What is Optimism Crypto?

28 Nov 2023 by Harry Newman 3 min read

What is Optimism crypto? Optimism is a layer 2 solution that aims to scale Ethereum with the help of optimistic rollups. Transactions are recorded on Optimism and sent to the Ethereum network to be confirmed.

This helps to reduce transaction costs and increase the speed at which transactions are completed.

What is Optimism Crypto

Optimism is a layer 2 scaling solution for Ethereum that uses optimistic rollups to facilitate faster and cheaper transactions on the Ethereum blockchain.

Optimism uses rollups to process transactions off of the main Ethereum blockchain.

Uses Ethereum’s code and infrastructure when possible, Optimism is designed to have the minimum number of moving parts where possible, creating a seamless user experience.

The design philosophy of Optimism is centred on long-term sustainability, prioritising it over any quick fixes for scalability.

Only essential data from transactions are posted to the Ethereum blockchain, significantly reducing the data and computational load put on the blockchain.

Optimism has no mempool, transactions are immediately accepted or rejected, which guarantees a smooth user experience whilst ensuring security through Ethereum’s consensus mechanism.

Transactions are submitted to Ethereum without direct proof of validity. They can be challenged for a certain period, currently 7 days, until a transaction is considered final. This is why withdrawals from Optimism to Ethereum take seven days to complete.

This is also where the term ‘Optimistic’ stems from, the protocol’s trust in the validity of the transactions However, if an individual suspects a transaction to be fraudulent, they can challenge it, if this is validated the transaction is reversed and the issuing party faces penalties.

Optimism is strategically designed to manage Ethereum’s congestion, ensuring a seamless flow of traffic, Optimism can substantially amplify the transactions per second making the Ethereum network more scalable and efficient.

OP Token

The native token of Optimism is the OP token.

The initial token supply of OP was 4,294,967,296, at an inflation rate of 2% a year.

In the first year, 30% of the initial token supply is made available to the Foundation for distribution. After this first year, holders of the token vote to determine the foundations annual OP distribution budget, the expected annual allocations are as follows:

Year 2: 15% of the initial token supply

Year 3: 10% of the initial token supply

Year 4: 4% of the initial token supply.

The token distribution for OP is as follows:

Ecosystem Fund: 25%

Airdrop: 19%

Core Contributors: 19%

Investors: 17%

Retroactive Public Goods Funding: 20%

Final Thoughts

Optimism offers a solution to Ethereum’s scalability challenges using its innovative optimistic rollups.

Solutions like Optimism are essential when it comes to achieving mass adoption.

Optimism is not the only Layer 2 of its kind, Arbitrum is a similar Layer 2, each one having different strengths and weaknesses.

FAQ

What is Optimism crypto?

Optimism is a layer 2 scaling solution for Ethereum that uses optimistic rollups to facilitate faster and cheaper transactions on the Ethereum blockchain.