Optimism (OP) is a cryptocurrency with a market capitalization of $577.4M and a daily trading volume of $235.9M[1]. It ranks 82nd in the global cryptocurrency ranking[1]. Optimism uses roll-up technology, which makes it cheaper to use than Ethereum[2]. The network was developed by OP Labs and launched on May 31, 2022[2]. The token for Optimism is OP, with a total supply of only 4.29 billion tokens[2].
Optimism has two governance systems: Token House and Citizens' House. Token House manages technical decisions related to Optimism, such as software upgrades. Citizens' House manages public funding decisions[2]. The use of Optimism is similar to that of the Ethereum mainnet - users' Optimism addresses are identical to their Ethereum mainnet addresses, which start with 0x. The blockchain explorer for Optimism is even identical to Etherscan, the Ethereum blockchain explorer[2].
Coinbase recently launched Base, a layer-2 network that works with layer-2 Optimism[3]. After the official announcement, the price of OP increased by 15%[3]. Coinbase's official Twitter account announced that Base would first build layer-2 to scale Ethereum and work with layer-2 project Optimism[3]. Both layer-2 projects are working together to build a Super chain that allows interoperability between layer-2 and cross-chain networks[3].
Despite efforts to increase investor confidence through an airdrop of 11.7 million OP tokens to over 300,000 wallets on February 9th, the price of OP continues to decline due to decreased user activity on the platform
**A NETWORK
Layer-2 networks are blockchain technologies that build on top of layer-1 blockchains to address network scalability issues. Ethereum has a problem with scalability because the more users it has, the more expensive and slower the network becomes to use. Optimism is a layer-2 network developed by OP Labs using roll up technology or Optimistic roll up so it is cheaper than Ethereum. Coinbase has just released Base, an Ethereum layer-2 network that offers a secure, low-cost, developer-friendly way for anyone, anywhere, to build decentralized applications or dApps. Base will not be limited to the Ethereum network, but will also provide easy and secure access to layer-2 networks; such as Optimism as well as other blockchain ecosystems such as Solana.
Coinbase and Optimism are working together to build a Super chain that allows interoperability between layer-2 and cross chains. Ethereum became the first blockchain where layer-2 Base scaled its network. In the future, Base also plans to build layer-2 for other blockchains such as Solana. As of February 24, 2023, there are two layer-2s that dominate the Ethereum network, namely Arbitrum with a market share of 53.04% and Optimism with a market share of 30.93%. The presence of layer-2 Base will most likely take some portion of the market share because Coinbase as the founder will certainly bring many users, especially Coinbase users themselves.
**what is layer-2 optimism
Layer-2 Optimism is a scaling solution developed by Ethereum to improve its network performance. Layer-2 implements the rollup technique, which is the combining of transactions into a single batch and processing them simultaneously. There are two types of rollup techniques used by Layer 2 blockchains: optimistic and zero-knowledge. Optimistic rollup is the technology used by Optimism. The transaction data will be processed until it is actually declared valid, so Optimism is much cheaper to use than Ethereum. Zero-knowledge rollups use validity proofs where transactions are calculated off-chain, then compressed data is provided to the Ethereum Mainnet as proof of validity.
Optimism has a native token called OP, which was first launched on May 31, 2022 with a total supply of only 4.29 billion. OP token holders have the right to participate in The Optimism Collective, a two-tier governance system consisting of a Token House and a Citizens' House. According to DefiLlama, Optimism currently has a total value locked (TVL) of $1.11 billion, up 73% in a month.
The Merge is an Ethereum 2.0 update that is believed to address most of its network scaling issues. However, L2s such as Polygon, Arbitrum One, Boba Network and Loopering will remain alternative scaling solutions after The Merge launches.
