Optimism aims to address one of Ethereum's biggest problems. As a layer 2 protocol, Optimism significantly improves scalability. The increasing popularity of the still young project is reflected, among other things, in the price performance of its native token OP. Since the beginning of the year, the price of the token has increased by more than 300%. OP is now tradable on the SMART VALOR platform.
Ethereum has a scaling problem. This became clear at the latest with the rapid spread of DeFi applications. These are largely based on Ethereum, which means that the network has to cope with countless transactions. The increased number of users and transactions not only congests the Ethereum network. The high demand also drove the Ethereum gas prices so high by 2022 that it became unaffordable for some to interact with the blockchain.
As a so-called layer 2 solution, Optimism enables improved scalability by conducting transactions outside the blockchain. Optimism aggregates hundreds of transactions for this purpose and adds them into the Ethereum network as one. In this way, transactions on the Optimism blockchain are much faster and cheaper than on Ethereum.
More speed for Ethereum
This makes Optimism very attractive for developers. They can easily create their apps on the layer 2 network. And all apps created on Ethereum also run smoothly on Optimism. So, it's no wonder that more and more people are using Optimism and more and more dApps are being created, benefiting from the security of Ethereum. Thus, the number of Optimism transactions has increased more than tenfold in the past year.
Yet Optimism is not in competition with Ethereum. Rather, Ethereum's future in scaling involves a rollup-centric roadmap. Optimistic rollups, such as Optimism or Arbitrum, currently the two largest Layer 2 protocols, are intended to increase Ethereum's throughput. They reduce the computational overhead on the Ethereum mainchain by processing transactions externally, which significantly increases speed.
Optimistic rollups were launched in 2019, the Open Mainnet launched in December 2021, and the OP governance token was launched via airdrop in June 2022. So it is a comparatively young project. Behind it stands the Optimism Foundation, a non-profit organisation dedicated to expanding the Optimism ecosystem. Like Ethereum, Optimism aims to be fully decentralised and non-profit. The project is funded by donations and grants and is committed to creating a growing and sustainable infrastructure.
The Optimism token (OP)
Optimism has its own token, listed under the ticker OP. The OP token uses the ERC-20 standard on the Ethereum blockchain. OP is a governance token that allows members to have a say, for example on upgrades or inflation adjustments.
Chart OP/USD, all. Source: CoinMarketCap
Currently, the OP price is $2.95 (as of 7 February) and the market capitalisation is around $691 million. This ranks the token 67th on the list of all cryptocurrencies. The recent price jump to $3.21 on 3 February brought the token to a new all-time high.
This came after the Optimism Foundation published a proposal to upgrade the Optimism Mainnet to Bedrock. The goal here is to provide a “new level of modularity, simplicity, and Ethereum equivalence for Layer 2 solutions, providing unprecedented performance and functionality”. The Bedrock upgrade is seen as a significant step towards the multi-chain future in the Optimism ecosystem.
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