L2: Comparison of Optimism and Arbitrum

Optimism and Arbitrum are two of the largest Layer 2 (L2) solutions that leverage Optimistic Rollup technology to scale the Ethereum network. This article will conduct a complete comparison of the two.

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Optimism and Arbitrum are two of the largest Layer 2 (L2) solutions that leverage Optimistic Rollup technology to scale the Ethereum network.

L2: Comparison of Optimism and Arbitrum

Currently, Ethereum’s high transaction fees and limited throughput of around 15 transactions per second (TPS) severely limit its scalability.

In order to solve this problem, the Rollup extension scheme has emerged, which can be divided into Zero-Knowledge (ZK) and Optimistic Rollup; in this article, we will focus on the latter. The two most prominent Optimistic Rollups, Optimism and Arbitrum, which support Ethereum or ERC-20 token transactions, have a throughput of around 2000-4000 TPS, a fraction of the benchmark Ethereum gas cost.

Optimistic Rollup

Optimistic Rollup works by executing transactions on the Layer 2 Rollup chain, while a node called a Sequencer aggregates and submits transaction status data to Layer 1. The advantage of this approach is that it compresses the data posted to the Ethereum mainnet while amortizing the gas fee across each Rollup batch of transactions.

Additionally, unlike sidechains, the Rollup scaling solution leverages a layer 1 blockchain consensus mechanism, allowing Rollup to benefit from the security of larger networks such as Ethereum. Also, as long as transaction throughput is scaled at layer 1, it is also scaled at the Rollup layer. Thus, when merged with ETH 2.0, Rollup has the potential to increase transaction throughput to ~100,000 TPS.

Optimistic vs. ZK-Rollup

Unlike Optimistic Rollup, which uses a “dispute resolution process” to secure transactions, ZK-Rollup utilizes zero-knowledge proofs for transaction verification. Some of the key differences between them are as follows:

Optimistic Rollup has a longer fund withdrawal period due to its security model.

Optimistic Rollup is less computationally complex, resulting in lower hardware requirements for layer 2 nodes.

Ethereum Virtual Machine (EVM) compatibility is much simpler on Optimistic Rollup than on ZK-Rollup.

Currently, on Optimism and Arbitrum, the centralized Sequencer must be trusted to publish valid transaction data to layer 1. In theory, this is a security risk because at least one of the sequencer and the validator must be assumed to be honest. However, Sequencer is encouraged to act honestly, so in reality the risk is minimal.

Optimistic Rollup is the more popular of the two protocols, with Optimism and Arbitrum controlling about 71% of the second layer market share.

Arbiter Optimism

While both Arbitrum and Optimism are classified as Optimistic Rollup, they do have some differences.

First, they utilize different dispute resolution processes to validate transactions. Optimism uses a single round of Fraud Proofs performed at layer 1, while Artibrum uses multiple rounds of Fraud Proofs performed off-chain. Arbitrum’s multi-round fraud is the more advanced of the two, and is cheaper and more efficient than a single round.

Additionally, while both Optimism and Arbitrum are EVM-compatible, Optimism uses Ethereum’s EVM, while Arbitrum runs its own Arbitrum Virtual Machine (AVM). This resulted in Optimism having only one Solidity compiler, while Arbitrum supports all EVM compiled languages ​​(Vyper, Yul, etc.).

Comparison of Ecosystems

L2: Comparison of Optimism and Arbitrum

The technical differences between Arbitrum and Optimism are very “invisible” and have little to do with the average user. But their ecosystems and community sizes vary widely:

Arbitrum has a total value locked (TVL) of $2.09 billion as of June 28, 2022, more than double Optimism’s $807 million.

Arbitrum’s official Twitter and Discord currently have 255K followers and 95K members respectively, while Optimism has 214K Twitter followers and 44K Discord members.

While Optimism’s ecosystem is slightly more mature, it is the smaller of the two systems with 50+ dapps compared to Arbitrum’s 80+ dapps.

The two protocols also share many DEXs, dApps, and lending protocols. The largest platform on Arbitrum is GMX. The second largest protocol is dForce, a DeFi infrastructure protocol that provides lending, trading, and staking services.

L2: Comparison of Optimism and Arbitrum

On Optimism, Synthetix is ​​TVL’s largest protocol, a derivative liquidity protocol that allows people to create synthetic assets on the blockchain. Additionally, Velodrome Finance is Optimism’s proprietary decentralized exchange designed to ensure better interoperability between DeFi protocols on Optimism.

community activity

Another notable difference between Optimism and Arbitrum is the type of initiatives they take to engage their respective communities.

L2: Comparison of Optimism and Arbitrum

Optimism airdropped the governance token OP on June 1, 2022. This will extend Optimism’s governance to its community members by creating the Optimism Collective and the Optimism Foundation.

Optimism Collective is a DAO which itself is divided into two parts (houses), Citizen’s House and Token House. Members of these houses join by earning $OP and will receive privileges such as voting rights for protocol upgrades, project incentives, and public goods funding.

The Optimism Foundation includes members of the OptimismPBC team (now former members) and will act as collective stewards, running governance experiments on their behalf.

L2: Comparison of Optimism and Arbitrum

On the other hand, Arbitrum is not governed by a DAO and the protocol is run entirely by Offchain Labs. To get their community involved, they recently launched an 8-week NFT campaign – Arbitrum Odyssey.

Arbitrum Odyssey is a collaborative event between Arbitrum and NFT artists Ratwell & Sugoi, where participants must complete various on-chain tasks over an eight-week period to win prizes. For example, users may be required to provide liquidity on one protocol, exchange on another, etc.

L2: Comparison of Optimism and Arbitrum

For example, in the first week they asked users to transfer ETH to Arbitrum via the bridge pictured above. Users of the bridge with the most transaction volume after a week will also be able to earn rewarded NFTs.

Development Roadmap

Another difference between Optimism and Arbitrum is their development roadmap. Optimism has a clear roadmap to 2024, some of which include enabling next-generation interactive fraud proofs, sharded rollups, and decentralized Sequencer.

Arbitrum has not disclosed any of its future plans on its website or Github. But as a competitor to Optimism, Offchain Labs may be influenced by the $OP release to launch its own governance token at some point in the future.

Summarize

Both Optimism and Arbitrum have objective advantages.

By rapidly expanding the influence of social media and attracting DApp developers to join their industry chain, the marketing capabilities of the Arbitrum team are very obvious. In its current state, Arbitrum’s architectures outperform Optimism’s in terms of security and longevity because of their superior fraud prevention mechanisms and proprietary virtual machines.

The advantage of the Optimism team is that they put more emphasis on protocol decentralization and governance than Arbitrum. Currently, it is cheaper to trade and exchange tokens on Optimism, and their future plans could see them lead the way in Optimistic Rollup innovations, which could eventually turn the market in their favor.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/l2-comparison-of-optimism-and-arbitrum/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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