As someone who has been closely following the developments in the blockchain and cryptocurrency space, I must say that Optimism has truly impressed me with its innovative approach to scaling Ethereum. Their strategy of providing grants to projects building on OP Stack is not only smart but also effective, as it encourages collaboration and fosters a positive-sum system.
For quite some time, Ethereum (ETH), the foremost platform for smart contracts, grappled with an issue of scalability. With an increasing number of users integrating into the Ethereum environment, the network experienced a rise in cost and slowed performance.
As a researcher, I embarked on a mission to address a significant challenge within our sphere in 2019 – scalability. In response, members of the Ethereum community devised innovative scaling solutions, which they termed as “layer 2s,” or rollups. Among the early market entrants was Optimism (OP). This solution, like many others, was designed to enhance the network’s efficiency and capacity.
Currently, Optimism’s technology is extensively adopted by various entities for establishing their own layer-2 networks. In the year 2024, Kraken, Uniswap, World Network (previously known as Worldcoin), and Sony’s Blockchain Lab decided to leverage Optimism’s technology to develop their individual scaling blockchains. As a result of successfully persuading some of the biggest players in crypto to adopt their technology and become part of their ecosystem, the founding team of Optimism, headed by Jing Wang, has been nominated for CoinDesk’s 2024 Most Influential list. This article is featured in CoinDesk’s 2024 Most Influential package. To view all this year’s nominees, click here.
According to Ben Jones, one of the founders of Optimism and a member of the Optimism Foundation’s board, if you want to understand the heartbeat of the Optimism Collective, it is Jing Wang. (Said this to CoinDesk during an interview.)
The original team behind this project includes veterans in the Ethereum community such as Wang, Jones, Karl Floersch, Mark Tyneway, Kelvin Fichter and Kevin Ho. Their history can be traced back to 2016, when Wang first encountered Floersch, who was previously a researcher at the Ethereum Foundation (EF), prior to the formation of Optimism.
B.O. (Before Optimism)
In our initial interaction, we were arranged in a group. There was a lot of conversation happening, and whenever a fresh face joined our circle, Jing would go out of his way to ensure they felt welcomed, posing a particular question to help them fit seamlessly into the ongoing experience, according to Jones’ recollection of their first solo meeting with Wang.
As a researcher observing the subject, I can confidently affirm that her abilities in this particular area have not diminished; instead, they seem to have grown even stronger. Intriguingly, it appears that she excels more and more in handling such tasks as the scale increases over time, particularly when she assumes the role of the Collective’s leader.
Initially involved in the Bitcoin community, Wang found herself dissatisfied with the scarcity of women involved in that particular developer scene, as revealed during a speech at a16z’s crypto startup school in July 2023. It was Vitalik Buterin, the founder of Ethereum and previously an ardent supporter of Bitcoin, who persuaded her to explore Ethereum and connected her with Floersch.
At the EF, Floersch mentored Wang and assigned her a writing task that served as a model or example (a “textbook” project). Meanwhile, another project involving coding was offered but given to a different protégé, Hayden Adams, who later developed Uniswap from it. Today, Uniswap is the largest decentralized cryptocurrency exchange on Ethereum, as reported by DefiLlama.
Wang dedicated much of her time to a project called Plasma, an early scaling solution that came before rollups. Over time, this project evolved into the foundations of what we know as Optimism today.
At the a16z talk on the origins of Optimism and Uniswap, Wang exclaimed, “That’s remarkably intriguing!” or simply put, “That’s quite fascinating!” He was expressing his surprise at the beginning stages.
Initially, the exploration of plasma on Ethereum was primarily an academic pursuit aimed at enhancing transaction processing capacity. However, later on, Wang collaborated with Floersch to establish the Plasma Group, a non-profit organization dedicated to advancing research in the area of scalability solutions.
As per Wang’s explanation, following the establishment of the Plasma Group, there seemed to be a strong demand among users for a Layer 2 solution offering reduced fees and swift transaction speeds. In response, the team shifted their focus and drafted designs for an optimistic rollup system.
