Optimism is a Layer-2 network that processes and confirms micro-transactions before concluding and consolidating the entire transaction to send it to the Layer-1 network, Ethereum, for a specified period of time. In this way, transactions through Optimism are much faster and the fees are significantly lower than Layer-1.
Essential details:
Optimism was developed by the Optimism Foundation, a non-profit organization founded to develop the Optimism Network and support the Ethereum network ecosystem to be more secure.
Optimism allows Ethereum to “lower transaction fees and make transactions faster”.
Gas price on Optimism considers operating costs and the cost of transaction data storing on L1 (also known as call data), Therefore there are additional transaction costs. (But still cheaper than transactions costs on Ethereum)
Optimism is a transaction rollup solution. The transaction data is saved on L1, but the transaction is processed by a single main computer, called “The Sequencer,” which reduces transaction costs and this mechanism ensures that the sequencer is accurate.
The Sequencer on Optimism performs computational data off-chain, then they compress the transaction data to propagate it to the smart contract on Ethereum chain.
Why invest in Optimism?
Optimism acts as a Governance Token that grants the holder the right to participate in the management of the network through the Optimism Collective feature, aiming to develop a sustainable ecosystem for the Ethereum network.
Optimism uses a solution called Optimistic Rollups (ORs) to manage transactions quickly and at low cost of fees.
Several DeFi platforms now support Optimism networks, including Uniswap, MetaMask, Aave, 1Inch.