What is Optimism (OP)?

Optimism is a Layer-2 scaling solution for Ethereum designed to enhance the Ethereum’s scalability and efficiency. It aims to help reduce the data load on Ethereum and lower transaction costs, making it ideal for decentralised applications (dApps) and decentralised finance (DeFi) platforms.

How does Optimism work?

Optimism enhances Ethereum’s performance using a technology called Optimistic Rollups. In this system, transactions are first processed outside of the main Ethereum network (this is referred to as “off-chain”). These transactions are grouped together into batches, and a summary of the batch is then posted back to the main Ethereum network (known as “on-chain”), where all transactions and smart contracts are recorded.  

This approach reduces the amount of data and computation that needs to be handled directly by Ethereum, which leads to lower fees and faster transactions. The system assumes that all transactions are valid unless there’s a reason to believe otherwise, which means that transactions are only checked in detail if there’s a dispute. This method ensures efficiency while still relying on Ethereum’s security.

What is the native cryptocurrency of Optimism?

The native cryptocurrency of Optimism is OP. OP is used to pay for transaction fees and participate in governance within the Optimism ecosystem. It allows holders to vote on important protocol decisions, including upgrades and fund allocations, ensuring that the community has a say in the future development of the network. It’s also used to invest in the future success of the ecosystem.

Who created Optimism?

Optimism was founded by Jinglan Wang and Kevin Huang, who aimed to address Ethereum’s scalability issues by introducing a highly efficient Layer-2 solution. The project is developed by Optimism PBC, a company dedicated to improving Ethereum’s infrastructure through innovative scaling technologies.

Useful tools

Optimism website

Optimism blog

Optimism on X 

*Investing in cryptocurrency may result in the loss of capital. This information should not be construed as a solicitation to trade. All opinions, news, research, analysis, prices or other information is provided as general market commentary for information purposes only and is not investment advice or recommendation. Luno always advises you to obtain your own independent financial advice before investing or trading in cryptocurrency.