Optimistic Rollups Finally Make It to Ethereum, Synthetix Offers Rewards to Participate
Leading DeFi Projects are tapping Ethereum Layer-2 scaling solution Optimistic rollup to execute cheaper and faster transactions.
- Ethereum scaling startup Optimism has released a limited testnet version of its Layer-2 solution.
- Apart from ZK-rollups, optimistic is the other leading solution for smart contract scalability on Ethereum.
- Synthetix Network was the first DeFi project to join the testnet. Others like Chainlink and Uniswap are following close behind.
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Optimism PBC has launched the first phase of its Layer-2 scaling solution for Ethereum. Leading DeFi platforms beginning with Synthetix Network, Chainlink, and Uniswap are already lining up to enjoy cheaper and faster network speeds.
DeFi Projects Choose Optimism
As many DeFi projects rely on composability with one another, constant smart contract calls have been the primary reason for Ethereum’s congestion as of late.
This has led to an increase in the transaction fee and long wait times for many popular applications, even causing some to shut down. A rollup offers one solution to this problem.
A rollup executes smart contracts outside of Ethereum and only uses the Layer-1 network to store the result. The solution reportedly offers a 100x improvement in transactions per second (TPS) on the Ethereum network.
On Sept. 25, Optimism announced the first phase of the Optimistic rollup testnet by partnering with the decentralized derivatives exchange platform Synthetix.
Synthetix will incentivize participants with 200,000 SNX (worth $990,000 at press time) to use the testnet.
Optimistic will be introduced in four phases, as the Optimistic Virtual Machine (OVM) is finally linked to Ethereum’s mainnet. For now, it will only cater to minting and burning Synthetix’s stablecoin, sUSD, and claiming the SNX rewards.
Upgrading the DeFi Ecosystem
ZK-rollups and Optimistic rollups are the two leading solutions for scaling Ethereum smart contracts and dApps.
ZK-rollups promises to scale Ethereum to 500 tx/sec and leverages non-interactive zero-knowledge proofs (ZK-SNARKs).
While Tether chose ZK-rollups for scaling USDT transactions on Ethereum, the DeFi ecosystem looks to have opted for Optimistic rollups.
According to Ethereum co-founder Vitalik Buterin, Optimistic rollups are the intermediary solution for scaling Ethereum before the launch of ETH 2.0. Nevertheless, it is the easier one to implement with numerous individual calls on DeFi smart contracts.
Kain Warwick, the founder of the Synthetix, noted in his plans for L2 Synthetix that:
“I strongly believe that the transition of much of DeFi to the OVM will be an inflection point where DeFi is no longer a whale game, but is accessible to anyone to both build on and use.”
The other leading incumbent for Optimism integration is Uniswap. Currently, the fees for a simple swap on the DEX between Ether and DAI charges more than $15.
Integrating OVM could bring these fees down and may be included in Uniswap’s third iteration, Uniswap V3.