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Strengths and Weaknesses


  • Fast transactions – as a result of its scalability, Optimism can process up to 2000 transactions per second
  • Security – chain security is shared with the Ethereum blockchain
  • EVM – the OVM is compatible with all dApps that run on the Ethereum network


  • Competition – Optimism is less effective than competing Ethereum blockchains utilizing layer 2
  • Ethereum 2.0 – Optimism may no longer be necessary in the future with the launch of the Ethereum blockchain on a PoS consensus

Basic Information

The Optimism chain shares Proof of Stake (PoS) consensus with the Ethereum blockchain.

Optimism is a layer-2 (L2) blockchain on the Ethereum network that uses the Optimistic Rollup solution to enhance scaling. Transactions on Optimism are "rolled up" into batches, which are then relayed to the Ethereum blockchain mainnet, which only records the overall state of the blocks. As these rollups are assumed to be valid, they are known as optimistic rollups. However, a rollup's validity can be challenged and invalidated for up to seven days. Therefore, asset transfers from the Optimism chain to Ethereum via the official bridge may take up to seven days (January 2023).

Optimism's blockchain solution has the advantage of significantly lower gas fees (in $ETH) for L2 and their reduction on the Ethereum blockchain in the long run. In light of the fact that Ethereum will be required to record less transaction data, one of the main challenges of the Optimism chain will be the reduction of congestion on the Ethereum mainnet. Additionally, Optimism is developing its OVM (Optimism Virtual Machine), which uses smart contracts that are compatible with EVM (Ethereum Virtual Machine) and secured by the Ethereum blockchain, which is a suitable solution for the development of new dApps.

Functioning of the Chain

Optimism functions by using rollups, another word for blocks on a blockchain, and by sharing a consensus (PoS or PoW) with the main blockchain to which it is connected.

In the case of Optimism, its main blockchain is the Ethereum mainnet. The Ethereum blockchain performs all of the finalization of transactions as well as sharing all of the security with it. This allows the Optimism layer to be fast and have cheap transaction fees in its network.


Storing blocks

The Optimism chain is composed of blocks that are stored in a special smart contract on the Ethereum blockchain known as the Canonical Transaction Chain (CTC). The blocks are stored in the form of a list that is updated only within the CTC. In essence, this list forms the Optimism blockchain.

The CTC contains code that ensures that the existing block list cannot be modified by new Ethereum blockchain transactions. Optimism layer blocks are protected from reorganization on the Ethereum blockchain. When more than 50 blocks are reorganized, the Optimism blockchain is reorganized as well. Thus, Optimism is secure against large block reorganizations.

Creating blocks

In Optimism, the process of creating blocks is primarily carried out by one party called the "sequencer" (the Optimism blockchain validator). By providing the following services, it contributes to the network:

  • Providing confirmations of transactions and blockchain status updates
  • Creates layer-2 (L2) blocks
  • Sends blocks to layer 1 (L1)

Sequencer (validator):

The Optimism layer does not have a mempool, so transactions are approved or rejected in the order they are received. When a user submits a transaction to the sequencer, the sequencer checks whether the transaction is valid (if the user has paid a sufficient fee) and adds the transaction to its list as a pending block. Upon reaching a large number of queued blocks, they are sent to the Ethereum mainnet for finalization as a single transaction. As a result of this process, the overall transaction fees are significantly reduced since all transactions have been packaged as a single transaction and sent to the Ethereum blockchain. Several basic compression techniques are also used by the sequencer in order to reduce the size of the data published on the Ethereum blockchain.

Miro Medium

Node composition

An Optimism node consists of two basic components: an Ethereum data indexer (DTL) and an Optimism client:

  • DTL reconstructs the Optimism blockchain using blocks published to the Canonical Transaction Chain (CTC) contract. To confirm the publication of new Optimism blocks, DTL searches the CTC for a processing trace. Then, it analyzes the transactions that generated these events and reconstructs the published blocks in the Ethereum blockchain's standard block format.
  • Optimism client software is almost identical to the Geth system. Thus, the Optimism blockchain is largely similar to the Ethereum blockchain. There are a number of things Optimism shares with Ethereum, such as the same EVM (called OVM for the Optimism blockchain), the same structure of accounts and states, the same method of measuring gas value, and the same fee schedule. The Optimism blockchain uses an architecture referred to as "EVM equivalence," which means that the majority of Ethereum blockchain tools (even the most complex ones) are 100 % compatible with Optimism.

