What is Optimism?

OP is a popular altcoin among sports fans. However, before you Trade OP, it is vital that you understand what you are investing in. Let's find out what's OP and how it functions.

Optimism is a second-layer blockchain built on top of Ethereum. Optimism uses optimistic rollups, which are protected by the Ethereum mainnet and contribute to the scalability of the Ethereum ecosystem. That means Optimism is used to record transactions in a trustless manner, while Ethereum is used to provide security.

With more than $300 million in TVL, Optimism is one of the largest scaling solutions for Ethereum. It is home to 35 protocols. Synthetix (SNX), which is a derivatives exchange; Uniswap (UNI), which is a DEX; and Velodrome (VELO), which is an AMM, are the biggest ones. Users can start using Optimism by adding the chain to their Metamask and connecting bridge tokens like ETH to L2. Optimism released its OP token in a much-anticipated airdrop on May 31, 2022. The airdrop was so popular that it temporarily slowed down the Optimism blockchain.

How is Optimism different?

As a layer two solution for Ethereum, Optimism seeks to use as little moving parts as possible. Putting this into effect entails using existing, stable components of the Ethereum network and code. Optimism strives to make its code as basic as possible and work directly with existing codebases.

Furthermore, the ecosystem emphasizes reality, since it is driven by the requirements and limitations of both its internal team and the people interacting with the ecosystem. Thus, Optimism intends to build iteratively and progressively include capabilities like EVM equivalency

There are four core tenets around which Optimism is built:

• Simplicity
• Pragmatism
• Sustainability
• Optimism

The optimistic design approach prioritizes long-term viability above rapid growth. This is why it employs Ethereum's consensus process and optimistic rollups to increase network capacity. The L2 (Optimism) layer handles block creation and execution, whereas the L1 (User Transactions) layer receives and processes bulk transactions (Ethereum). The L2 does not use a mempool; hence the outcome of a transaction is known instantly. This ensures safety via Ethereum's consensus process and a pleasant user experience.

The transactions uploaded to Ethereum lack irrefutable proof of their validity and can be contested for a limited time (currently seven days). Once that time has passed, the transaction is regarded to be final. This is why Optimism to Ethereum withdrawals take seven days to process.

How many OP tokens are in circulation?

The initial token supply is 4,294,967,296 OP tokens, with a 2% annual inflation rate. In Year 1, the Foundation will get 30% of the original token supply for distribution.

Optimism tries to build an ecosystem where all three of its groups can get something out of it:

• Token holders get value from the productive re-use of sequencer revenue.
• Contributors and builders both get something out of funding public goods in the past.
• Incentives like regular airdrops and community rewards help keep users and community members engaged in a project

In short, when people buy OP block space, they make money, which is then spent on public goods, which makes more people want to buy block space. So, the distribution of Optimism's tokens is as follows:

• Ecosystem fund (25%): governance (5.4%), partner (5.4%), seed (5.4%), and unallocated (8.8%).
• Retroactive Public Goods Funding (20%)
• User airdrops (19%): A first airdrop of 5% and more airdrops that have not been announced yet.
• Core contributors (19%): These are the people who help make the Optimism Collective a reality.
• Investors (17%)

Network security

Optimism uses optimistic rollups. Optimistic Rollups (ORs) can store transactions on the second-layer blockchain in a trustless manner and periodically broadcast the Merkle roots of those transactions to the first-layer blockchain. These Merkle roots are verified by external validators, which causes a delay in the withdrawal of money (usually by one week) from layer two protocols using optimistic rollups.

Founders

The Optimism Foundation is a non-profit group with a focus on developing the Optimism ecosystem. Optimism, like Ethereum, intends to become a fully decentralized public benefit that is not motivated by financial gain. All of Optimism's operating expenses are covered by generous donors who have pledged to support the development of public good infrastructure.

Where can you buy OP?

OP is available on the licensed cryptocurrency exchange CryptoForce and several other national and international exchanges.

Disclaimer: Cryptocurrencies are highly volatile and subject to market, technical, and regulatory risks. Crypto trading requires one’s own diligence, and Cryptoforce will not be responsible for any losses incurred. Any information provided here should not be regarded as Cryptoforce’s technical or financial advice