• Ethereum network is plagued with clogged transactions and high fees.
  •  The second-layer solution launched by Optimism may become a game-changer.

The startup Optimism launched Optimistic rollups, a limited version of its testnet to improve the Ethereum scalability.

Ethereum scalability woes

Over the past few months, the Ethereum network has faced heavy overloads. The spectacular growth of the decentralized finance (DeFi) industry resulted in the long waits if the transactions and skyrocketing gas prices. 

The community put hopes on Ethereum 2.0, a major network update that is supposed to fix the scalability problems. The developers expect to start rolling out the solution by the end of the year; however, many ETH-based projects cannot wait that long. As the FXstreet previously reported, the prohibitive transaction fees forced some projects to shut up or move to another blockchain

At the time of writing, ETH users have to pay $2.6 on average for any transaction on the network. While it is way lower from an all-time high of $14.53 hit on September 2, it is still a heavy burden on users' budgets. 

Ethereum transaction fees

Source: Bitinfocharts

Cause for Optimism

The team announced the Optimistic rollups project in January 2020. According to the official blog post definition,  it is "a layer 2 scaling solution that scales general smart contracts and enables instant transactions on Ethereum." 

The solution is based on the Optimistic Virtual Machine (OVM), fully compatible with the EVM. It is supposed to allow to scale Ethereum network up to 2000 transactions per second.  Now that the test version has gone live, the team promises to roll out the solution gradually, integrating small cohorts of projects set by step.  

The decentralized cryptocurrency exchange Synthetix is the first project registered with the testnet. They will give away  200,000 SNX in rewards to their users willing to participate in the tests. Uniswap and Chainlink also announced that they would want to participate in the project.

Optimistic roadmap

Source: Official blog of the project

At this stage, the network is open for public use; however, the team will be adding features gradually to ensure the system's stability. 

On Phase A, users will be allowed to mint & burn sUSD and claim staking rewards. Phase B will unlock deposits. Also, users will be able to increase their staked SNX. And finally, in Phase C, withdrawals will be enabled.  To receive the testnet reward on the mainnet, the participants will have to perform a successful withdrawal.

The community was enthusiastic about the announcement, with some Twitter users comparing the Optimistic rollups launch with moving from dialup internet to 5G.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

Bitcoin Price Prediction: Bitcoin facing potential pullback before a final push to $20,000

Bitcoin is back above 60% market dominance and climbed above $13,000 for the first time since June 2019. In the past week alone, BTC's total market capitalization has increased by over $31 billion.

More Bitcoin News

Ripple Price Prediction: XRP cracks a critical resistance level and targets $0.30

XRP has been fighting with an ascending triangle pattern for around one month and seems to have finally cracked the upper boundary. If the digital asset can close above this critical resistance point, bulls will be in full control.

More Ripple News

Vechain Price Prediction: VET hits a robust resistance wall towards $0.016

Vechain, like the rest of the market, seems to be rebounding although still far away from its 2020-high at $0.0229, currently only trading at $0.0123. Over the past week, the digital asset gained around $125 million in market capitalization. 

More Vechain News

Bankers grow concerned as governments around the world rush to digital currencies

The idea of state-backed digital money is gaining traction around the globe. However, neither regulators nor the community clearly understands how it will look like and what are the consequences of this major evolutionary development in the global financial system.

More Cryptocurrencies News


Bitcoin: BTC ready to escape from the range; bulls have $12,000 in mind

Bitcoin has been gaining ground amid positive fundamental developments. The flagship cryptocurrency is ready to break free from its current range and proceed with the recovery towards $12,000. 

Read the weekly forecast