.