With the Ethereum blockchain experiencing scalability issues, more platforms have developed scaling solutions to address the issue.
Typically, these scaling solutions are intended to improve transaction speed while reducing the high transaction costs associated with the Ethereum chain.
The Ethereum network has recently been under increased pressure. Developers are building decentralized apps such as DeFi protocols, NFT projects, and Decentralized Autonomous Organizations (DAOs) on the network.
The blockchain is not scaling with increasing usage, resulting in high transaction fees and network congestion.
This article extensively examines the concept of scalability, the Optimism scalability solution, and its underlying architecture.
What Are The Different Scaling Solutions?
As a result of the scalability issues noticed in the older blockchains such as Bitcoin and Ethereum, different types of scaling solutions exist and will be discussed below. Many of these scaling solutions act as Layer 2 platforms.
Sidechains
These Layer 2 solutions are smaller chains connected to the main blockchain through infrastructure similar to a bridge. They use an independent consensus mechanism from the main chain, allowing it to verify transactions.
Rollups
This type of scaling solution rolls up multiple transactions into a ball of a single transaction and presents it to the blockchain. Since multiple transactions are presented as one to the Ethereum chain, it drastically cuts down on transaction costs.
Rollups may come in the form of optimistic rollups or zero-knowledge rollups. Zero-knowledge rollups work with the help of zero-knowledge proof, which shows that something is true without revealing much information about it.
It is different from optimistic rollups because it does not need the dispute resolution system since it adds only valid transactions to the rollup. Its use of zero-knowledge proof means that only valid transactions are added to the rollup. This type of rollup is expensive compared to its counterpart.
Optimistic rollups work based on the fact that every piece of rolled-up data is valid, ensuring that no one tries to game the system. There is a dispute resolution system; anyone can dispute transactions by submitting them to the Ethereum chain.
This type of scaling solution is based on the belief that by assuming that transactions are valid, transaction speed can increase tremendously.
Transaction costs are reduced drastically with the help of optimistic rollups while offering high throughput.
No matter the type of rollup system used, transactions are done outside the Ethereum mainnet; then, once consensus has been reached, the data is sent to the Ethereum chain. As a result, they also depend on the security mechanism of Ethereum, though they have checks and balances to ensure that their network is not manipulated.
State channels
State channels ensure that participants directly communicate with one another on the blockchain network, eliminating the need to wait for miners to verify a transaction. This type of Layer 2 scaling solution sacrifices a bit of decentralization for scalability.
Nested blockchain
A nested blockchain is a decentralized architecture that connects to the main blockchain to receive commands, then executes them.
What is the Optimism Network?
The Optimism Network is an open-source Layer 2 chain built on the Ethereum blockchain. As a Layer 2 chain, it works independently of Ethereum in such a way that transactions are done on it, and only the data linked to the transactions are sent to Ethereum for verification.
Optimism bears some similarities to Polygon because they are both Layer 2 solutions with varying architectures. Different DeFi protocols, such as UniSwap and Synthetix use the Optimism network to ensure scalability on Ethereum.
As a result of its Layer 2 feature, the Optimism Network offers faster execution of transactions and lower transaction costs while ensuring that Ethereum remains decentralized. Its existence does not negatively affect the integrity of the Ethereum mainnet.
Optimism is similar to Arbitrum, with the main difference being the fraud-proof mechanism they employ. Arbitrum employs multiple-round fraud proofs, whereas Optimism employs single-round fraud proofs.
Optimism was created primarily to reduce transaction costs, whereas Arbitrum is concerned with ensuring that Ethereum smart contracts function properly.
How Does Optimism Network Work?
Optimism Network uses rollup technology to improve scalability. According to its technical documentation, the Optimism Network is an “Optimistic Rollup, which is basically just a fancy way of describing a blockchain that piggy-backs off of the security of another “parent” blockchain. Specifically, Optimistic Rollups take advantage of the consensus mechanism (like PoW or PoS) of their parent chain instead of providing their own. In Optimism’s case, this parent blockchain is Ethereum.”
Optimistic Rollups work by bundling up data linked to multiple transactions into a single transaction and submitting it to the Ethereum chain.
The transactions may include regular transactions, minting of NFTs, token swaps, and so on. Typically, the rolled-up and single transaction submitted to the network can consist of thousands of transactions from a wide range of activities on the Ethereum chain.
As previously stated, there are two types of Rollups, and Optimism employs the Optimistic rollup.
Every transaction is considered valid in this system, and a dispute resolution mechanism is in place to prevent users from manipulating the system.
Typically, anyone can attempt to prove a transaction is false, but only within a specific time frame.
The importance of a sequencer in the Optimism Network can’t be overemphasized. They are in charge of:
- Receiving transactions from users.
- Rolling up these transactions in a batch and publishing them in the Canonical Transaction Chain.
- Publishing the intermediate state roots produced by the transactions as a state batch in the State Commitment Chain.
Sequencers in Optimism are the brains of the network’s operations as they execute the calculations outside the Ethereum mainnet before sending the rolled-up data to the chain using a smart contract. There are safeguards in place to prevent sequencers from manipulating the network.
Users can cross-check the submitted data to see if there was an error after the sequencer submits it to the Ethereum chain. Verifiers are compensated for checking the submitted data.
Does Bitcoin Have Scalability Solutions?
The Ethereum blockchain is not the only one that has scalability issues or scaling solutions. The Bitcoin network employs a number of scaling solutions to improve transaction speed and reduce transaction costs. Off-chain and on-chain scaling solutions have been used on the Bitcoin blockchain and other chains suffering from scalability issues.
Side-chains and plasma are examples of off-chain scaling solutions. Plasma is a Layer 2 scaling architecture that employs child chains that branch off the parent chain. Each child chain operates independently of the others, executing transactions and reducing the load on the main network.
There are several methods for on-chain scaling solutions, including sharding, SegWit, and hard forks. SegWit, or Segregated Witness, improves a network’s block size restriction by removing the signature data from each transaction in the blocks.
Hard forks result in the formation of new chains, each with its own set of principles and base layers.
In the case of sharding, the network is divided into smaller parts called shards that ensure that transactions are verified quickly. Shards are independent of one another.
In Conclusion,
- Optimism Network is an open-source Layer 2 chain that is built on top of the Ethereum blockchain.
- Rollups come in the form of optimistic rollups and zero-knowledge rollups.
- Zero-knowledge rollups work with the help of zero-knowledge proof, showing that something is true without revealing much information about it.
- Optimism network employs optimistic rollups.
- Optimistic Rollups work by bundling up data linked to multiple transactions into a single transaction and submitting it to the Ethereum chain.
- Optimistic rollup works based on the fact that every rolled-up data is valid, and there is a dispute resolution mechanism in place to prevent users from manipulating the system.
- The Optimism Network works with the help of sequencers.
- Sequencers in Optimism are the brain of the network’s operations as they execute the calculations outside the Ethereum mainnet before sending the rolled-up data to the chain using a smart contract.
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