The majority of live rollup solutions available today take the form of minimally viable products, including straightforward settings for the execution of smart contracts. They do not grant developers any new degrees of creative freedom when it comes to the design of apps or business models. The majority of the research that has been done on L2s has concentrated on the ecosystems for general-purpose smart contracts. While these ecosystems are important, it should be noted that they do not indicate the current or future state of blockchain scaling, nor do they encapsulate the potential of rollup designs or new business models. The well-known L2 platform, Optimism, will shortly implement an improved roll-up mechanism on the mainnet of its own: the OP Stack. It is a complete software development kit for assembling Ethereum-centric rollups based on modular. Without having to depart from the Ethereum infrastructure and tooling, developers are able to design rollups that are particular to their use cases with the help of the OP Stack. The OP Stack exemplifies an innovative approach to open-source collaboration and the development of protocols.

OP Stack Overview

Ethereum is widely acknowledged to be one of the most secure and decentralized blockchains in existence. The network is structured on three characteristics that keep everything working smoothly: decentralization, security, and scalability. Nevertheless, because of the limits imposed by the blockchain trilemma, Ethereum can only successfully deploy two of these three qualities.

To keep the network running, the Ethereum governing council opted to trade scalability in favor of security and decentralization. At the time of writing, Ethereum could handle more than one million transactions per day. When this happens, the Ethereum network can no longer grow and becomes clogged.

As blockspace gets limited, Ethereum network users engage in a bidding war to obtain their transactions on the next block. As a consequence, the price of gasoline increases, making it substantially more expensive for the typical user to gain from a transaction. Besides paying a hefty gas charge, Ethereum network users must also suffer significant wait periods for their transactions to process.

This is when optimism enters the picture. Optimism provides a scalable alternative to the Ethereum network, allowing for faster transaction speeds without losing decentralization or security.

The software that forms the basis of the Optimism ecosystem is referred to as the OP Stack. This includes the multi-purpose Optimism Mainnet L2 as well as any chain that employs open-source code to construct modular and configurable chains. Chains that are constructed using the OP Stack are referred to as "op chains." It is up to the communities that use them to decide whether they should be app-specific or general-purpose.

The OP Stack is a collection of modules that offer secure default settings and are tightly integrated with Ethereum's underlying infrastructure and architecture. A rollup of smart contracts that are constructed on Ethereum and have EVM-equivalent execution is what is known as a standard op-chain.

As one investigates the matter a little further, one will find that the OP Stack is partitioned into modifiable modules at the rollup execution layer.

Execution Node: Transaction propagation and execution take place here (op-geth).
The Rollup Node (op-node): responsible for the most fundamental rollup-specific functions.
Cannon Proof System: Interactive, EVM-equivalent, and optimistic fraud-proof engine. Sequencers and verifiers are responsible for running (in a variety of modes) the execution and rollup nodes. Sequencers are responsible for processing transactions, constructing blocks, and posting batches of compressed blocks to L1. Verifiers keep tabs on sequencers and are prepared to present them with fraud proofs in the event that the sequencers produce erroneous output.

Source: Optimism

The canonical L2 chain must be derived by both the sequencers and the verifiers, and this is done by reading block data from L1, transaction data from L2, and new deposits from L1. At the present time, this component of the stack is consolidated into a single sequencer that is dedicated to it alone. In addition, the Cannon fraud-proof engine is currently in the process of being developed, and its release is anticipated somewhere in 2023.

A sequencer, or sequencer set, may be shared by multiple op-chains in a modular configuration. This enables access to the next stage of Optimism, known as the Superchain. The Superchain is a collective of Ethereum-aligned networks that are established using the OP Stack. The Superchain will have advantages over other blockchains due to its atomic cross-chain composability, decentralized governance, and shared Ethereum infrastructure.

Advantages of Using the OP Stack: More Than Just a Rollup Software Development Kit

The OP Stack is not "simply" an EVM-equivalent rollup software development kit (SDK). It encompasses any infrastructure that is capable of supporting Optimist, Superchain, and upstream Ethereum. The infrastructure consists of fundamental tooling such as:

Block explorers.
Structures of government
Attestations
Mechanisms for communication between rolls of paper

The OP Stack is able to inherit several benefits thanks to the fact that its codebase and architecture are designed to be as similar to Ethereum's as is practically possible. Namely:

The reduction in complexity and risk that results from having fewer new lines of code is referred to as "simplicity." The cost to maintain a code base that contains fewer bugs is lower.

Familiarity: Existing Ethereum developers and infrastructure providers will not experience any learning curve when constructing with the OP Stack or running op-chain nodes. Both are already intuitive.
Client diversity: It is feasible to construct several clients for both the op-chain execution nodes and the proof engines. Diversification, similar to how it works with Ethereum clients, helps protect against failures in liveness and safety.
Extensibility: Both the EIP and client upgrades ought to be simple to put into action.

Ethereum is another coin that is anticipated to profit from the OP Stack. It is possible that new innovations will be useful for Layer 1, and that EIPs will be able to go through live testing in an environment focused on Ethereum.

