With Ethereum rising up the market as a legitimate competitor to Bitcoin, it is only natural that the blockchain network has become the first platform of choice for many users. However, there are limitations to this network that make it difficult to scale in addition to affecting its profitability for the average user.
Challenges to Scalability and Costs:
Currently, transactions on the Ethereum network run on the proof of stake (PoS) validation model. This means that individual transactions are validated by users who stake their crypto tokens in exchange for validation rights and the associated rewards. However, these transactions must be paid for, and the gas fees (or transaction fees) are quite high.
For instance, a recent sale of the popular Bored Apes NFT collection saw users pay nearly five times the price of the NFT being sold in gas fees!
However, as with all technological innovations, there is a clear solution already in the works.
Optimism and Rollups:
Utilising the innate capacity of Ethereum for Smart Contracts and Layer-2 applications, Optimism is a scaling solution for the Ethereum network. It acts as a compressor for new blocks on the network.
This function is achieved by a concept called rollups. This is basically a validation technique for transactions where validation occurs off-chain, allowing for cost-effectiveness in terms of gas fees. A window to challenge transactions that may not be valid is usually built-in to the program, providing security to the entire batch and the network, by extension.
Optimism extends this concept further by effectively extending the use cases of rollups to Ethereum’s Layer-2. With coding that is a near-replica of the L1 network, Optimism Ethereum is generated by validating large batches of transactions through “optimistic rollups”. The program optimistically assumes that all transactions are valid for a particular block.
A sequencer then compresses all of the validated data into a new block that is added to the L1 blockchain. Since the new block is far smaller in size but contains a large number of transactions, Optimism acts as an effective solution to both scalability and affordability for the Ethereum network.
It is important to remember that the sequencing program is currently controlled by the development team from Optimism, which may raise eyebrows with regards to decentralisation of optimistic ethereum as a viable way of transacting.
How to Use Optimism:
- For the average user, connecting their preferred platform of choice to the Optimism Layer-2 code requires the use of the Optimism Gateway.
- From there, a crypto wallet must be connected, and a suitable provider like Metamask or Wallet Connect must be chosen.
- The next step is to deposit the tokens you would like to stake for your transactions.
- Once complete, the Smart Contract will begin to move your tokens over, bridging them on to the Optimism Layer-2 subnetwork where your transactions are validated. The entire process takes about 5-10 minutes!
- Once your tokens are bridged over, you can transact as usual on the Ethereum network.
The advantage of using Optimism is that it is designed to be a near-replica of the L1 Ethereum network. It is also important to remember that while bridging tokens from Ethereum to Optimism is immediate, reversing that transaction requires 7 days of waiting for the entire batch to be validated.
Why Use Optimism Ethereum?
The main draw behind optimistic ethereum is that of gas fees. Considering that larger batches of transactions are rolled up and validated together, there is a subsequent reduction in transaction fees that users may otherwise have to pay in full.
Optimistic ethereum also allows for scalability of the network. This benefit is two-fold. It not only allows the network to add more blocks owing to the compressed sizes of new blocks being added, but also allows for faster validation of transactions. This is a perfect solution to the limitations currently plaguing the Ethereum network.
There is also security and safety in using optimism ethereum. A 7-day window to raise any concerns about invalid transactions means that users can use this solution with complete peace of mind, knowing that their tokens are secured and can be recovered in the event of an invalid transaction.
Optimism ethereum also allows for power efficiency. With smaller blocks and a larger number of transactions being validated, optimism reduces the hardware requirements for running Ethereum blockchains, thus being beneficial to solving environmental concerns as well!
However, the biggest benefit to using Optimism ethereum would be that of accessibility. With reduced transaction fees, increased security, faster validation and power efficiency, optimism ethereum is a solution that has made Ethereum all the more accessible to the average blockchain user!
An Optimistic Future:
The benefits that Optimism brings to the Ethereum blockchain are set to further improve with a slew of updates to the program.
A decentralised sequencer program is already in the works, which would transfer complete autonomy to users of the Ethereum blockchain and allow the solution to align with the underlying philosophies of blockchain networks.
Shared rollups and next-gen fault proofing are also on the cards. This translates to faster validation and even more security, making Optimism Ethereum a very safe and effective way to transact on digital blockchain networks.
Furthermore, the Optimism Collective DAO was launched in April 2022, with OP tokens being air-dropped to a select few users as another step towards true decentralisation of the solution.
It is clear that optimistic rollups are a great application of Layer-2 features that allows the Ethereum network to truly be of value to both individuals and organisations alike. It is a testimony to the creativity and innovation of modern technology, and of the blockchain industry in particular.
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