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Why Optimism deserves your attention

May 17, 2023
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17 May 2023 : 19:51
Updated : 19 May 2023 : 20:20
9 min read

Ever felt like you’re always one step behind? That’s been Optimism in the Layer 2 arena, always trailing behind its big rival, Arbitrum. But guess what? Optimism is done playing in second place.

With their highly anticipated Bedrock upgrade around the corner, they’re making a play for the top spot. Could this be the game-changer that finally gets Optimism out of Arbitrum’s shadow?

Let’s dive in and see what the fuss is all about!

TLDR 📃

  • Optimism is set to roll out its Bedrock upgrade on June 6, 2023, aimed at turbocharging the network’s speed, security, and affordability.
  • This much-anticipated upgrade promises to slash fees by a whopping 50% and quicken deposit times by 75%, potentially pulling in more users.
  • With Bedrock, devs will have the power to craft their own chains linked to Optimism, opening up chances to ramp up the Total Value Locked (TVL) in the ecosystem.
  • Big-name projects like Worldcoin and Coinbase’s Base are hitching a ride with Optimism, showcasing their confidence in the network’s ability to handle masses of users.
  • The post spotlights three potential game-changers in the Optimism ecosystem: UniDex, Synthetix, and a yet-to-be-revealed mystery DEX.
  • Despite the Bedrock upgrade signalling a bright future for Optimism, the currently bearish market might put a damper on the OP token‘s short-term performance.
Disclaimer: Not financial or investment advice. Any capital-related decisions you make are your responsibility and yours only.

Game-changer upgrade for Optimism? 🔴  

After months of marketing, Optimism’s Bedrock Upgrade finally has a launch date – June 6 2023.

ICYMI – this upgrade is a major overhaul that will make the network faster, cheaper, and more secure.

Optimism is hyping up their upcoming Bedrock Upgrade as the “largest upgrade ever released”. But, is it really that extraordinary? And could this be the ticket to outpace Arbitrum, their long-standing rival?

When you compare chains, it boils down to two things: fees and capital (or as we call it, Total Value Locked – TVL). Right now, Arbitrum’s in the lead, thanks to its larger capital pool, which means more opportunities, and its lower fees. But, could Optimism’s major upgrade stir things up? Let’s dig in and see.

Fees

At the moment, an ETH transfer on Arbitrum is a bargain at $0.15, compared to Optimism’s steeper $0.36. Oddly enough, more users mean cheaper fees on L2s, which explains Arbitrum’s edge. But hold on, Optimism’s Bedrock Upgrade aims to halve fees, sending them down to around $0.18 – cheaper, but still not beating Arbitrum.

Yet, if this upgrade pulls in more users (and therefore brings fees down), Optimism might just take the lead in the fee game.

But remember, folks, it’s crucial not to get lost in the hype. Until this upgrade rolls out for real, we can’t be sure if these optimistic (pun intended!) forecasts will hold water. What counts is how things play out in the real world.

Capital (TVL)

Currently, Arbitrum’s TVL stands at a whopping $5.75B, dwarfing Optimism’s $1.72B – that’s a 3.3x lead! But don’t write off Optimism just yet.

Here’s the deal: The upgrade introduces the “OP Stack”, a foundation for projects to build their own chains – just like on Polkadot and Cosmos. This opens up a world of potential capital, though it won’t directly beef up Optimism’s TVL. That only happens if projects build applications on Optimism.

Now here’s the exciting part: Pre-upgrade, porting your Ethereum code to Optimism was a pain. You had to rewrite the whole thing. But post-upgrade? Developers can simply copy-paste their code onto Optimism. Add some incentives to the mix, and we could see a surge of new capital. Mind you, Arbitrum has its own incentives, so it’s a bit of a toss-up until we see how developers react.

And there’s more! Optimism is slashing deposit times from 10 minutes down to just 3. This smoother experience might tempt retail investors to dip their toes into the Optimism pool – even if they’re just there for a quick gamble. This is where Optimism outshines Arbitrum big time, whose deposit times are still a bit “last season” at 10 minutes.

The “world” is moving to Optimism 🌎

You know how we said “projects can build their own chains on Optimism”? Yes, well guess who decided to make it their home?

Sam Altman, founder of OpenAI, also built another project called “Worldcoin” back in 2020 and today that project is housed on Polygon.

He’s building Artificial Intelligence, so Sam thought it will be important to have a way to prove you’re human so he built up Worldcoin. This will use a Proof-of-Humanity system that scans everyone’s eyeballs. Plus, since AI probably takes over many jobs, he also thought about introducing a new type of UBI (universal basic income) with it. Now, whether we like his ideas or not is besides the point here, the point is that now Worldcoin is moving to Optimism.

