Founded: 2021
Optimism was founded as a Layer 2 solution on Ethereum to improve transaction costs and speed without compromising decentralized security. Optimism thus joins a series of so-called Layer 2 solutions on Ethereum. A blockchain essentially consists of a network of many individual servers, ranging in size from small to large, all storing the same data packets (blocks = blockchain). Each data block contains the information relevant to that specific moment. This could include, for example, transactions or ownership details. A Layer 2 blockchain is essentially an application of an existing blockchain—a blockchain (Layer 2) on top of another blockchain (Layer 1).
All relevant Layer 2 blockchains are based on Ethereum, meaning they leverage the security and infrastructure provided by the Ethereum blockchain and build their own mechanisms and systems on top of it. These mechanisms ensure faster transaction processing at lower costs, while the data is still written to blocks on the Ethereum blockchain. The fundamental principle of outsourcing is applied here in its purest form. While Optimism isn't the oldest Layer 2 blockchain, it has simplified many processes and is therefore now considered foundational infrastructure. To save on transaction fees, Optimism uses a technology that allows it to bundle transactions from various parties and only writes a summary to the block on Ethereum. Furthermore, Optimism utilizes rollup technology, which enables it to process all transactions on its own systems without having to use the resources of the expensive and slow underlying Ethereum blockchain.
Optimism thus serves a wide variety of applications in so-called DeFi, or decentralized finance, all of which require inexpensive and fast transactions. What is unique, however, is that the transaction fees are not charged in the blockchain's native currency, OP-Coin, but rather in Ether. Aside from that, most other Layer 2 blockchains also meet the requirement of processing transactions quickly and cheaply. Therefore, many are working very closely together with the goal of becoming a large, unified ecosystem.