Due to Plasma operating as a non-profit entity, the team faced challenges in securing sufficient funds to transform their research into marketable products. Jones, in an interview with CoinDesk, expressed his exasperation saying, “We were constantly trying to convince people other than ourselves to join our research nonprofit, which relied on donations, and it was becoming increasingly difficult.” He further explained that they were developing crucial public goods and expanding infrastructure for blockchain technology to dominate the global market, but lacked the necessary funding.
In part, our commitment was to ensure no one else would face similar circumstances, as we shifted focus towards hopefulness and established the Optimism Collective, Jones explained further.
Optimism’s technological growth
2019 marked the inception of Optimism, with its operations fully functional by the closing of 2021. Subsequently, the company managing Optimism underwent a division in 202x, giving birth to two distinct entities. The first, OP Labs BPC, serves as the primary developer tasked with constructing the Optimism blockchain. The second entity, the Optimism Foundation, focuses on guiding the governance system of Optimism and fostering its ecosystem growth.
Pre-split, Wang served as CEO at Optimism BPC. Following the split in 2022, he assumed the roles of CEO and Executive Director for the Foundation.
The blockchain of Optimism is fueled by optimistic rollup technology, which groups numerous transaction data into manageable sets, reducing the cost of transactions compared to Ethereum. Due to their popularity, a multitude of these rollups have emerged since Optimism launched, with well-known alternatives such as Arbitrum, Blast, zkSync, Polygon, Starknet, and Scroll being among them.
With the growing popularity of major rollups, a fresh trend surfaced among top layer-2 projects. This trend, often referred to as “blockchain-in-a-box,” invited developers to replicate the project’s code, enabling them to set up their own layer 2 solutions independently. For instance, Optimism’s framework became famously known as the OP Stack, launched in the year 2023, coinciding with the significant blockchain upgrade dubbed “Bedrock.
In simpler terms, the chains beneath the Optimistic (OP) Stack will become part of a unified network called “Superchain”. This Superchain is constructed using Optimism’s technology, enabling fluidity by allowing liquidity to be exchanged across different chains. All these chains will operate under Optimism’s governance and shared principles, known as the Collective. The Superchain aims to resolve fragmentation issues, making it smoother for all blockchains in this ecosystem to interact with each other and transfer funds more efficiently.
Jones emphasized that it’s crucial for our approach to ensure that developers can work seamlessly across all the individual chains without having to deal with them independently, as this will greatly simplify their tasks.
Contenders such as Arbitrum, Polygon, and zkSync have begun deploying their respective platforms, sparking intense competition as they vie for users and businesses eager to develop on their frameworks. The race is on!
Initially, Coinbase’s Base network was the first significant client of the OP Stack, marking the entry of the largest U.S. cryptocurrency exchange on the blockchain in August 2023. Since then, numerous key players in the crypto sector have also developed their own layer-2 solutions and chose the OP Stack to facilitate this rollout. This year, Uniswap, World, Kraken, Sony’s Blockchain Labs, and others announced their plans to build their layer-2s using the OP Stack, establishing Optimism as the undisputed leader in this field.
At present, Base ranks as the second most significant layer-2 platform, boasting a protocol value of approximately $9.8 billion. This puts it ahead of Optimistic (OP), which currently stands at around $6.5 billion, based on L2beat’s data. Among the 52 active rollups, 24 are constructed using the OP Stack, with a combined total of $19 billion locked within them.
By November 2024, transactions on Layer 2 within the OP Stack represented about 52.7% of all Ethereum Layer-2 transactions, as stated by a representative from the Optimism Foundation.
Jones attributes the success of OP Stack to how easy it is for developers to create their own chains. “There is a ton of complexity in just running a chain. And the reality is that just having good infrastructure that is reliable, that is easy to run, easy to maintain, and won’t go down, is a super important part of the story,” he told CoinDesk.
Pay-For-Play: a winning strategy?
