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What Is Optimism Crypto Network? - Introductory Guild To Optimism Blockchain

 

By Nerly Shammah Nov 30, 2022

 

 

What is Optimism blockchain? 

 

Optimism is a Layer 2 cryptocurrency blockchain operating as an extension of the Ethereum blockchain, meaning that it is a scaling layer of the parent chain. 

 

Amongst all Ethereum's technologies is a bit of weakness, this is mostly its inability to scale at ease without an undesired weight forced on the network. As such, many developers have come together to build solutions around these flaws, from the deployment of new layer 1 networks to building layer 2 scaling environments, different blockchains have been deployed as a scaling structure believed to be a long-term aid or killer to the Ethereum blockchain. 

 

That said, Optimism is one of the many blockchains envisioned to help scale Ethereum via a technology called rollups, a scaling solution that sandboxes the current Ethereum technologies rather than reinventing the wheel. 

 

 

Understanding Optimism

 

The key to understanding Optimism and why it is a necessary development of the Ethereum ecosystem is to understand some of the weaknesses of the parent chain. Optimism build-ups are centred on simplicity, pragmatism, sustainability, and let's not forget optimism, this allows it to focus on building out a Layer of ease in scaling the Ethereum blockchain.

 

This feature set design allows the network to lower the bars on all things, thereby promoting a more secure, fast, and scalable blockchain network. 

 

As many may have already been aware, building on Ethereum becomes increasingly expensive and painful proportionately to the growth of the ecosystem and network, this limits decentralized applications or high-demand performance applications from scaling. Optimism aims to be an extension for efficiency, allowing developers and users to leverage the Ethereum technologies while having to worry less about scaling or cost.

 

How does Optimism really work? 

 

Understanding how Optimism really works can be tricky given the numerous pieces to it, but if you understand Ethereum technologies, then see Optimism as an optimized version of Ethereum, literally.

 

Optimism is more technically called "Optimistic rollups", as previously mentioned, this technology feeds on the Ethereum security structures while rolling up data into a more compressed space to lower storage requirements and transaction costs thereby enhancing growth and network scaling capacity. 

 

In detail, Optimism is built as optimistic rollups, this functions similarly to common blockchain blocks, however, unlike the usual nature of blocks where different transactions are grouped into a block, rollups are actually a group of blocks, so they hold significantly much higher data. 

 

The benefit of this is that the chain is able to significantly lower the needed cost for transacting directly on the Ethereum blockchain, by grouping blocks into an append-only list, Optimism is able to scale beyond Ethereum fee flaws and also attain network immutability as by design, it can withstand up to 50 blocks reorganization. 

 

This means that perhaps if the Ethereum blockchain was to reorganize up to 50 blocks(which is unlikely), optimistic rollups are stored in a  CanonicalTransactionChain or CTC which by code, allows the blocks to be modified by new Ethereum transactions unless it's a reorganization of blocks. That said, if the parent chain has to undergo more than 50 blocks of reorganization, then Optimism would reorganize.

 

How are blocks produced on Optimism?

 

First, you need to understand that the CanonicalTransactionChain is a smart contract that holds blocks of transactions from the Optimism network.

 

Now, unlike other blockchain networks where miners or validators individually run nodes to produce blocks and post them to the chain as we've seen in Bitcoin mining and numerous proof-of-stake blockchains, Optimism blocks are produced by a single party called the "Sequencer". 

 

The sequencer does three main jobs, which include providing instant transaction confirmations and state updates, constructing and executing L2 blocks, and submitting user transactions to L1(that is Ethereum). To legacy structures and parties, a central method of network management is often considered efficient, but to the cryptocurrency ecosystem, it screams unscalability as the state of the blockchain is centralized by this. 

 

Typically, the sequencer aids in Optimism's Vision of scaling Ethereum as its practices help reduce storage and transaction cost. That said, Optimism still relies heavily on Ethereum for block finality, when a transaction is submitted to the sequencer, it instantly validates the gas fees paid to prove transaction uniqueness, these blocks are further grouped into the CanonicalTransactionChain contract which is forwarded to Ethereum as a single block. As a collection of transactions submitted in batches to Ethereum, they are called pending blocks. Notwithstanding, a user may choose to directly post a transaction to the CanonicalTransactionChain contract, which promotes network sovereignty but however exposes such transactions to high gas payments. 

 

Is Optimism Blockchain Decentralized?

 

Given the nature of most influential Optimism technologies, the Optimism blockchain is not decentralized on a network level. Notably, the sequencer plays a significant role in the centralization of the Optimism network, given that there are no mempools and certainly no miners or validators on the Optimism blockchain, blocks are picked by the sequencer and instantly accepted or rejected through a practice of evaluating the gas paid and then posted to the Ethereum chain for finality. Optimism relies on Ethereum governance for the finality of blocks, thus security, but on the layer 2 network level, most transactions are centrally picked for validation. 

 

Notwithstanding, users may choose to directly submit transactions to the CanonicalTransactionChain smart contract as aforementioned to avoid being censored by the sequencer, however, this would mean paying significantly more for gas to get one's transaction validated. Optimism is also working on a model that creates a more decentralized environment for how the sequencer is operated.

 

Secondly, as a layer 2 framework, Optimism is heavily reliant on the control of a set of anonymous individuals. These individuals can perform upgrades on core Optimism smart contracts via the leverage of a multi-sig wallet which is the current security model of the Optimism layer 2 frameworks. 

 

This makes the chain centralized by default as these individuals hold access to upgrade keys - a common layer 2 feature that surprisingly, isn't often discussed. That said, Optimism is however set out to potentially remove this control by deploying a multi-client architecture to decentralize the chain.

 

Fault Proofs - Can Transactions Be Changed or Reverted On The Optimism Blockchain?

 

No, all transactions are considered "valid", however, a state commitment can be challenged provided it is still in the "challenge window" of about 7 days.

 

But what are fault Proofs? 

 

Fault Proofs are proof of the validity of a network state, Optimism state commitments initially relied on being unchallenged in a 7-day window to be considered fault-proof by the Ethereum network. 

 

But given that the system(the challenge window) has been greatly inefficient, this feature has been temporarily disabled and all users solely trust the integrity of the sequencer while leveraging the Optimism network. Additionally, Optimism is working on making its layer 2 networks ultimately fault-proof without the need for custom validity as it is seen to be highly irrelevant as a network upgrade can simply override such security measures. 

 

Optimism OP token - What Is It and How Is It Leveraged?

 

What is OP token? 
OP token is the native cryptocurrency for the Optimism Blockchain, which was airdropped to thousands of addresses following predefined criteria.

 

Like many other blockchain networks, OP holders have significant blockchain influence which mostly centres on governance, discussed below. 

 

Optimism Blockchain Governance - How does it work?

 

Optimism is currently most governed by a set of anonymous individuals who with access to a multi-sig wallet can make core changes to the Optimism Blockchain.

 

But say we ignore all that, OP token holders can influence Optimism governance in a number of ways including voting for Governance fund grants, Protocol upgrades, Inflation adjustment, Director removal, Treasury appropriations, and Rights protection. 

 

Typically, a system called the "Optimism Collectives" is set up to govern the Optimism Blockchain and its vast operations therein. These collectives are currently divided into two:

 

-Token House 

-Citizen's House

 

The Token House is made up of OP token holders who decide on network-level governance as mentioned above. While the Citizen's House deals with retroactive public goods funding(RPGF).

 

Collectively, they make up the Optimism governance structure but as an experimental framework that the ecosystem looks to constantly build upon until it is highly scalable.