Interest in Optimism (OP) is high. For example, both CoinGecko and CoinMarketCap gave OP a $1.31 on 21 September 2023.
Optimism was CoinMarketCap’s 13th most trending cryptocurrency on 20 September 2023. Conversely, Optimism was CoinGecko’s seventh most trending cryptocurrency on the same day.
Moreover, CoinGecko named Optimism the 42ndlargest cryptocurrency, while CoinMarketCap labeled OP the 41st largest cryptocurrency on 21 September 2023. Thus, many people will wonder what Optimism is and if it is worth $1.31?
What is Optimism?
Optimism (OP) is a Layer 2 Blockchain built for Ethereum (ETH). To explain, a Layer 2 is a second blockchain. They add to another blockchain to expand its capacity.
Many decentralized finance (DeFi) apps need a Layer 2 because of limited capacity. Ethereum has a limited capacity because of all the encryption. Layer 2 blockchains often have less encryption, which gives them more capacity and speed. In particular, Layer 2 blockchains can process transactions faster and process more transactions at once.
They claim Optimism apps are faster and cheaper than Ethereum apps. Essentially, Optimism’s OP Mainnet is an alternative to the Ethereum Virtual Machine (EVM). The EVM is the digital computer than runs Ethereum. Apps need EVM access to operate on Ethereum.
The Mainnet lets apps run on Ethereum without paying gas fees. Ethereum gas fees are the price apps pay to access the EVM. Gas fees can add up fast. CoinDesk estimates the average Ethereum gas fee was $2.61 on 20 September 2023. Optimism builders claim they have saved users over $3 billion in gas fees.
How Optimism Works
Optimism (OP) works by offer several features that can reduce the costs of Ethereum while increasing its speed and capacity. Those features include:
Optimistic Rollups. An Optimistic Rollup is a Layer 2 protocol that extends the throughput of Ethereum’s base layer. Throughput is the amount of data that passes through a blockchain. Theoretically, Optimistic…