Arbitrum versus Optimism.
Architecture Ethereum is scaling natively
with a detailed roadmap following its switch to proof of stake.
After the merge layer, two chains like Arbitrum
and Optimism are helping Ethereum to share the workload.
They use optimistic rollups to roll up hundreds of transactions into one
and offload the traffic from the Ethereum mainnet into the second layer.
This reduces the network load for the first layer and allows for faster
transaction processing and cheaper fees by doing the bulk of the computation
on the L2 chain.
Optimistic rollups derive their name from the optimistic assumption
that all transaction
data is valid when aggregated into batches for verification on the L1 chain.
Both chains use fraud proofs, which you can imagine
as tests for the validity of the data.
Because these rollups are trustless transaction finality is instant
and the blockchains produce a much higher throughput than Ethereum.
The trade off is that there is a seven day challenge
window for verifiers to challenge the validity of submitted transactions.
There is also a so-called sequencer which orders
the transactions before they are submitted to the client.
The main technical difference between the two chains is that Optimism
uses single round from proofs, while Arbitrum uses multi round fraud proofs
in normal English.
This means Optimism is method is faster but potentially more expensive due
to higher gas fees because it's executed on the L1.
Arbitrum’s way takes more time but is more cost effective.
Moreover, Optimism uses the Ethereum virtual machine or even while
Arbitrum has its own Arbitrum Virtual Machine or AVM.
This means Optimism as programing language is limited to solidity.
Arbitrum supports all even programing languages.
So in conclusion, the technical differences are minimal
and barely noticeable for everyday users of both chains.
So Arbitrum vs Optimism.
Let's talk about the ecosystem analysis.
Since Arbitrum and Optimism use a similar technical approach
to scaling transaction throughput.
Comparing growth metrics across both chains is particularly
interesting in terms of TVL arbitrage is clearly ahead in the score.
According to DeFi Llama, the chain boasts more than double the total value
locked of optimism in their analysis of the two ecosystems.
BlockCrunch found that Arbitrum TVL is less dependent on one sector.
Almost 30% of TVL comes from derivatives and 22% from Dexes.
Meanwhile, Dexes account for almost 42% of the TVL
on Optimism, with only about 70% coming from derivatives.
Another interesting detail
is the comparison of native versus non-native protocols for TVL.
54% of Arbitrum TVL came from Native protocols, but only 29% of Optimism.
The reason for that is the dominance of GMX on Arbitrum.
GMX's alone accounts for almost 25% of all the TVL on Arbitrum.
Arbitrum also leads in terms of daily active addresses and daily transactions.
Its airdrop only accentuated this lead, although you can probably expect
the transaction and address count to revert back to more normal numbers
actually quite soon.
And as of this time, Arbitrum means processing more daily transactions
than Ethereum while having more daily active addresses as well.
And this will likely not stay the case for long.
Both protocols are on a long term upward trajectory for chain activity
and show no signs of slowing down Regarding key growth drivers Arbitrum them
benefited mainly from its Odyssey NFT series and the nitro upgrade
before the airdrop activity spiked during Odyssey as users were collecting NFTs
which may have been more useful for a potential later airdrop.
Still, after Odyssey and the Nitro upgrade, daily
active users were permanently higher than before for Optimism.
The big one was its initial airdrop.
Its op quests led to a temporary increase in daily active users,
but the network could not sustain the level of activity in the long term.
Optimism.
Second, Airdrop received a fairly lukewarm reception,
probably because most users were not eligible for this round.
All of these events
were unsurprising, dwarfed by the activity following the ARB airdrop.
However, it remains to be seen
if the activity on Arbitrum will tail off after the cat is out of the bag.
So let's talk about Arbitrum vs Optimism and its future catalysts.
So far the picture is clear.
Arbitrum is the clear leader among Optimistic rollups L2.
But what does the future hold for these two chains?
Well, interestingly,
the two chains are pursuing
slightly different approaches to grow their market share.
Optimism explained its gameplan in a blog post about the OP Stack.
The OP stack is Optimism next phase of scalability.
It’s a series of modules that work as a blueprint for modular scalability
and interoperable blockchains.
Optimism designed this framework and a flexible way to make it applicable
to various types of blockchains, not just optimistic rollups.
The first official release of the stack will be Optimism bedrock.
It will introduce modularity to Optimism and allow the separation of consensus,
execution and data availability layers to help future proof the chain.
The promise performance improvements are reduce transaction fees,
optimize deposits and withdrawals, and faster node sinking.
Most importantly, Optimism is collaborating
with Coinbase to develop its new base layer two Blockchain
and the end goal is a super chain comprised of a network of rollups built
using the OP stack.
This ecosystem of interoperable chains will share sequencing, proving
and bridging infrastructure, fostering seamless communication between networks.
Arbitrum just finished playing its biggest trump card, which is the ARB token drop,
and this is an important milestone and route to more decentralization.
But of course, it's also an important business decision that, as Arbitrum
hopes, will pay off by drawing more users into the ecosystem in the long run.
Besides ARB, Arbitrum is planning
to innovate the Arbitrum Nova, Arbitrum Orbit, and its Stylus Upgrade.
Arbitrum Nova is a sidechain with up to 90%
lower gas fees compared to the regular Arbitrum chain.
Although it offers lower security Arbitrum Nova is ideal
for gaming social and other high bandwidth applications.
Opensea and Treasure DAO recently launched marketplaces on Nova, providing
critical infrastructure for future projects.
Arbitrum Orbit enables developers to permissionless early launch L3
and leverage Arbitrum technology to build in the ecosystem
with its upcoming Stylus Upgrade Arbitrum.
Furthermore, it aims to introduce even plus allowing contracts written in
Rust C and C++ to interact synchronously with existing solidity based contracts.
This expansion opens the door to a vast pool of developers
improving network performance and reducing fees.
So in conclusion, optimism focuses on modularity, scalability
and interoperability and cooperates with Coinbase to gain a foothold
among builders in the space.
Meanwhile, Arbitrum seeks to expand its reach to more developers
and improve network performance
through its Stylus Upgrade and the development of its Arbitrum.
Nova Sidechain.
So who will be the winner in this optimistic roll up battle?
For now, Arbitrum has the lead.
It boasts a significantly higher TVL
and has more daily active users and processes more transactions.
And its airdrop quite literally broke its own system for a few minutes
and ARB has twice the market capitalization of AOP
over Optimism is by no means down, and now its cooperation
with Coinbase could put its solutions in front of millions of new users.
Moreover, it remains to be seen whether Arbitrum will keep going strong
now that the long awaited airdrop is finally concluded.