With the potential to serve billions of users, Worldcoin’s move is a huge vote of confidence for Optimism.

Who else is moving in you ask? Coinbase.

Coinbase did not reach the high levels it did by being dumb. They understand that centralised exchanges will go extinct but they still want a piece of the pie so they decided to build up their own chain: Base on Optimism and they’ve hinted about going live on there soon.

Yes, the Coinbase with 8M+ monthly active users – it’s a massive endorsement for Optimism’s performance and capacity.

And here’s the cherry on top: Optimism stands to earn a share of the fee revenue from these new OP Chains like Base. Even if just one of them takes off, it could mean substantial revenue for Optimism. So, all in all, things are looking pretty optimistic for Optimism!

Promising projects in the Optimism ecosystem

Base won’t have a token and Worldcoin has questionable tokenomics. So as exciting as both of the updates above are, there’s no real opportunity beyond OP itself  – and we all know that depends on whether Optimism improves their tokenomic model because right now it does suck. So what else is there?

But fear not, we’ve got our eyes on three promising projects we’re itching to talk about:

UniDex

UniDex is a game-changer. It’s a one-stop-shop that makes the DeFi world a breeze by bringing together products from different projects into one sleek interface. No more bouncing between dYdX for derivatives and Uniswap for spot trading.

UniDex is already rocking multiple chains, including Optimism, with zkSync boasting the highest TVL. But here’s where it gets interesting – they’re hinting at launching their own “OP Chain”, dubbed Magma. Although UniDex’s TVL is a humble $4M right now, the Bedrock Upgrade could be a game changer. With Magma currently in testnet, it’s poised to follow Base to the mainnet once Bedrock drops. So, if you’re looking to dip your toes into the Optimism pool, keep a keen eye on Magma.

Synthetix

We’ve long been fans of Synthetix, and it’s no secret. They’ve been fuelling Optimism’s growth since day one and remain loyal.

As Optimism’s flagship project, Synthetix is set for a big leap forward with the Bedrock upgrade. The upgrade will give their perps a serious speed boost, slashing transaction time on their perp DEX from 9 seconds down to a lightning-fast 2 seconds.

What does this mean? A slicker product and a better user experience. And in a hot market like perpetual futures, that can only mean one thing: more users. More users equals higher revenue, and that’s good news for SNX stakers. So, if Bedrock hits the mark and draws in the crowd, SNX could become an even hotter ticket.

Mystery DEX ?

Back in March, we shared our strategy about spreading our bets across multiple chains, not just sticking with Arbitrum. It was then we stumbled upon a promising DEX on Optimism that’s ready to skyrocket if Optimism hits its stride.

You can catch up on all the details here (note: this is exclusive to our Pro subscribers).

What does this mean for the price of OP? 💵

Even though the Bedrock Upgrade is a big win for Optimism, the overall bearish market mood might rain on the parade,  pulling down OP’s short-term performance.

Two weeks ago, OP set its sights on $1.40 after falling through the $2 support level. Given our market projections (we’re seeing a bearish trend with BTC potentially dipping to $25,150 in the coming weeks), it looks like OP will be testing the waters at $1.40 this May.

Cryptonary’s take 🧠

he Bedrock upgrade is without a doubt a game-changer for Optimism. It’s all about slashing fees, speeding up deposit times, and boosting capital with the OP Stack. Optimism is clearly stepping up to the plate.

Big names like Worldcoin and Coinbase’s Base packing up and moving to Optimism is a major confidence boost. But let’s not forget, the real test is seeing how this upgrade plays out live.

Now for the OP token, it’s not immune to the market’s current bearish mood, which means a probable short-term slump. But if the Bedrock upgrade delivers and pulls in more users, all Optimism needs to make OP an appealing investment is to jazz up their tokenomics.

As with everything in crypto, it’s a waiting game.

Other news :newspaper:

  • Aevo unveils altcoin options trading: Aevo, the decentralised options exchange built on the OP Stack, now enables users to trade options tied to various tokens including Lido’s LDO, Sui’s SUI, Arbitrum’s ARB, and others. Previously, these tokens could only be traded through an over-the-counter desk.
  • Optimism unveils season 4 of the grants program: The upcoming season is scheduled to commence on June 8th. Notably, the grant process has undergone a significant overhaul, enabling the formation of groups of individuals known as Alliances to apply for an OP Grant.
  • Velodrome has announced the launch date of Velodrome V2: Velodrome V2.0 was announced in December 2022, but now the definitive date has been determined as the upgrade which will introduce additional features such as concentrated liquidity pools, is scheduled to arrive on June 15th.

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