Staying optimistic about Ethereum’s optimistic rollups

Although more rollups are joining the L2 race, optimistic rollups still possess the greater share of total value locked

article-image

NicoElNino/Shutterstock modified by Blockworks

share

Ethereum’s layer-2 ecosystems are growing.

To date, nearly 30 different layer-2, or L2, networks have deployed on Ethereum. Recent entrants include Mantle Network and Consensys’ Linea. Projects like Scroll, Taiko and Honeypot are geared up to enter the game.

These second-layer protocols are intended to help scale the network by shifting some of the computational processes off Ethereum itself. For users, this means cheaper and faster transactions compared to how they might proceed on the mainnet. 

L2 networks have, over time, become economies of their own, collecting billions of dollars worth of digital assets in locked-up deposits along the way. 

Today’s crop of L2 networks chiefly break down into two categories: optimistic rollups and zero-knowledge (ZK) rollups.

Optimistic rollups move user transactions off-chain and then post the data back to Ethereum as “calldata.” Zero-knowledge rollups, on the other hand, also post their transactions off-chain, but they can validate that it is accurate without revealing the information inside. 

Of those building optimistic rollups, prominent players in the game are Arbitrum, Optimism, Base and Mantle. The first two, Arbitrum and Optimism, have amassed nearly $9 billion in total value locked (TVL) between the two protocols.

Today’s zkSync-centric rollups include Polygon zkEVM, Starknet, Scroll and Linea.

So optimistic

Today, optimistic rollups are the dominant protocols in the L2 space, according to data from L2BEAT, an information portal for the ecosystem. 

Arbitrum currently possesses the highest market share, with a TVL of $5.82 billion.

Arbitrum developer Offchain Labs is still exploring ways for the protocol to become a stage-3 optimistic rollup, according to co-founder and Chief Technology Officer Harry Kalodner. Under that framework, the rollup would be completely run via smart contracts. 

“I firmly believe that ZK rollups are much more complicated than optimistic rollups, and the amount of people who actually understand the tech is very tiny,” Kalodner said.

In conversation, Kalodner noted that L2 growth often involves a trade-off between permissionless and accessibility of the technology.

“We want to see everybody who wants to have an Arbitrum chain, have an Arbitrum chain, and we’re balancing that with the competitive realities of the market and being the technical leader,” Kalodner said.

Optimism is the second-biggest rollup, with a TVL of $2.42 billion. Unlike Arbitrum, Optimism’s source code is completely open-source, meaning that anyone can use the code to build their own L2.

Of those, Base Protocol, Coinbase’s decentralized L2 network, has most prominently used the Optimism stack to help build out its so-called superchain vision

Jesse Pollak, head of protocols at Coinbase, believes that on-chain computation will compete directly with the likes of Amazon Web Services and Google Cloud over the next decade. In his view, future apps will be able to run their own infrastructure at a much higher rate.

“The mental model I have for this is you can think of Base and OP mainnet as a shared compute model where you’re in the same compute environment, then certain apps will scale out of the compute environment…they’re going to be app chains or L3s,” he said.

Pollak notes that Base is focused on maximizing decentralization and security for as cheap as possible.

“The strategy for us is to create an open source code base, that’s standardized, configurable, modular, creates decentralized governance and funding infrastructure that attracts developers and makes them feel like they’re part of something bigger than themselves,” Pollak said.

Pollak added: “This way we have a bottoms-up groundswell of technology that even if it looks a little bit chaotic in the beginning, and maybe a bit slower. In the long run, it ends up being way faster and way bigger.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

4.png

Research

This months PPGC covered four main areas. Firstly, debriefing the progress and status of the mainnet implementation of the Ahmedabad hard fork. Secondly, a retrospective on the testnet phase of the Ahemdabad Hard Fork. Thirdly, an update on PIP-36 which involves replaying failed state syncs. Lastly, PIP-47 which pushes upgrades to the Polygon Protocol Council.

article-image

Spain-based Banco Bilbao Vizcaya Argentaria has been working in the new Visa Tokenized Asset Platform sandbox

article-image

The retail crowd is engaging with Robinhood both on and off chain, general manager Johann Kerbrat said

article-image

Gurbir Grewal, who has been at the agency almost as long as Gensler has been chair, will depart on Oct. 11, 2024

article-image

The stablecoin’s supply has declined about 50% in the last month, from $660 million to $320 million

article-image

Plus, Sky’s soaring stablecoin and simpler bitcoin staking