What is Optimism? A Simple Explanation

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Learn all about the EVM Layer-2 Optimism

Optimism has already saved its users over $1 billion in gas fees and handled millions of transactions. Its usage has steadily increased since removing its whitelist and becoming fully open for deployment. Optimism is the only EVM equivalent Layer 2, meaning developer tooling ‘just works, and all it takes is one click to deploy dapps. 

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Optimism data points to Layer 2 season

If you’re looking for the next Spotify, Google, or Amazon on the blockchain, DappRadar can help with our weekly Dapp Trends articles. With so much happening across various categories and verticals, it’s crucial to know which blockchains, dapps, and NFT projects generate value and build audiences for the right reasons. 

Moreover, Ethereum Layer 2 solutions have seen a massive leap in traction and utility in 2021 and 2022. TVL across L2 platforms went up 130% in ETH terms since the beginning of this year. 

There are arguably three leading platforms in this Layer 2 race, Loopring, Arbitrum, and Optimism. Let’s shine a light on Optimism, its ecosystem of dapps, and significant milestones. 

Optimism is an Optimistic Roll-up, a fancy way of describing a blockchain that piggybacks off another parent blockchain’s security. In this way, Optimism possesses all of the benefits of the leading blockchain Ethereum, such as decentralization and security, without high gas fees and slow execution. 

Check out the most popular dapps on Optimism in our rankings

What is Optimism Network? 

Optimism is a Layer-2 scaling solution for Ethereum called an Optimistic Roll-up, or ORU. An ORU solves Ethereum’s scaling dilemma by moving bulky transaction data off the main blockchain while retaining the security guarantees of Ethereum’s base layer. 

Moreover, Optimism is the only EVM equivalent L2, meaning developer tooling works straight away. It takes one click to deploy dapps to the network, helping projects find new audiences on multiple chains. 

One particular category of dapp that’s found success over Optimism has been DeFi and token exchanges. Primarily the experience on Optimism mirrors that on Ethereum, but the fees are far lower. Currently, 41 of the 60 dapps on Optimism tracked by DappRadar sit in the DeFi and Exchange categories, clearly showing the network’s intentions as a viable alternative to Ethereum for DeFi. 

Optimism for dapp builders 

Builders already familiar with developing for Ethereum will find deploying to Optimism incredibly simple due to true EVM equivalence. Tooling like Hardhat works out of the box. Optimism has allocated significant resources toward creating a best-in-class developer experience, and it shows. Deployment to Optimism is easily accomplished with one click. 

Optimism is fully EVM compatible, and DappRadar invites dapp developers to submit their dapps to DappRadar, creating more visibility on The World’s Dapp Store. Developers interested in learning more about Optimism and the possibilities available can start on the Optimism docs website.

OP rewards for Aave users

Optimism’s launch of the liquidity mining program, or OP rewards, for Aave users in early August doubled Optimism’s TVL from $600 million to almost $1.2 billion in September. Alongside this hike, the OP token price appreciated around 5%, trading at about $1.15. However, this growth was stimulated by a rewards package, so the vital metric is retention. 

We see upward solid growth in the number of transactions flowing through Optimism over the last year. It will be interesting to see the campaign’s longevity and whether users came to Optimism for the rewards but stayed for the experience.

Optimism Transactions - October 2021 to October 2022

Expectation after the Ethereum Merge 

The Merge came online on September 15, 2022. As a layer-2 Ethereum blockchain, Optimism seeks to scale the ecosystem via Rollups, or off-chain computations, to speed up transactions. Transactions are recorded on Optimism and finalized on Ethereum.

Optimism is home to more than 60 protocols, including derivatives exchange Synthetix, decentralized exchange Uniswap, and lending and liquidity platform Aave. Due to the high volume of user trade orders on exchanges, which includes cancellations, the Ethereum blockchain’s current capacity of 30 transactions per second is ill-equipped to handle such demand. 

Two critical objectives for blockchain technology are to scale to mass adoption and reason to suggest that layer-2 season is on its way.

Experts predict that the network could potentially scale to 100,000 transactions per second after The Merge upgrade, with Layer-2 solutions further enhancing such capacity. It will pave the way for solutions like Optimism to handle hundreds of thousands of transactions per second, all for a fraction of the cost. 

Optimism dapps grow in stature 

Users liked what they found as a large chunk of the already well-used Optimism dapps has experienced a month-over-month lift in the number of active wallets interacting with them daily.

The main reason may well be that established dapps such as Uniswap, 1inch and Synthetix operate on Optimism, so users find a familiar experience once they bridge some assets into the ecosystem. 

While rewarding those who participated, OP rewards also brought many more eyeballs to the Optimism dapp ecosystem. It led people to potentially complete transactions for the first time on Optimism and see the benefits of super-low gas fees and fast transactions. 

Top Dapps on Optimism by UAW - October 2022
List of dapps with the most unique active wallets registered in the 30 days | Source: DappRadar

Looking through a thirty-day lens at the number of users connecting to Optimism dapps, we see that DeFi and Exchanges reign supreme.

Multichain dapp PoolTogether has seen more than a 251% increase in users. Stargate Finance has seen more than a 131% lift compared to the previous month. The outlier in the gang is the Quixotic NFT Marketplace, with around 47 thousand UAW in the last month. 

Optimism in summary 

Layer 2 networks have proven their worth in no uncertain terms. They retain Ethereum’s blockchain security while offering users a convenient way to avoid ETH gas fees at fast speeds.

However, Ethereum underwent a significant overhaul to become a fully proof-of-stake network in the last few months. 

Nonetheless, that doesn’t mean that Ethereum 2.0 renders Layer 2 networks redundant. As the most popular smart contract blockchain, there is no amount of upgrades it can do to negate the traffic overload.

This puts Layer 2 protocols in a tight relationship with Ethereum, while the end-user only needs to have a commonplace browser wallet like MetaMask to take full advantage. 

Explore Optimism dapps 

Those interested in looking into Optimism can dive into our Optimism dapp rankings. Here you can find the most popular dapps in the Optimism ecosystem. We advise you to take a look at these three dapps:

  • Aave – Aave is a decentralized non-custodial liquidity protocol where users participate as suppliers, borrowers, or liquidators.
  • Slingshot – Slingshot is a trading platform offering aggregated DEX liquidity with CEX-like performance, featuring the best swap rates, real-time charts, and trade data for every liquid token.
  • Quixotic – Quixotic is the largest NFT marketplace on Optimism, with an average transaction fee of 0.00025 ETH, or around $0.50. 

Connect Optimism to MetaMask 

Keep learning with DappRadar

Accessing quality content is essential to stay ahead of the game when looking for opportunities in the cryptoverse. At DappRadar, we will continue following Optimism’s leading role in layer-2 innovation to keep you posted.

Make sure to read our blog regularly, follow us on Twitter, and subscribe to our newsletter to be the first to get our dapp reviews, insights, and reports.

The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in various cryptocurrencies, including BTC, ETH, and RADAR.

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