The current state

In September of 2021, Optimism achieved EVM-equivalence after maturing from a monolithic, EVM-compatible optimistic rollup design (the OVM) to an EVM-equivalent state. Bedrock, which will shortly be made available to the public, is the initial release of the Optimism Stack and provides a comprehensive and modular redesign of the fundamental components of the Optimism architecture.

As a result of the results of numerous community audits, Bedrock is now undergoing development. It is expected that Optimist Mainnet will be the first network to implement Bedrock's standard modules within the next few weeks. The following is a list of the primary anticipated benefits of Optimism Mainnet:

Costs were cut by around 47% thanks to the implementation of a variety of batch compression strategies and L2 compatibility for EIP-1559.
As a defense mechanism against denial of service attacks, a fee market brought deposit times down from ten to less than three minutes.
Enhanced node performance as a result of a reduction in state growth of around 15 gigabytes per year, quicker peer-to-peer networking, and fifty times quicker node sync times.
The Superchain can also be reached in a short amount of time. The announcement that Coinbase would be developing an op-chain called Base caused a stir at the beginning of the previous month. Coinbase will be joining OP Labs as a core developer of the OP Stack, and the two companies have plans to release an alpha version of a fraud-proof engine and verifier set before the end of the year.

Building atop the OP Stack and participating in the Superchain in a more general sense will likely be profitable for Coinbase. It will develop Coinbase-specific on-chain products, which might function as new business streams from existing users after it reaches a verified user base of over 110 million customers. Coinbase will profit from the use of a variety of high-profile apps thanks to the fees gained from sequencing transactions, and many apps have already indicated their plan to build atop Base. They might also boost earnings by offering financial incentives to users who make use of tokens that they are currently associated with, such as cbETH and USDC.

The OP Stack was designed with the intention of offering rollup developers secure defaults while yet offering a high degree of flexibility in order to encourage innovation. "Hacks" are so-called chain modifications that include replacing the standard modules with experimental variants. Despite the fact that compromised op-chains are ineligible to join the Superchain, builders can still experiment with them in order to create unique applications.

Hacks at the execution layer have resulted in the creation of several entertaining forks, such as the Optimistic Gameboy and Lattice's OPCraft, a Minecraft-based game that conducts all of its transactions on the blockchain. This is a big advance over the current state of the majority of blockchain-based games, in which the actual gameplay takes place off-chain. (With approximately 3.5 million transactions processed in the first two weeks of operation, OP Craft served as a stress test for the operational capabilities of the OP Stack).

Using different data availability tiers is another potential alteration that might be made. Altering the proof scheme to one that relies on validity proofs or something else entirely is another possibility, given that op-chains do not have to be purely optimistic. These kinds of security exploits could, in the long run, result in the creation of innovative bridge protocols.

The thesis of Optimism

In the ongoing scaling conflicts, Optimism stands out as a project in its own right. Its strategy is to sustainably fund the infrastructure that will proliferate composable, Ethereum-centric chains, and it does not aim to be the "first" to market, nor does it even aim to capture the most users on a general-purpose L2. Rather, its goal is to achieve both of these goals simultaneously.

It might be difficult to provide incentives for public goods and open-source projects. Putting food on the table ranks higher on the majority of people's hierarchy of needs, regardless of whether or not they have the desire to help others. It is necessary to have some form of economic engine in order to attract a collective of committed builders. Optimism intends to leverage Retroactive Public Goods Funding (RPGF), to create a public-goods flywheel that is sustainable for the OP Stack.

The Optimism Foundation has also committed to donating 100% of the revenue generated from centralized Ether sequencing on the Optimism Mainnet. Twenty percent of the total OP supply has been set aside for the RPGF, and another 25 percent will be used to get other ecosystem projects off the ground. In the not-too-distant future, in order for operators to take part in the decentralized sequencing network provided by Superchain, they will likely be required to acquire the right to do so, which will be given to RPGF.

optimism rpgf

Source: Optimism

Contributors to the Optimism Collective are able to raise capital based on the early potential of projects and receive compensation for projects that do not have direct revenue streams when the collective votes on a quarterly basis to allocate capital to projects that provide public goods and where "positive impact to the collective is proportionally rewarded with profit to the individual."

It is anticipated that allocating capital toward public goods would compound ecosystem development. This results in an increase in the number of users, which in turn leads to more app income and sequencing revenue, and the cycle continues. In addition, since Optimism contributes to the world's most active ecosystem for smart contracts, the organization has a stake in the ongoing success of that ecosystem.

It's possible that providing back-dated money to completed projects is a technique for allocating capital that's more effective than the more standard approaches. Conventional forms of finance, such as venture capital, need accurate projections; when such assumptions are incorrect, the cash is lost. In addition, cryptocurrency incentive schemes have the propensity to distribute big percentages of funds up front, with the choice being made by a centralized project team. Every dollar raised to the RPGF is put towards active projects, and participants in the Optimist ecosystem have a voice in determining which projects get financing and how those funds are allocated.

