Optimism is a Layer 2 scaling solution based on Optimistic Rollup technology that provides the security of Ethereum while being able to process transactions at scale. Optimism also achieves EVM equivalency, allowing Ethereum Solidity smart contracts to run on Optimism’s Layer 2 without needing to build additional functionality. Developers can seamlessly transition to building applications on Optimism.
On-Chain Situation of Optimism (OP)
As of the time of writing, the total value on the Optimism chain has reached $6.56 billion, with over 1.77 million ETH on-chain. In terms of transaction data, Optimism has seen a total of 163,860,796 transactions, with 30-day transaction counts reaching 312,393. The 24-hour on-chain transaction volume is 14.06K ETH. Notably, the official cross-chain bridge has been used 333,293 times, with a total of 877,779 active addresses, 52,267 daily active users, and 18,678,966 contract addresses. Optimism hosts a total of 146,159 on-chain tokens and achieves a TPS of 3.29 transactions per second.
Technical Features of Optimism
Optimism Rollup employs a fraud-proof/challenge mechanism. After transaction sorting, data summaries are transmitted to the Ethereum main chain, allowing validators a challenge window to verify transactions. Successful challenges are rewarded, and appropriate actions are taken. If there are no challenges during the window, the data is considered valid by default. This design requires a well-thought-out economic model to incentivize validators and reduce the motivation for malicious actors. Optimism uses non-interactive fraud proofs, which, compared to Arbitrum, are simpler in design, eliminating the need for coordination among various parties. However, the overall transaction costs are significantly higher due to the need to run each transaction through the EVM in case of disputes. Consequently, Optimism cannot handle transactions exceeding the Ethereum gas limit, as these cannot be validated correctly on-chain. In contrast, Arbitrum can execute transactions of any size, even beyond Ethereum's gas limit, without requiring batch processing through the EVM.
Tokenomics of Optimism
At its genesis, the initial total supply of OP tokens is 4,294,967,296, with a 2% annual inflation rate.
(1) Token Allocation Mechanism
| Type | Quantity | Percentage |
| Ecosystem Fund | 1.073 billion | 25% |
| RetroPGF | 859 million | 20% |
| Airdrop | 816 million | 19% |
| Core Contributors | 816 million | 19% |
| Investment Allocation | 730 million | 17% |
(2) Token Locking Supply
Sixty-four percent of the initial token supply (i.e., the portion not reserved for core contributors and investors) will be distributed to the community. Over time, these allocations will be managed by the Optimism Foundation as administrators of the Optimism Collective.
Year 1: 30% of the initial token supply will be available for distribution by the Foundation. After the first year, token holders will vote on the Foundation’s annual OP distribution budget. The Foundation intends to seek the following annual allocations:
Year 2: 15% of the initial token supply.
Year 3: 10% of the initial token supply.
Year 4: 4% of the initial token supply.
(3) Incentive Mechanism
Optimism Collective creates value for three groups:
1. Token holders derive value via effective redeployment of Sequencer revenue; Sequencer revenue comes from fees generated by users: L2 execution fees and L1 data fees.
(1) L2 execution fees are similar to Ethereum's gas fees, with the fee amount depending on the transaction's complexity and computational/storage requirements, constituting roughly 1% of the user's fee.
(2) L1 data fees cover the cost of publishing batch transactions to Ethereum. The Sequencer applies a cost markup method, charging users a price higher than L1 costs. The current fee is approximately 1.24 times the total gas needed for transaction submission, plus 2,100 gas, constituting about 99% of the user's fee.
2. Contributors and builders directly benefit from retroactive public product funds and supported market incentives.
3. Users and community members benefit from continuous OP airdrops, project incentives supported by the OP ecosystem fund, and benefits provided by public products.
