What is Optimism?

What is Optimism?

Optimism is a layer 2 chain that operates on top of the Ethereum mainnet, also known as layer 1. This means that transactions occur on the Optimism chain, but the transaction data is posted and validated on the Ethereum mainnet. To put it simply, it's like driving on a less crowded side street while still benefiting from the security of a highway.

What is Layer-2?

Layer-2 (L2) is a secondary layer built on top of a main blockchain (Layer-1 or L1) to improve its speed and scalability. It helps process transactions faster and reduce congestion on the main blockchain. Examples include the Lightning Network for Bitcoin and Optimistic Rollups for Ethereum.

Why do we need Layer-2?

Layer-2 solutions are essential because they tackle the inherent limitations of Layer-1 blockchains. Main blockchains like Ethereum and Bitcoin often struggle with slow transaction processing and high fees when they become congested due to increased user activity. This congestion hinders their ability to scale and support a growing user base effectively.

Layer-2 solutions provide a crucial remedy by offloading a portion of the transaction load onto secondary layers. These secondary layers, while independently operated, remain secured by the primary blockchain's consensus mechanisms. As a result, Layer-2 solutions significantly enhance transaction speeds, reduce costs, and increase the overall capacity of blockchain networks. They make blockchain technology more practical for a wide range of applications, from everyday transactions to decentralized applications (dApps) and smart contracts.

Roll-ups

Rollup is a type of layer two solution to solve the Ethereum scalability problem. Roll ups work by executing transactions outside the main ethereum chain, while submitting data to the base chain.This means that layer-2 networks can handle the processing of transactions much faster than the base blockchain, since there is a smaller validator set with better hardware. In addition, the base blockchain only needs to execute proofs submitted to the rollup smart contract to verify the activity on the layer-2 network, rather than store raw, unexecuted transaction data. There are generally two main kinds of roll-ups:

a. Optimistic Rollups

Optimism is categorized as an "Optimistic Rollup," which is essentially a blockchain that relies on the security of another blockchain, known as the parent chain. In this case, Optimism leverages the consensus mechanism, such as Proof of Work (PoW) or Proof of Stake (PoS), of the Ethereum mainnet. By doing so, Optimism can benefit from the robust security measures already in place on the parent chain, ensuring the safety and integrity of transactions on the Optimism chain.

b. Zero-Knowledge Rollups

Unlike Optimistic rollups, ZK rollups use cryptographic proofs like SNARKs or STARKs to confirm transactions' authenticity, making them more efficient as they update Layer 2 state through these proofs. This approach simplifies block validation and ETH transfers to Layer 1. However, ZK rollups may not fully support EVM and may be resource-intensive for low on-chain activity applications.