Competitors of Optimism have pointed out that a significant aspect of Optimism’s approach to persuade new networks to adopt their technology is by distributing substantial amounts of OP tokens as grants. Previously, representatives from the Optimism Foundation have informed CoinDesk that these grants are intended to support developers in initiating development on the platform, with the ultimate aim of benefiting the Collective and other networks within Optimism’s Superchain.
At the launch of Base, it was disclosed that Coinbase would acquire approximately 118 million OP tokens, with each token priced at $1.55, equating to an initial value of around $182 million. Currently, these tokens are worth $283 million. In exchange for this investment, Base agreed to contribute either 2.5% of its total sequencer fee revenue or 15% of its profits (whichever was greater) to the Optimism Collective as a means of supporting the Optimism ecosystem.
After that, it appears that certain projects have been more secretive about the number of Optimism (OP) tokens they will get from the Optimism Foundation for developing on the OP Stack. Initially reported by CoinDesk, Kraken was to receive 25 million OP tokens for building on OP Stack, equivalent to $100 million at the time of the agreement, now valued at around $60 million.
As reported by representatives at Kraken, the payment corresponded to what is typically given for significant initiatives sourced from Optimism.
As an analyst, I’ve noticed that neither Uniswap, Sony, nor Worldcoin have disclosed the amount of OP tokens they are expected to receive from Optimism over time. In contrast, several smaller projects like Celo (with a grant of approximately 6.5 million tokens) and BOB (with a grant of roughly 750,000 tokens) have publicly shared their anticipated token allocations.
Officials from Optimism Foundation have stated in the past that they rely on the projects themselves to reveal the grant amounts. Recently, a representative clarified to CoinDesk that the Optimism ecosystem prides itself on transparency regarding its treasury, and that the Kraken agreement is included within this disclosure.
As a crypto investor, I’m involved in partnerships that channel funds towards specific projects, fostering their early growth and development on the blockchain.
In conversation with CoinDesk, Jones stated, “It’s accurate to point out that numerous teams within this sector often rely on grants as a standard industry method. We have no intention of avoiding assisting our developers in their growth, especially since grants can be beneficial for such purposes.
The unclear distribution of OP tokens assigned to chains stirs up doubts about the extent to which these grants influenced the negotiations for those transactions.
Instead of viewing the distribution of OP tokens as simply dispensing money, Jones contends that these projects are leveraging Optimism’s technology at no cost (since it’s open-source) and are contributing to enhance Optimism’s code and software. Essentially, they are being compensated for their efforts within the broader OP ecosystem, which in turn gets funneled back into the Collective.
Jones added that it’s crucial to realize we’re establishing a governance structure, designed to ensure everyone within our cooperative system has an opportunity to express their opinions,” or simply, “Jones emphasized that we’re creating a governance structure for our collaborative system to empower the voices of all its members.
Jones emphasized that there are two key points to remember: firstly, the OP Stack is thriving, regardless of where grants aren’t taken into account globally. Secondly, it’s misleading to discuss these grants in terms of OP tokens without comprehending their purpose. Lastly, he highlighted that linking the various projects within the Superchain is a crucial part of our strategy.
The wager of optimism suggests that an approach combining simple technology and funding via grants could prove successful. However, at this point, it’s uncertain if Optimism will continue to lead in the field of Ethereum scaling; we’ll need to wait and see how things unfold over time.
Read More
- SUI PREDICTION. SUI cryptocurrency
- „People who loved Dishonored and Prey are going to feel very at home.” Arkane veteran sparks appetite for new, untitled RPG
- LDO PREDICTION. LDO cryptocurrency
- Destiny 2: A Closer Look at the Proposed In-Game Mailbox System
- Clash Royale Deck Discussion: Strategies and Sentiments from the Community
- Jennifer Love Hewitt Made a Christmas Movie to Help Process Her Grief
- ICP PREDICTION. ICP cryptocurrency
- Naughty Dog’s Intergalactic Was Inspired By Akira And Cowboy Bebop
- Critics Share Concerns Over Suicide Squad’s DLC Choices: Joker, Lawless, and Mrs. Freeze
- EUR IDR PREDICTION
2024-12-10 18:15