To overcome the scalability problems encountered by the Ethereum blockchain, many Layer 2 «Rollup» types have been created. This is the case of the Optimism blockchain.
As a reminder, there are different layers on a blockchain. There are 3 main layers, layers 0, layers 1 and layers 2. Layers 0 are basic layers to build interoperable blockchains. This is the case for example of Cosmos, Polkadot and Algorand. Layers 1 are the most common levels. These are blockchains that allow to manage transactions, decentralized applications (dApps), smarts contracts,... For example, Bitcoin, Ethereum and Solana. Layers 2 are scaling solutions that are grafted to a layer 1 blockchain in order to improve its performance. The Optimism blockchain is a layer 2 grafted to layer 1 of Ethereum. The goal? Improve the speed and cost performance of the Ethereum blockchain with bridge and Optimism.
Let me remind you of the dilemmas faced by blockchains. They must continually maintain a balance based on 3 pillars. We are talking about the trilemma of blockchains.
No blockchain has been able to perform well on all these factors. For example, Bitcoin’s decentralization is excellent, its security too but its scalability is imperfect. No layer 1 has managed to make a fault-free today and for good reason, these criteria are often opposed. When volumes increase, maintaining high security, maximum decentralization and speed of execution is complex. This is where layers 2 come in. They allow a load to be transferred from one network to another before transferring that load to the initial blockchain. There are different consensus to make this work.
There are for example sidechains like Polygon. Sidechains are copies of Ethereum that have been modified to be able to process more transactions with reduced fees. They have in common with Ethereum only the execution environment. They are therefore responsible for their own security, but can accommodate all applications coming from Ethereum, so they are “Ethereum compatible”.
Channels are smart contracts deployed on Ethereum or other blockchains allowing the creation of communication channels between two addresses. Once created, they allow related entities to make an unlimited number of payments with virtually no fees. This technology only processes peer-to-peer payments, but benefits from the security of the parent blockchain. The most famous is Bitcoin’s Lightning Network uses this technology.
Rollups are very well-known. It is a single transaction wrap. This resembles several files of which we would keep only the information necessary for their integrity, and that we compressed in a zip file, lighter and occupying only one location. They have the advantage of benefiting from the security of the mother blockchain and being able to host all applications of Ethereum. There are two types of rollups: optimistic rollups and ZK rollups. Optimism is the first optimistic rollups solution to be developed. It has laid the foundation for this promising technology.
Very important note, OP is a governance token and not a Token to pay gas fees. Indeed, OP is connected to EVM (Ethereum Virtual Machine), so the fees are paid directly in ETH. The principle of Rollup is to condense in a single contract a transaction package to reduce the cost associated with each transaction. The second objective is also to avoid saturation on the network. This is a file compression. The volume is increased, the fees remain the same and security remains fully guaranteed.
The rollup acts as a smart contract. To receive a transaction via Optimism you will always have to make sure that your cryptocurrency wallet is compatible with smarts contracts. Rollup packages are regularly published on the parent blockchain, in this case Ethereum. This operation is carried out by the “sequencers”. Only the information crucial to account maintenance (sender, receiver and amount) is kept in order to minimize the size of the lot. A transaction is then sent by these sequencers on the parent blockchain. This contains not only the batch of compressed transactions, but also what to update the state root. To publish the new backup, it is necessary to have the previous state root (corresponding to the state of the rollup solution before batch transactions are executed) to avoid overwriting the wrong backup. This way, the network can avoid double-spending fraud on its network. The network also has a “Proof of Fraud” mechanism. Optimistic rollups assume that all transactions are valid, which could be compared to a presumption of innocence in court. They are optimistic. Hence their name. Unlike blockchains like Ethereum or Bitcoin, transactions are not systematically verified, they are verifiable. Optimistic rollups therefore do not verify all transactions, but allow anyone to do it. They are based on the fact that there will always be an honest player given the volume traded on these blockchains. There is a period of “challenge” during which anyone can object to the validity of a transaction by submitting “fraud proofs”. This period lasts 7 days, at the end of which the transaction becomes immutable. Although anyone can object to a transaction, a bond must be blocked throughout the dispute, so when a fraud proof is sent, the problem transaction is found and isolated.
Optimism developers are the first to have designed a scalability solution on Ethereum using optimistic rollups. As a result, many applications very close to the Ethereum community have decided to deploy their decentralized applications on Optimism. You can find big names of Ethereum like Curve Finance, Aave or Uniswap.
The network offers very interesting technical features for the challenge. During the 2021 Bullrun, the sector was in trouble due to fees and speed issues of the Ethereum mainline. Yet the deployment of smart contracts on EVM is essential for many of these actors. The Optimism network offers them a solution to improve their business model. The only flaw in this system is the 7-day delay before you can make a new transaction with the initial transferred amount.
