Optimism is a second-tier blockchain for Ethereum that uses optimistic rollups as a scaling technology. It is one of the largest Ethereum scaling solutions with over $250 million in TVL at the time of writing. Optimistic rollups outsource transaction execution to an L2 solution like Optimism.
Transactions on Optimism are grouped into batches that are forwarded to the Ethereum mainnet, which only records the new state of the chain.
Since their validity is assumed, rollups are called optimists. The validity of a rollup can be contested for up to seven days, which is why withdrawals from Optimism to Ethereum take seven days.
The upside of Optimism’s solution is a significant reduction in gas costs on L2 and a decrease in gas tariffs on Ethereum in the long run. Since the Ethereum mainnet will have to record less transaction data, one of optimism’s externalities is a less clogged Ethereum. In addition, Optimism operates on the same ethereum EVM-compatible smart contracts and is protected by the Ethereum mainnet, providing an ideal solution for new DApps to build on.
Optimism vs Arbitrum vs ZK-Rollups
We have covered the differences between Optimism and Arbitrum in the Ultimate Guide to the Arbitrum Ecosystem. However, here is a quick summary of the main similarities and differences.
Where Optimism and Arbitrum are similar
- Validators are incentivized to behave honestly through ETH staking.
- Both employ the same optimistic rollups as a scaling solution.
- Both have full nodes, accumulate top-level transactions, and validation nodes that monitor the state of the chain.
- Both forward only calldata with hashes of confirmed rollup blocks to the mainnet.
- Both chains allow DApps to select their own validators. This local validation of transactions versus validation of transactions by all nodes reduces communication between nodes and consequently increases transaction throughput.
Where Optimism and Arbitrum are different
- The biggest difference is the resolution of disputes. Arbitrum resolves off-chain disputes in multiple rounds and presents the final result as a transaction. Optimism uses all-round fraud evidence and disputes are resolved in a chain. That’s why gas rates on Optimism are slightly higher than on Arbitrum.
- Arbitrum uses multi-shot fraud evidence. Put simply, Optimism performs the proof of transactions in one round on the layer-one chain, Arbitrum does it in several rounds.
- Arbitrum uses an Arbitrum virtual machine while Optimism is “only” compatible with EVM.
- Optimism has a Solidity compiler, Arbitrum supports all EVM programming languages.
- The Optimism ecosystem is significantly smaller ($1.5 billion versus $300 million in total blocked value).
Where Optimism and ZK-rollups are different
- Optimistic rollups have longer withdrawal periods due to their security model (one week versus minutes).
- Optimistic rollups are less complex from a technological point of view because they do not employ mathematically complex technology.
- Optimism has higher gas costs than ZK-based layers-two.
- Running EVM on Optimism is easier than on ZK chains.
- Off-chain calculation costs are higher on Optimism.
Investor Optimism and Roadmap
Optimism launched its first testnet in 2019 and the first EVM-compatible testnet in 2020. The Optimism mainnet and the EVM-compatible mainnet were launched in 2021. In June 2022, Optimism released its OP token via a highly anticipated airdrop. Token allocation is described in the Optimism community portal. One interesting thing to note is the inclusion of public goods funding, which aims to reward public members who contribute to the Optimism Protocol, and is an important part of the Optimism Collective.
Optimism currently has more than 50 decentralized applications running on its chain. As part of the roadmap, Optimism plans to:
- Introduce next-generation proof of failure that improves on-chain security.
- Decentralization of the sequencer, so that anyone in the network can participate as a block producer.
- More decentralization and sharded rollups in 2023.
Optimism raised a total of $28.5 million in two investment rounds. The first round was a seed round, raising $3.5 million led by Paradigm and IDEO CoLab Ventures. The Series A funding round in February 2021 led by a16z raised $25 million.
How to use Optimism on Ethereum
You can use the Ethereum Optimism blockchain with the following steps:
- Connect to the official Optimism Bridge or use one of the bridges to and from Optimism.
- Transfer ETH to Optimism.
- Add the Optimism network to your portfolio.
- Access DApps on Optimism in the Optimism ecosystem.
The OP and Airdrop token
On May 31, 2022, Optimism launched its OP token, making it one of the largest airdrops in history. However, the price of the token plummeted rapidly, as users had trouble claiming their promised airdrop. Although Optimism has solved the problem, OP continues to trade around $0.50, well below its listing price, amid a broader collapse in the cryptocurrency market. For more information about OP tokenomics, go to the OP token page.
The best DEX on Optimism
The best decentralized exchanges (DEX) on Optimism are:
- Uniswap: the pioneer of the AMM mechanism.
- Curves: a huge stablecoin exchange.
- ZipSwap: a gas-efficient native swap.
- Perpetual Protocol: a DEX for futures trading.
Uniswap
Uniswap (UNI) is TVL’s largest DEX on Optimism ($30 million at the time of writing). Uniswap is primarily known for being one of the first DEXs to offer trading with an automated market maker (AMM) model. Uniswap is also available on Arbitrum, Polygon and, of course, Ethereum.
Curves
Curve (CRV) is a DEX stablecoin and one of the most important exchanges for stablecoin exchange. It is one of the largest decentralized exchanges on Optimism with a TVL of over $23.5 million at the time of writing. Curve has become popular through its AMM model and has integrations with all relevant blockchains.
ZipSwap
ZipSwap (ZIP) is a more gas-efficient native swap that guarantees the lowest possible fees on token swaps for optimistic rollups. Thanks to the technical improvements of the Uniswap V3 AMM, Zipswap is able to provide better liquidity to less slippage.