Fault proofs

As part of the Optimistic Rollup solution, commitments (transactions) are sent to the Ethereum blockchain without any direct proof of their validity. They are considered pending and are currently subject to a seven-day waiting period (January 2023) during which anyone may challenge and dispute them (the "challenge window"). As long as these obligations are not disproved within this period, they will be considered valid. This means that smart contracts on the Ethereum blockchain will be able to safely accept them.

In the event that commitments are challenged, they can be invalidated by a process referred to as "fault proofing." They are then removed from the Stated Commitment Chain (SSC) list.


If the proposed root state is not the correct result of the transaction execution, the verifier (i.e., anyone running a full node at the Optimism layer) can initiate a request to review the transaction result. When an incorrect transaction result is successfully demonstrated, the verifier receives a reward from the funds that the sequencer (validator) puts forward as a security deposit.

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Bond Manager

The Bond Manager contract handles deposits in the form of an ERC-20 token from bonded proposers. It also handles the accounting of gas costs spent by a verifier during the course of a challenge. In the event of a successful challenge, the faulty proposer's bond is slashed, and the verifier's gas costs are refunded.

SCC: The State Commitment Chain (SCC) contract contains a list of proposed state roots which proposers assert to be a result of each transaction in the Canonical Transaction Chain (CTC). Elements here have a 1:1 correspondence with transactions in the CTC.

: The Canonical Transaction Chain (CTC) is a transaction protocol that must be applied to the state of the OVM.

: Optimistic Virtual Machine is a layer-2 (L2) compliant execution framework that enables roll-up implementations to communicate with Ethereum's main blockchain.

: Geth is an execution client for the Ethereum blockchain, which processes transactions. The deployment and execution of smart contracts includes a built-in EVM.

Development History


  • in June, Plasma Group developers created a scalability solution called Optimism Rollup


  • in February, the Optimistic Virtual Machine (OVM), which is compatible with EVM, was launched in a test phase
  • in September, the testnet with the Optimism Rollup solution was launched


  • in January, Optimism launched its Alpha version
  • in October, its mainnet upgrade for the EVM was launched
  • in August, a full-fledged blockchain bridge between Ethereum and Optimism was launched. The bridge previously only allowed the transfer of enabled ERC-20 tokens
  • in December, the crypto world celebrated Optimism's mainnet launch


  • in April, it was announced that the Optimism Collective (a governance experiment) had been established and a number of airdrops had been made. Due to this change in governance, the Optimism PBC was dissolved and a non-profit organization, the Optimism Foundation, was created
  • In May, a distribution of the $OP coin began
Even Optimism is not infallible. In June 2022, an airdrop of $OP coins was made. Wintermute was entrusted with the distribution of this airdrop by the Optimism Foundation and received the $OP coins at their address. However, the address provided was not set to multisig layer 2 (L2) Optimism, but only to layer 1 (L1) Ethereum. As a result of this, a hacker noticed it and took advantage of the opportunity to gain access to the locked coins on L2, to which Wintermute did not have access at the time. So, the hacker stole 20 million $OP (worth approximately 26 million USD) that was intended for an airdrop. The hacker then exchanged 1 million $OP for $ETH, sent another 1 million to Vitalik Buterin's address, and kept 1 million $OP. The rest was returned to the Optimism Foundation. In other words, this hack was not caused by a bug in the smart contract or blockchain code, but rather by human error that occurred during distribution.


Benjamin Jones - Co-founder and senior researcher

Jinglan Wang - Co-founder and CEO

Kevin Ho - Co-founder

Liam Horne - CEO

Mark Tyneway - Co-founder and systems engineer

Julien Boedec - Head of BD (Business Development) and developer relations

Lynnette Nolan - Head of communications department

Christa Sullivan - Operations Manager

Palash Agarwal - OP Labs, Financial controller

Benjamin Jones is one of the co-founders of the Optimism blockchain. He creates parody songs inspired by the Ethereum blockchain in his spare time, under the stage name ‘Weird ETH Yankovic.’

Jinglan Wang has been an active member of the Ethereum community for a number of years and is currently working for the Optimism team (formerly Plasma Group). Previously, she worked at Handshake, Nasdaq, Blockchain Education Network, and was a member of the MIT Bitcoin Club.


The main governance coin on the Optimism blockchain is $OP.

