Ethereum Optimism Explained In Detail
Pressed down on the weight of its own success, the second-largest cryptocurrency, the Ethereum blockchain, is still haunted by scalability issues. This bottleneck has given people a reason to look elsewhere and has led to ETH bull runs being cut short. Let’s dive deeper to find out how Optimism has become a scaling solution for the Ethereum network.
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What is Ethereum Optimism
Optimism is a firm that is developing a Layer-2 scaling solution for the Ethereum blockchain. It runs all computation and transactions off-chain while only publishing transaction data in the main Ethereum blockchain. Optimism speeds up Ethereum transactions and cuts their gas fees due to a validation technique called optimistic rollups.
A Cost-Effective Scaling Solution For Ethereum
Ethereum network, a legitimate competitor to Bitcoin, has become the first platform of choice for millions of active users with its skyrocketing market value. And, naturally, there can be certain limitations to this platform that prevent it from growing and make it difficult to scale. And Ethereum needed scaling solutions to make its transactions faster and cheaper.
So, Optimism has emerged to be one such highly anticipated scaling solution alongside with Ethereum 2.0. It functions as a compressor for new blocks in Ethereum. It sets Ethereum transactions on another blockchain using optimistic rollups. The former is an advanced data compression technique that speeds up transactions and cuts costs.
As Optimism allows larger batches of transactions to be rolled up and validated together, it causes a considerable reduction in gas costs. According to some research, Optimism decreases gas fees by an eye-watering 129 times.
What Makes Optimistic Ethereum Stand Out From Other L2 Solutions?
There are two main factors that make Optimistic Ethereum stand out from other Layer-2 solutions. First, one of the optimism-supported decentralized applications Synthetix, for instance, has a suite of smart contracts that are the most complicated in Defi. So any other solution that needs rewriting contracts in a new language can’t be workable, because users are eager to keep just a single codebase at a time.
Also, Optimism is the most reliable Layer 2 protocol that is able to provide users with the same level of security as the main blockchain also known as the “Base Layer”. When Optimism rolles up transactions, it only moves the information to Layer 1. This means that Optimism uses the same safety features as standard Ethereum apps.
How To Use Optimism
To use Optimism, first visit the website and connect to the Optimism Gateway through one of the popular digital wallets that Optimism supports, like MetaMask, WalletConnect and Coinbase Wallet. And now you can deposit your tokens.
Once your wallet is connected and you have deposited your tokens, you can use your funds within Optimism-supported Dapps, like Lyra Finance, Uniswap, Synthetix, etc. You just have to choose Optimism from the menu of the networks.
The Main Downsides To Optimism
Optimism, like any other Layer-2 solution, has some downsides:
- Long and costly withdrawals: Users have 1 week wait period (also known as the Challenge period) prior to moving assets out of Optimism into the Ethereum mainnet. This period is aimed at the safety of assets stored at the Optimistic Ethereum network.
- Potential incentive misalignment between network participants and fraud-proof is another major technical downside. However, the Optimism firm chose a phased approach to increase the complexity of withdrawals and deposits.
- Composability: Optimism doesn’t provide cross-chain compossibility. It doesn’t allow Dapps to interact with other Daaps deployed on Ethereum.
Ethereum Optimism is a new term introduced alongside with Proof of Humanity, StarkNet and Soulbound Tokens. Optimism plays a significant role in the solution of Ethereum blockchain’s scalability problems. Developers who were previously looking for cheaper networks due to Optimism can stay and enjoy the ecosystem. We are more than sure Optimism Ethereum is the best solution as it reduces gas fees, increases security, speeds up validation, and powers efficiency. And, using all the information that our article provides, you can benefit from its accessibility.