Optimism is a Layer 2 network built on Ethereum. It runs transactions on its own chain, called OP Mainnet, and posts the transaction data back to Ethereum. Users get lower fees and faster confirmations, while Ethereum remains the place where the record is stored and disputes are settled.
Optimism is also the name of a wider project: the open-source OP Stack software, the group of chains built with it, and the governance body called the Optimism Collective. The project's own overview is on the Optimism website.
A Short History
- 2021: OP Mainnet launched in stages, first for selected applications in January and then for all developers in December.
- 2022: the Optimism Collective and the OP token were introduced, with the first airdrop on May 31.
- June 2023: the Bedrock upgrade rebuilt the network on the modular OP Stack and cut fees.
- March 2024: after Ethereum's Dencun upgrade, Optimism began posting data as blobs, which lowered fees sharply.
- June 2024: permissionless fault proofs went live on OP Mainnet.
How Optimistic Rollups Work
Optimism is an optimistic rollup. The name comes from its main assumption: transaction batches are treated as valid unless someone proves otherwise.
A component called the sequencer receives user transactions, orders them and produces Layer 2 blocks every two seconds. It then compresses the transactions and posts them to Ethereum. Since Dencun, this data goes into blobs, a cheaper kind of data space, instead of regular transaction calldata.
A proposer also posts claims about the state of the Layer 2 chain to Ethereum. After a claim is posted, there is a challenge window of about seven days. During that time, anyone can dispute a claim they believe is wrong by starting a dispute game on Ethereum. Both sides post bonds, and the side that is proven wrong loses its bond.
The ethereum.org page on optimistic rollups explains the design and how it compares with zero-knowledge rollups, which prove every batch with cryptography instead of waiting for challenges.
The practical effect for users is the withdrawal delay. Moving funds from OP Mainnet back to Ethereum through the official bridge takes about a week, because the withdrawal must wait for the challenge window.
OP Mainnet is compatible with the Ethereum Virtual Machine. Contracts and wallets that work on Ethereum work there with little or no change, and gas is paid in ETH.
The OP Token
OP is a governance token. It is not used to pay gas. The initial supply was 4,294,967,296 OP, distributed over time to users through airdrops, to ecosystem and public goods funds, to core contributors and to investors.
The Optimism Collective has two houses:
- Token House: OP holders and their delegates vote on protocol upgrades, grants and treasury matters.
- Citizens' House: a separate group of members, not based on token holdings, that oversees retroactive public goods funding.
Retroactive public goods funding rewards projects for value they have already delivered, such as open-source tools and infrastructure, instead of funding promises.
The OP Stack and the Superchain
The OP Stack is the software that runs OP Mainnet. It is open source under the MIT license, so any team can use it to launch its own Layer 2. The Optimism documentation covers the stack and how chains are deployed.
The Superchain is the group of OP Stack chains that have agreed to shared standards, shared upgrades and a common governance framework. Base, launched by Coinbase in 2023, became the largest of them by activity. Other chains built on the stack have included Zora, Mode, Unichain, Soneium and World Chain.
Member chains agree to contribute a share of their sequencer income to the Optimism Collective. The stated formula is the greater of 2.5% of sequencer revenue or 15% of sequencer profit. This gives the Collective a source of funding beyond the OP token itself.
The long-term aim is for these chains to pass messages and assets between each other natively, so that users do not experience them as separate networks.
Risks to Understand
- Centralized sequencer: OP Mainnet's sequencer is run by a single operator. It could delay or reorder transactions. Users can still force a transaction through Ethereum if the sequencer ignores them.
- Upgrade keys: a Security Council can upgrade the contracts and can override the proof system in an emergency. In August 2024, permissionless proofs were switched back to a permissioned mode for a short period while bugs found in audits were fixed.
- Value capture: OP holders govern the system, but fees are paid in ETH. The link between network activity and the token depends on governance decisions.
- Dependence on partners: a large part of Superchain activity and income comes from a few chains, above all Base. A member chain can choose to leave or change its stack.
- Competition: Arbitrum, zero-knowledge rollups and other Layer 2 designs compete for the same users.
Common Mistakes
One mistake is assuming OP is needed for gas. You need ETH on OP Mainnet to transact.
Another is sending funds to an exchange on the wrong network. OP Mainnet, Base and Ethereum use the same address format, and a deposit sent on a network the exchange does not support may be lost.
A third is forgetting the seven-day wait when using the official bridge to withdraw.
Nothing in this article is financial advice.
Key Optimism Facts
- Type: optimistic rollup on Ethereum
- Gas token: ETH
- Governance token: OP
- Block time: 2 seconds
- Challenge window: about 7 days
- Software: OP Stack, open source under the MIT license
- Permissionless fault proofs: live since June 2024
Track on CoinMarketGuy
The Optimism price page shows the live OP price, market cap, circulating supply and chart. Because gas on the network is paid in ETH, the Ethereum page is useful alongside it. The DEX page lists active liquidity pools with their volume and liquidity.