The Optimism method for allocating money must still demonstrate that it can withstand the passage of time. Layer-2 solutions, such as the OP Stack, are centered on providing end customers with costs that are within their price range. Throughout the course of the last year, the profit that Optimist Mainnet made from fees (not including the expenditures that were paid to L1) was under 7 ETH

Source: Dune Analytics.

This equates to a total of around 2,500 ETH, or little more than $4 million, over the last year. In comparison, seed rounds for cryptocurrency projects may easily raise upwards of $3 million per participant. At this point, the Superchain's effect of compounding will need that begin to take effect. Coinbase has already agreed to give a portion of the proceeds from the sequencing fees it collects to the RPGF. After that, further private investment interest, network utilization, and the mechanisms of the planned sequencer auction are going to be crucial variables to watch in order to assess the effectiveness of the RPGF.

Comparison Inside and Between Rollups and Frameworks

There are other projects in addition to Optimism that is working to enhance the rollups and developer experiences. The following are some of the major categories that competitors fall into:

L2s centered on Ethereum that are designed for wide usage
SDKs and ecosystems for use with Rollup-as-a-Service (RaaS).

Specifically Designed for Ethereum, General-Purpose L2s

Rollups designed and constructed by Scroll and Starknet are examples of general-purpose L2s. While Scroll's coding is open source and may be modified by anyone, the primary goal of the project is to create a ZK-rollup that can be used for a variety of purposes. On the other hand, Starknet has not yet opened up the source code for essential components of its infrastructure.

Arbitrum has had a development path quite similar to that of Optimism, beginning with a monolithic rollup solution and transitioning to a modular approach with the Nitro update in August 2022. Optimism's development path began with a rollup solution. Alongside the EVM, the Stylus improvement that is scheduled to take place in 2023 intends to let applications operate in normal programming languages. The major objective of Arbitrum's business plan is to cultivate a vibrant ecosystem of applications for use with its general-purpose blockchains, Arbitrum One and Arbitrum Nova. Included in this are L3 rollups that settle to Arbitrum's chains.

RaaS SDKs and Ecosystems

The zkSync Hyperchain and the Stackr SDK are two Ethereum scaling alternatives that may be most comparable to the OP Stack in terms of their functionality.

zkSync has plans to provide an open-source version of its zkEVM rollup SDK. In a manner similar to that of OP Stack Hacks, developers will have the ability to switch out their favorite modules. The rollup ecology of zkSync, on the other hand, is centered on zkSync Era, which serves as the "Basechain" for the settlement of L3 "Hyperchains."

With a significant portion of the EVM development layer abstracted away, Stackr plans to enable non-EVM, app-specific rollups on Ethereum or other chains that are compatible with the EVM. Common programming languages, such as JS and Rust, will be used by developers in the creation of applications. Stackr is still in the early stages of development, and in order to accomplish its ambition, it will need to construct a complete ecosystem consisting of various pieces of infrastructure, such as wallets and block explorers.

There are also a number of rollup software development kits (SDKs) and ecosystems, the majority of which are centered on making use of Celestia for data availability and are constructed with a modified version of the Cosmos SDK. In the absence of a shared sequencer set, this family of rollups is able to have native, trust-minimized bridging by utilizing IBC.

Sovereign rollups (managing execution and settlement) that are able to communicate with one another and create "clusters" via the use of IBC are known as Celestia Rollkit (previously Rollmint). Rollkit rollups are deployed to Celestia to ensure that data and consensus are available.
The Dymension RollApp Development Kit (RDK) is comprised of optimistic, app-specific rollups that will employ Dymension-specific decentralized sequencers and are linked to the Dymension Hub for the sake of settlement and consensus. RDK rollups will have the ability to link to external ecosystems and Cosmos zones that are equipped with IBC. They have an agnostic selection policy for both their execution and data availability layers.
Standard programming languages are used by the Sovereign Labs SDK in order to create chain-agnostic, sovereign ZK-rollups.

The primary emphasis of the OP Stack is on extending and developing Ethereum, which is what sets it apart from the other solutions described above. The plan of attack for Optimism is to construct on and for Ethereum using a collection of atomically composable chains that branch out in order to scale execution. Because of the low difficulty of creation and the use of a common sequencer architecture, there are fewer obstacles standing in the way of potential protocol developers. This tactic has already shown to be effective since Optimism's codebase is now the most forked of any L2 project.

Bottom Lines

If you want to be a part of the Optimism ecosystem, you have to believe in the concept of a "positive-sum game," in which the whole pie is growing rather than individual enterprises competing for a piece of it. The architecture of Optimism enhances the functionality of Ethereum's infrastructure. Since it is built on top of Ethereum, The OP Stack is able to use Ethereum's battle-tested code as well as its established user and development community. When combined with RPGF, this should result in an explosion of new applications and business models that may be composed of smaller components. Nonetheless, the OP Stack offers a new paradigm for open-source cooperation and protocol creation. Only time will tell whether the optimistic approach will be successful in the long run.

Disclaimer:
This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.

OP stack: Optimism's Superchain ambition