NDAX New Coin Listings: What is Optimism (OP)
What is Optimism (OP)?
Optimism (OP) is one of Ethereum’s largest scaling solutions: It is a blockchain that was built as a layer-two for Ethereum. The protocol benefits from the security of the Ethereum mainnet and helps scale the Ethereum ecosystem by using optimistic rollups. (This means that transactions are bundled, ‘trustlessly’ recorded on Optimism, and ultimately ‘secured’ on Ethereum.
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The History of Optimism
Optimism was founded in 2019. It was built by Ethereum developers to process their ecosystem transactions in batches using rollups, with a view to increasing speed and throughput.
The project is led by the Optimism Foundation, a nonprofit organization dedicated to growing the Optimism ecosystem. (Optimism aims to become a fully decentralized public good that is not profit-oriented, and is completely funded by donations and grants. It has pledged to produce infrastructure that promotes the growth and sustainability of public goods.
Optimism has raised a total funding of $175M from institutional and venture capital investors over 2 rounds. Notably, a16z made their first investment in Optimism on Feb 24, 2021 in its Series A round, and Paradigm invested in Optimism on Mar 16, 2022 in its Series B round.
Optimism first launched its OP token to the public via an Airdrop on May 31, 2023, when 231,000 addresses were eligible to claim 214 million OP tokens for free. (Visit Optimism Cummunity for more information on token distribution.) Roughly 25% of max OP token supply are currently in circulation. (Early investors hold 17% of total supply.)
Optimism Project Details
Optimism is one of the biggest scaling solutions for Ethereum with over CA $1 in total value locked (TVL, at time of writing Jan, 2024). It is home to 97 protocols, the biggest being Synthetix (SNX), a derivatives exchange, Uniswap (UNI), a DEX, and Velodrome (VELO), an AMM (Automated Market Maker). Users can begin their journey on Optimism by adding it to their Metamask and bridging tokens like ETH to the L2. On May 31, 2022, Optimism conducted a highly anticipated airdrop of its OP token.
The OP Mainnet (previously known as Optimism), serves as the primary blockchain network within the Optimism ecosystem. Developed by OP Labs and powered by the OP Stack software, it functions as a Layer 2 network built on Ethereum's architecture. Essentially, it acts as a streamlined extension of the main Ethereum layer, offering swift transactions at low fees while upholding the security of Ethereum.
Introduces the concept of a "Superchain," Optimism aims to connect multiple Layer 2 networks by sharing code and facilitating interaction among them. Coinbase's Layer 2 network Base, for example, uses the OP Stack and aligns with this Superchain vision.
Worldcoin's app has migrated to the OP Mainnet from Polygon, embracing the benefits offered by the OP Mainnet.
At the heart of the OP Mainnet is the OP token, essential for covering transaction fees. Distributed through a May 2022 airdrop to wallets engaging with the OP Mainnet or contributing to Gitcoin on the Ethereum blockchain, the network has conducted a total of three airdrops to date.
About Optimism
How It Works:
Optimism relies on "optimistic rollups," a technique streamlining off-chain transaction processing to reduce fees and enhance network efficiency:
1. Multiple transactions from Ethereum's Layer 1 are grouped into a single transaction on Optimism's Layer 2, with fees shared among users.
2. Adopting an optimistic stance, transactions are initially assumed valid, delaying computations until necessary, and fraud-proofing is employed only if/when suspicions arise.
3. This differs from zero-knowledge rollups (zk rollups), which prove validity before reaching Ethereum's blockchain, often incurring higher costs. Therefore--
4. Optimistic rollups offer a more economical solution for transactions.
What OP Is Used For:
OPT is the native utility token of the Optimism network. It is used for governance, paying transaction fees, and participating in the network’s consensus mechanism. The OP token grants holders the right to participate in The Optimism Collective, a dual-tier governance system consisting of Token House and Citizens’ House. While Citizens’ House is scheduled to launch later in 2022, Token House is already operational and oversees technical decisions concerning Optimism, including software upgrades. On the other hand, Citizens’ House is responsible for making decisions related to funding public goods. In its initial phases, Optimism secured funding through Gitcoin, a prominent platform dedicated to funding public goods.
Key Takeaways:
- Optimism operates as an Ethereum Layer 2 scaling solution using Optimistic Rollups.
- Optimistic Rollups bundle a large number of transactions into a single data point off of the Ethereum blockchain, significantly reducing congestion and fees.
- Optimistic Rollups allow the network to process transactions more quickly and at a lower cost than the Ethereum mainnet (Layer 1), while—
- Still maintaining a relatively high degree of security and decentralization.
- OPT is the native utility token of the Optimism network. It is used for governance, paying transaction fees, and participating in the network’s consensus mechanism.
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Disclaimer: This article is not intended to provide investment, legal, accounting, tax or any other advice and should not be relied on in that or any other regard. The information contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of cryptocurrencies or otherwise.