Perpetual Protocol
Perpetual Protocol (PERP) is a decentralized exchange for trading perpetual and futures. Instead of trading on centralized exchanges with an order book model, traders can trade non-custodially and against an automated market maker. All transactions are recorded on-chain, even if their execution takes place on a gas-free sidechain.
This allows Perpetual Protocol to be one of the most efficient and sought-after perp exchanges on the market and has helped it attract investment from several backers such as Binance Labs. On Optimism, Perpetual Protocol boasts a TVL of over $31.2 million, making it one of the largest exchanges in the ecosystem.
Synapse
Synapse (SYN) is a cross-chain bridge that connects Optimism to other level one blockchains like Ethereum. Synapse is backed by cross-chain multi-part compute validators and powered by the Synapse SYN token, which is used as an incentive for liquidity providers and a subsidy for gas fees.
Synapse also expands through other tier one and level two chains and also offers token swaps and liquidity pools. The total value locked in the Optimism ecosystem is close to $5 million.
Hop Exchange
Hop Exchange (HOP) connects second-level networks such as Optimism and Arbitrum with Ethereum. As on Synapse, users can transfer tokens almost instantly using Hop Exchange, without having to wait multiple days. This is made possible by Hop’s interconnectivity with other networks, which allows you to move resources to provide the desired asset to the top level.
Hop Exchange also uses automated market makers to trade between each token and the corresponding canonical token on each rollup to rebalance liquidity across the network. Hop exchange has over $5.7 million in TVL on Optimism and recently conducted an airdrop of its HOP token.
The Best Loan Protocols on Optimism
The best lending protocols on Optimism are:
- Aave: a popular money market.
- Stargate Finance: a fully composable liquidity protocol.
- dForce: A DeFi infrastructure protocol.
- Velodrome: a liquidity incentive protocol.
- QiDao: a zero-interest loan protocol.
Aave •
Aave (AAVE) is a DeFi money market protocol and lending platform that allows users to borrow and lend different crypto assets. Users can deposit their crypto assets in different liquidity pools and earn interest on them or borrow against their existing crypto holdings as collateral.
Aave is very popular in several blockchain ecosystems and boasts over $8 million in total value locked on Optimism.
Stargate Finance
Stargate Finance (STG) is a fully composable liquidity protocol, which allows users to transfer assets through blockchain and access the protocol’s unified liquidity pools with an immediate purpose guaranteed.
Stargate’s key products are cross-chain transfers, providing liquidity to its Omnichain protocol, yield farming for STG rewards, and staking to receive veSTG, the protocol’s governance token. Although Stargate Finance isn’t as popular on Optimism as it is on Arbitrum, it still has over $7 million in TVL to show for itself.
dForce
dForce (DF) is committed to providing DeFi infrastructure in the web3 through lending, trading and staking services. As a community-driven DAO with dForce USD (USX) as the stablecoin at the heart of its protocol matrix, dForce implements a pool- and vault-based model with a hybrid interest rate policy to scale its algorithmic stablecoin. In addition, dForce has protocol-to-protocol integrations and a cross-chain bridge to facilitate its adoption.
As part of its all-in-one DeFi solution, dForce also provides lending, staking, trading, and bridge services.
Velodrome
Velodrome Finance (VELO) is a liquidity incentive protocol for Optimism. Velodrome expands on the foundation built by Solidly Exchange, a decentralized exchange of protocols. It aims to provide protocols with their own liquidity and ensure better interoperability between DeFi protocols in the Optimism ecosystem.
QiDao
QiDao (QI) is a zero-interest crypto loan protocol with zero-interest stablecoin loans. Users can create a vault, where they deposit their collateral and borrow stablecoins against it.
As a self-sufficient, community-governed, decentralized stablecoin protocol, loans are secured having more total value locked than the debt issued.
The best DApps on Optimism
Some of the best DApps on Optimism include:
- Synthetix: a protocol of synthetic assets.
- Lyra : a decentralized options protocol.
- Beethoven X: a decentralized investment platform.
- Aelin: a decentralized fundraising protocol.
Synthetix
Synthetix (SYN) is a derivative liquidity protocol that enables the creation of synthetic assets on the blockchain. Synthetic offers exposure to real-world assets such as stocks with on-chain instruments. Its main products include decentralized perpetual futures and synthetic versions of technology stocks and commodities such as gold. The price of the underlying assets is tracked through oracles.
SNX tokens act as collateral for minted synthetic assets and are burned when a position is liquidated. Synthetix is the largest protocol on Optimism with a TVL of over $100 million.
Lyra
Lyra (LYRA) is a decentralized options protocol with a pricing model adjusted for tilt. Due to its dynamic volatility input to price options, Lyra can provide deeper liquidity than competitor protocols, producing more trading volume for traders and higher fees for the protocol. Lyra is the most popular options protocol on Optimism with a total locked value of over $18 million.
Beethoven X
Beethoven X (BEETS) is a one-stop decentralized investment platform that offers weighted investment pools. Users can collect commissions from traders who rebalance their portfolios by following arbitrage opportunities. In addition, new tokens can initiate their liquidity through liquidity bootstrapping pools (LBPs), which have similar dynamics to crowdfunding.
Aelin
Aelin (AELIN) is a decentralized fundraising protocol that allows you to raise capital and do OTC business without the involvement of venture capitalists. Sponsors can create pools where investors can deposit funds for potential trades.
Each agreement has an optional vesting program, and once a suitable sponsor and investor have agreed on the terms, the protocol acts as an unauthorized intermediary providing the infrastructure for fundraising.
