To tackle scalability issues and high transaction costs on the Ethereum network, Optimism has emerged as a compelling Layer 2 solution. Functioning as an off-chain network layered on top of Ethereum, Optimism extends the capabilities of the blockchain. Fueled by its native token OP, the platform aims to alleviate Ethereum's challenges and enhance its performance.
What is Optimism
Optimism (OP), also known as Optimistic Ethereum (OE), is a Layer 2 solution built to address the scalability issues of the Ethereum network. At its core, Optimism utilizes a technology known as optimistic rollups. This technology bundles, or rolls up, multiple transactions into a single transaction, significantly improving the speed and cost of transactions. As Optimism is built on top of Ethereum’s architecture, developers and users can make use of the speedy and low-cost transactions whilst having the security of the Ethereum blockchain.
The Optimism team
The Optimism team comprises a group of dedicated blockchain experts, including Jaynti Kanani, Jinglan Wang, Ilya Polosukhin, Ben Jones, Paul Hauner, and Matteo Rizzi.
How does Optimism work
When a user initiates a transaction, it's executed on the Optimism network rather than directly on the Ethereum mainnet. Throughout this process, Optimism maintains communication with Ethereum's Layer 1 and leaves the original network unchanged. This is achieved through optimistic rollups, which consolidate multiple transactions into a single batch submitted to Ethereum.
By adopting this approach, the computational burden on the Ethereum mainnet is lessened, resulting in faster transaction speeds and lower gas fees. Ultimately, Optimism plays a pivotal role in alleviating strain on the Ethereum network, consequently reducing congestion and associated high fees.
Optimism’s native token: OP
OP is the token of the Optimism ecosystem, crucial in securing and powering the Optimism network. The token also serves as incentivizes and rewards for validators who correctly process and confirm transactions. Validators are able to stake OP tokens as collateral, which can be confiscated if they act maliciously.
OP tokenomics
There is a maximum supply of 4,294,967,296 OP tokens. The supply of OP tokens is carefully controlled and released into the market via strategic allocation methods such as staking rewards, developer incentives, and ecosystem grants. This approach ensures a balanced and sustainable distribution of tokens, maintaining the long-term stability and health of the Optimism ecosystem.
OP use cases
The primary purpose of the OP token is governance. This encompasses various essential functions, including allowing token holders to cast votes pertaining to proposed updates to the protocol as well as distribution of incentives for projects through the Governance Fund. Additionally, it facilitates the funding of projects hosted on the Optimism platform. OP holders are also allowed to engage in project management alongside other OP Citizens.
Distribution of OP
OP’s distribution is as follows:
- 25 percent: Ecosystem fund
- 20 percent: Retroactive Public Goods Spending (RetroPGF), an experimental spending mechanism designed to align with OP's objective of equating impact with profit.
- 19 percent: Airdropped to the community
- 19 percent: Awarded to core contributors
- 17 percent: Given to investors
Optimism: The road ahead
On the project's horizon is the launch of a public mainnet, marking a significant milestone that will elevate Optimism's capabilities. Looking ahead, Optimism aims to become the leading Layer 2 scaling solution for Ethereum. The project envisions a future where Ethereum's transaction processing capabilities skyrocket to millions per second while upholding its foundational principles of security and decentralization.
