Optimism is a robust and efficient Layer 2 blockchain, created by none other than the talented Ethereum developers themselves.
They designed this blockchain to be an effortless add-on to the current Ethereum software, making it easier to scale your Ethereum applications.
With Optimism’s innovative EVM-identical infrastructure, there are no hurdles or surprises when it comes to your app’s performance.
The platform claims that “if it works on Ethereum, it works on Optimism”. One of the best parts about the protocol is that the cost of using Optimism is only a fraction of what you’d pay otherwise.
As of now many wonderful dApps are gradually developing on Optimism and tracking their growth and potential can prove to be extremely beneficial for all crypto users.
In this article, we will talk about the Optimism Ecosystem and also highlight each dApp building on it individually.
A brief overview of Optimism
Optimism was once just a passion project by a tight-knit group of Ethereum enthusiasts who spent countless hours brainstorming ideas on whiteboards. This was in the early days before rollups were the go-to solution for scalability. Back then, plasma was all the frenzy.
The group behind Optimism executed a non-profit called Plasma Group, which served as both a community hub and a research institution. They regularly organized events, hosted calls, and shared their latest design concepts with implementers. But in June of 2019, they stumbled upon a groundbreaking realization: the rollup design of Vitalik could be seamlessly integrated with the optimistic designs provided by plasma.
The community rallied behind this breakthrough, and through collaboration and iteration, they brought the Optimistic Rollup to life.
And so, Optimism, a cutting-edge L2 blockchain built on the backbone of optimistic rollups, was born. This innovative solution serves as one of the most prominent scaling options available to Ethereum users, boasting an impressive $902 million in TVL (total value locked) at present. The crux of the technology behind Optimism lies in its use of optimistic rollups, which delegate transaction execution to Layer 2 resolutions like Optimism, enabling lightning-fast processing speeds for users.
Optimism’s unique transaction processing system relies on the aggregation of transactions into batches, which are then transmitted to the mainnet of Ethereum. This results in the recording of only the new chain. The process of assuming the validity of these batches of transactions is why they are referred to as optimistic rollups. These rollups provide a validity that can be contested for up to seven days, meaning that any kind of withdrawal from Optimism to Ethereum needs at least seven days to complete.
Optimism’s approach offers several compelling benefits, one of which is a significant reduction in gas costs for transactions executed on the L2.
Furthermore, the lowered gas fees on Ethereum in the long term are achieved by reducing the amount of transaction data that must be recorded on the mainnet.
Another noteworthy aspect of Optimism’s technology is its use of smart contracts that are compatible with EVM and its security is guaranteed by the Ethereum mainnet. This compatibility allows developers to build new DApps on Optimism with ease.
DApps building on Optimism
The launch of the Optimism token and other airdrop drives have proved to be a resounding success for the platform, attracting significant liquidity and engagement to its platform. In a bid to further incentivize community involvement, the Optimism team announced a “season of airdrops” campaign in April, further boosting engagement and participation.
A key factor contributing to the platform’s success has been the Optimism Foundation’s emphasis on aligning token rewards with the privileges of governance, allowing for a more decentralized and democratic decision-making process. The result is a thriving ecosystem that offers exciting opportunities for developers and users alike.
These strategies have been particularly effective in fostering a strong community of loyal Ethereum developers and driving decentralized application (DApp) development on the platform. Some of the most popular of these dApps are:
- AAVE V3
Now let’s dive deep into each of these dApps
Velodrome, the latest addition to Optimism’s suite of protocols, is an innovative liquidity incentive platform that constructs on the foundation established by Solidly Exchange. Solidly Exchange is essentially a decentralized exchange for platforms that offers to facilitate the provision of liquidity for projects operating within the Optimism network.
One of VELO’s key objectives is to promote greater interoperability between DeFi protocols on the platform, enabling more seamless and efficient interactions between different protocols. The platform currently has a TVL of 289.05 million dollars and an Average APY of 81.56 per cent.
In short, Velodrome is the largest decentralised crypto exchange on Optimism chain.
Sonne Finance is an innovative platform for decentralized lending that provides easy access to economic benefits for individual users, organisations, and projects. As an open-source and permissionless platform, Sonne Finance operates on Optimism, making it a popular choice for users seeking a trustless and secure protocol. By depositing their assets as collateral, users can access loans and use them to invest or fund their projects. Sonne Finance is a promising project that currently has around 29.3 million dollars in TVL.
Synthetix (SYN) is a revolutionary derivatives liquidity platform that employs cutting-edge on-chain tools, to facilitate the innovation of synthetic acquisitions. At the heart of the Synthetix protocol are synthetic forms of several renowned tech stocks and asset entities like gold. Additionally, they also provide users with decentralized perpetual futures. Oracles are used to track the value of the asset that is underlying to ensure that the synthetic assets accurately reflect the value of their real-world counterparts.
To mint synthetic assets on the Synthetix platform, users must stake SNX tokens as collateral. These tokens are destroyed or burned after the liquidation of a particular position. It has a total value locked (TVL) of over 451 million dollars, of which the Optimism chain comprises 137.28 million dollars.
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Aave (AAVE) is a decentralized finance (DeFi) platform that facilitates the borrowing and lending of various crypto commodities. The platform enables users to put their crypto into liquidity pools, where they can accumulate a passive income via the interest on the collateralized assets.
With its success on various blockchain networks, Aave is now also present on Optimism, where it has a total value locked of more than 87 million dollars. Through Aave’s integration with Optimism, users can leverage the benefits of the Optimistic Ethereum network to access cheaper transactions, faster confirmation times, and increased scalability.
Curve (CRV) is a decentralized exchange (DEX) that has gained significant traction in the DeFi space for its unique stablecoin trading capabilities. Curve uses an automated market maker (AMM) model to facilitate trades and provide liquidity for stablecoins. Curve has quickly become one of the most important DEXs in the DeFi space and boasts a TVL of over 83 million dollars on Optimism.
The exchange has been successful due to its user-friendly interface and blockchain integrations that include a variety of networks, allowing users to trade and swap their stablecoins with ease.