It is used for:

  • Voting / Delegation
  • Rewards for sequencers (validators)
  • Staking

Special Governance System

Currently, there is a collaboration between the Optimism Foundation and the Optimism Collective, established in April 2022, within the Optimism blockchain. The Optimism Foundation will collaborate with the Collective on shaping the development of governance rules over time. Governance will be adapted following its growth and with the input of the entire community.

The Optimism Collective consists of two equal "houses":

  • Token House, where $OP holders are
  • Citizens' House gathers all those who have been granted "citizenship" by the Optimism Foundation based on their participation and contribution to the Optimism community

This structure was partially designed to prevent the common pitfall of voting in which individuals with large amounts of coins dominate. Both houses share a common goal of balancing short-term incentives with long-term vision in promoting Optimism for the future.

Optimism appears to be a decentralized blockchain, and it certainly wants to be in the future, but it is not completely so at present. The only entity who oversees transaction approval is Optimism itself, so it can censor your transactions. This should change in the following updates. More sequencers (validators) will also be added to the system, who will rotate to maintain the blockchain.

The first step towards greater decentralization will be the launch of the Bedrock update in Q1 2023, which will bring the storage of transactions into a mempool that will no longer be automatically accepted.

Revenue & Tokenomics

In January 2020, Optimism received 3.5 million USD from Paradigm and IDEO for the development of the Optimistic Rollup solution.


The initial distribution of the OP coin was as follows:

  • 25 % allocated to the ecosystem fund
  • 20 % allocated to the RPGF (Retroactive Public Goods Fund)
  • 19 % for airdrops
  • 19 % allocated to the main contributors
  • 17 % given to investors

The total supply of OP coins will be 4,294,967,296 by 2026.

Currently, there are 214,748,364 $OP in circulation (January 2, 2023).

The OP coin is an inflationary coin with an inflation rate of 2 % per year.

In the future, Optimism plans to deploy more large airdrops of $OP to support its blockchain. The airdrops will most likely be sent to wallets that are active on the Optimism and Ethereum blockchains. The first such airdrop took place in 2022 when $OP was released.

The Uniqueness of the Chain

The Vision of the Optimism Project

The goal of the Optimism project is to create an independent system whose form of decentralization will be maintained by fees generated by the protocol, thereby financing the entire ecosystem. The team behind Optimism believes in the concept of "impact = profit," meaning that "a positive impact on the collective should be rewarded with a profit for individuals." If the experiment proves successful, it could serve as a model for similar systems.

This idea from the project vision is undoubtedly ambitious:

"The idea that a decentralized ecosystem could reliably and on a large scale provide basic human needs may seem idealistic today, but tomorrow it will seem like a common thing. We start small with a sense of pragmatism, but aim big with an overwhelming sense of optimism."

Optimism (specifically the Optimism Collective) is explicitly presented as an experiment and frequently emphasizes the provisional nature of its documents, rules, and procedures.

How the Network is Secured

The Optimism blockchain is secured by validators on the Ethereum blockchain, who are informed of block information by a sequencer (validator in the Optimism network). Currently, there is only one sequencer operating on the Optimism blockchain, managed by Optimism itself (i.e., Optimism can censor your transactions). Over time, it is necessary to eliminate this single sequencer and invite other sequencers onto the chain to participate in block production.

The first step towards decentralizing sequencers is to determine how often they will take turns creating new blocks. This function is still under development and is not yet complete. Its form could look something like this:

  1. An economic mechanism that creates a competitive market for sequencing and redirects the surplus profits of sequencers to protocol development
  2. A governance mechanism that prevents sequencers from prioritizing short-term profits over the long-term health of the blockchain

The team behind the Optimism blockchain has created a bug bounty system for reporting bugs in smart contracts or the blockchain itself, in order to motivate ethical hackers to collaborate in finding and reporting errors.

Optimism's network security is now decentralized entirely through Ethereum validators who are overseen by delegates. Proof of Stake (PoS) consensus does not require as much computational power as Proof of Work (PoW) consensus, but even this small amount of power must be utilized somewhere. In most cases, these servers are leased through Google Cloud computing services or Amazon Web Services. The majority of the chain's power is provided by these services. If these cloud services owned by large corporations are forced to shut down in the future (for example, under threat of punishment by government agencies), it will affect the entire Ethereum blockchain ecosystem and, with it, the Optimism blockchain.


You can delegate your OP coins to someone else or become a delegate and participate in voting on the future functioning of the Optimism chain.

To delegate your coins:

Choose your delegate at here.

