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Layer 2 scaling solution Optimism announced that it has raised $150 million at a $1.65 billion valuation.
Paradigm and a16z have backed Optimism
The funding round was led by Andreessen Horowitz and Paradigm. The Layer 2 startups said in a blog post that it plans to use the fresh funding to hire a significant amount of additional talent to compete with other Layer 2 solutions like Arbitrum and Starkware, both of which have also built up war chests in recent months.
In recent months, the market for Layer 2 solutions has gained traction, and the TVL for Layer 2 has increased to $5.76 billion. Currently, Arbitrum is the market leader with a 50% market share, according to L2BEAT. Still, Optimism has been widely available on a public “mainnet” for over a year and is slowly climbing to #4 on the list with a current TLV of $440 million.
What is Optimism?
L2 solutions come in many varieties, the best known of which are Zero-Knowledge (ZK) and Optimistic Rollups. Optimism is based on Optimistic Rollup technology, which is considered the most popular solution in the short term due to the cryptographic complexity of ZK rollups.
Instead of running all computations and data on the Ethereum network, Optimism places all transaction data on the chain and performs computations off-chain, increasing Ethereum’s transactions per second and reducing transaction fees. The top 3 most used protocols on Optimism are currently Synthetix, Uniswap, and Lyra, and there are plans to work on solutions to cut current costs in half.
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