Project Ecosystem of Optimism
Velodrome
Velodrome is one of the flagship projects on OP, positioned as a dex based on Solidity. It aims to build a major trading and liquidity market on Optimism, incorporating features from Solidly, Curve, Olympus DAO, Votium, such as veToken, and game theory. It optimizes token allocation, release, and incentives rules to facilitate the flow of incentives towards the most valuable ecosystem pools.
Velodrome has two types of tokens: VELO, an ERC-20 token obtainable through staking, and veVELO, an NFT governance token similar to veCRV.
In the past six months, almost all newly acquired VELO tokens have been locked, demonstrating the effectiveness of the (3, 3) mechanism. Various yield farming projects actively accumulate more veVELO, with veVELO holders primarily earning through bribes, enhancing the efficiency of attracting liquidity for project teams.
The core function of Velodrome is to allow users to exchange digital assets with low fees and low slippage, with transaction fees ranging from 0.02% to 0.05%. Even without Uniswap V3's liquidity aggregation, users can enjoy a better experience due to lower fees.
Sonne Finance
Sonne Finance is the native lending platform on OP, and the 2nd largest in TVL among lending projects. The platform provides money markets for wETH, USDC, USDT, DAI, OP, sUSD, wBTC and SNX. Sonne uses Velodrome in their token strategy, as they do not simply reward liquidity providers with SONNE tokens.
Instead, they bribe VELO holders to vote for the SONNE/USDC pair, while users staking SONNE tokens get VELO rewards instead. OP has the chance to build its native DeFi lego on the foundations of Velodrome, with Sonne being the lending component.
Other lending platforms such as dForce, Hundred Finance, are multi-chain deployed lending protocols, but their TVL and LTV are not particularly strong.
Pika Exchange
Pika Exchange is a perpetual futures trading platform that supports leveraged trading. It offers token-based inverse perpetual swaps, with the underlying foundation being virtual Automated Market Makers (vAMM). PIKA stablecoins are supported by Pika Exchange, designed to maintain price stability around $1 through perpetual swap positions. PIKA is minted by opening a 1x inverse perpetual short position. It achieves capital efficiency by minting PIKA using supported tokens (e.g., ETH, WBTC) worth $1, offering better capital efficiency than overcollateralized stablecoins.
Quix
Quix is the first native NFT marketplace platform on Optimism, allowing users to search, collect, buy, and sell NFTs. Users can also launch their NFT projects through the Quix Launchpad, enabling the deployment of code-agnostic NFT smart contracts and minting pages. Low fees due to Layer 2 have helped users save nearly $300,000. Due to funding issues, Quix has shut down, and the Quix Launchpad ceased service on January 16th of this year. This gap can now be followed by NFTEarth, which has multiple airdrop plans, and OG cards can be purchased on the secondary market.
Summary
While Optimism has been experiencing robust growth, some potential risks should be noted. For example, the network's sole block producer, the Sequencer, is currently operated by Optimism PBC, which has centralization characteristics and carries the risk of malicious actions or downtime. Consensus reached between Verifiers and Sequencers has some latency, which may lead to various attack scenarios. This issue may improve in future network upgrades.
Currently, OP is focused on perfecting the first version of the OP stack, the Bedrock upgrade. The OP ecosystem needs further expansion on top of refined tools. With the maturity of the OP Stack, Optimism is poised to closely resemble the implementation of Cosmos, with OP as its core, establishing the OP universe.
"One-Click Chain Deployment" will become a feature of OP, and based on the standardized OP L2 and L3, explosive growth in Appchains can be expected. Appchains can play "blockchain LEGO," combining various specialized VMs and technologies for endless innovation and possibilities.
Furthermore, modular blockchains built on the OP stack can achieve interoperability within the OP universe. Chains can communicate easily using a shared message format.
Therefore, even among numerous L2 competitors, Optimism remains highly competitive, and we have great expectations for its future.
For more analysis, please follow Aibit's media account for real-time updates! This article is for reference only, does not represent any position, and is not intended as investment advice. Investment is risky, caution should be exercised.
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