Connect your wallet and assign your $OP to the delegate (note that delegation becomes effective only at the next snapshot when the number of votes for each delegate is counted, which occurs at the beginning of each voting cycle every three weeks).

Here you will find exact instructions on how to become a delegate.

Sequencers' (validators') earnings are distributed back into the ecosystem especially through the Retroactive Public Goods Fund – RetroPGF.

The Citizens' House will begin voting quarterly on distributing funds to individuals, teams, projects or communities that have provided subjective value over a certain period of time. This will directly reward community members for the positive impact of their work.

RetroPGF also offers liquidity for the exit of public goods projects, which opens up the market for early investment in these projects. This means that developers:

  1. can be rewarded for their positive contribution without generating income
  2. can raise capital for start-ups based on the initial potential and future promise of their projects

In the long-term, the Optimism Foundation expects this mechanism to lead to a wide range of subsequent pro-social effects that the Optimism Collective can capture and spread through frequent experimentation and repetition.

Community Optimism

Road Map

Bedrock is a forthcoming new upgrade to the Optimism protocol. It will bring the following innovations:

- Thanks to the use of a more efficient compression algorithm, the security fee for layer 1 (L1) will   be lower

- Each block will be created every two seconds, regardless of its fill level

- Rather than accepting or rejecting transactions immediately, the sequencer (validator) will store   them in a mempool and sort them according to priority fees

- In order to avoid unnecessary delays, deposits (transactions from Ethereum to the Optimism   blockchain) will be processed by verifiers even when the sequencer is not working

- The deployment of EIP 1559 – Optimism will use the same fee mechanism as Ethereum   (burning a portion of the transaction fees)


Because of its compatibility with EVM, Optimism has a large number of DeFi projects and also offers fast and cheap transactions.

The biggest DeFi projects on the Optimism chain are:

  • AAVE – Lending / borrowing
  • Synthetix – Synthetic assets
  • Velodrome – DEX

As of January 2, 2023, Optimism blockchain has over 60 active DeFi protocols with a combined TVL of 702 million USD.

As part of its blockchain development, Optimism has its own investment fund. Individual developers may apply for funding through this fund for projects developed for Optimism.


The community on Discord is very friendly. There are many sections of the site (both for developers and users) where you can turn up with a problem and receive a response quite quickly.

Optimism's Twitter account has a massive following, with regular posts about new collaborations, airdrops, and other developments that contribute to the growth of the Optimism Blockchain.

Overall, the mood in the community is positive and optimistic about future steps.






Where to Buy

The OP coin can be purchased on all major centralized exchanges (CEXs) in the crypto community.

If you plan to purchase on a decentralized exchanges (DEXs), it is best to use a platform that supports Optimism:

Note: On the Optimism network, gas transaction costs are paid in $ETH. As a result, you will still need to load your wallet with some ethereum in order to pay for fees if you plan on using your $OP in the future. This includes transferring $ETH from another chain, for example from the Ethereum mainnet, using a bridge, buying on CEX and sending it to the Optimism chain, or exchanging it in a DEX within the Optimism blockchain.

Before registering for a CEX purchase, ensure that it supports the OP coin. As of January 2023, $OP is the 128th largest cryptocurrency, but some small exchanges may not support it.

For example, $OP can be purchased on:

Supported Wallets

Ledger Nano X – the most widely used hardware wallet (HW) on the market. When paired with your software wallet (SW), you get greater security for your cryptocurrencies.

TrustWallet – SW wallet

MetaMask – SW wallet

Analyst Opinion

Optimism looks great as a L2 on Ethereum and it is clear that their rollups are an effective solution for scaling. However, we have not had enough time to evaluate how the entire chain will perform under full load. It may look great on paper, but the reality could be quite different. Using layer 2 is fast and cheap - what more could you ask for? But Optimism is not the only L2 for the Ethereum blockchain – Arbitrum is its main competitor.

In contrast to the Arbitrum blockchain, Optimism already has its own coin that is used to vote and determine the future course of the Optimism blockchain. It is my belief that the overall governance setup of this project and the future airdrops of the OP coin will provide a significant advantage in the future. The arrival of new users and heavy load on the network will only demonstrate the effectiveness of the scaling mechanisms, and the sustainability of the low fees.

In conclusion, one question remains unanswered: after Ethereum has switched to PoS and is preparing additional scaling improvements, will blockchains on its layer 2 still be necessary in the future? This will probably be answered in the next bull run.

Ondřej Tittl


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