High transaction costs, low scalability, and network congestion are crippling Ethereum.
Rollups are solving these challenges head-on, and making Ethereum a more efficient and scalable blockchain. Arbitrum and Optimism are the two largest Optimistic rollups.
Let’s see how they are stacked against each other.
1. Definition of Rollups
Before we get to the core, it's essential to understand what rollups are.
A layer-2 scaling solution that allows computations to be performed off-chain while storing only a small amount of data on-chain.
This mechanism increases the throughput of the mainchain, consequently reducing transaction costs and improving scalability.
Importance of Rollups
With the increase in Ethereum's popularity, the network's ability to handle a large number of transactions per second (TPS) has been strained.
Rollups help solve this problem, thereby improving the blockchain's functionality and utility.
2. A Deep Dive into Arbitrum
What is Arbitrum?
Arbitrum is an optimistic rollup developed by Offchain Labs.
It's designed to bridge the gap between the speed, security, and scalability of Ethereum.
How Does Arbitrum Work?
Arbitrum works by moving computation and storage off-chain and leaving the data on-chain.
It introduces a unique system of validators and an 'anytrust' model, meaning as long as one honest validator exists, the system remains secure.
Advantages of Arbitrum
Arbitrum stands out for its flexibility, supporting all Ethereum developer tools and languages.
It also offers interoperability, low costs, and high speed, all the while maintaining Ethereum's security.
Drawbacks of Arbitrum
On the flip side, Arbitrum's 'anytrust' model is contingent on the existence of at least one honest validator.
This introduces a small degree of centralization risk.
3. A Look at Optimism
What is Optimism?
Optimism is another popular optimistic rollup solution. Its mission is to scale Ethereum by using a technology called Optimistic Virtual Machine (OVM).
How Does Optimism Work?
Optimism works similarly to Arbitrum, moving computation off-chain and retaining data on-chain. However, it uses a different method of dispute resolution based on a game-theoretic mechanism.
Advantages of Optimism
Optimism excels in compatibility with Ethereum, scalability, and low transaction fees.
It also has the backing of major players in the Ethereum ecosystem, bolstering its credibility.
Drawbacks of Optimism
Optimism's key limitation is its withdrawal period.
When users want to withdraw their funds, they must wait for a challenge period of one week, which can be a significant inconvenience.
4. Arbitrum V.S. Optimism
Arbitrum and Optimism share the same goal but achieve it differently.
has broad support and credibility but suffers from a long withdrawal period.
shines in flexibility and supports all Ethereum tools and languages, but it has a centralization risk.
Therefore, the choice between the two comes down to individual needs and preferences.
Let’s see how they compare:
Optimism has 2X total value bridged in ETH.
Arbiturm has 2X unique bridge depositors of Optimism.
b. Technical Design
Both Arbitrum and Optimism use an "optimistic" approach to verifying transactions, meaning they assume all transactions are valid until proven fraudulent.
But their methods of dispute resolution and handling fraud proofs differ.
uses a more direct and simplified mechanism based on a game-theoretic system
implements an interactive protocol known as a "bisection game."
c. Ecosystem Support
Arbitrum seems to have gathered more projects deploying on its network at an early stage.
has gained strong backing from major industry players, like @synthetix_io and Uniswap, and significant Ethereum developers.
Arbitrum seems to have gathered more projects deploying on its network at an early stage. It also has managed to attract well-known DeFi projects like @Uniswap, @Sushiswap, and @Bancor.
d. Gas Costs
Optimism offers constant and predictable gas fees, which could be more appealing to projects with simpler transactions.
Arbitrum's unique off-chain computation can lead to reduced gas costs for complex transactions, making it more suitable for sophisticated smart contract interactions.
e. User Experience
For end-users, one notable difference lies in the waiting period for withdrawals.
currently requires a seven-day "challenge period" for withdrawals.
has reduced this to a shorter time span of about one week, providing a slightly faster withdrawal experience for its users.
f. Governance and Upgradeability
Both Arbitrum and Optimism are upgradable by their respective teams. However, recent events regarding Arbitrum's governance highlight a difference.
has made no upgrade, though it retains the capability.
An upgrade was executed without community knowledge, which sparked a scandal in the community.
g. Chain Variants
Optimism operates a single chain without such delineation between application types.
Arbitrum's technology stack currently powers two live chains.
Arbitrum One, targeting DeFi applications, and the newer, Arbitrum Nova, designed to be even faster and cheaper, primarily aimed at gaming and social applications.
Optimism follows a more conventional path with a multisig setup involving key community members.
Arbitrum DAO uses a self-executing governance model, and tokens from the Arbitrum Foundation neither count towards voting nor can they be delegated.
i. Language Compatibility
is directly compatible with Solidity, the dominant smart contract language in Ethereum.
introduces an extended capability with Arbitrum Stylus, programming language that allows developers to write smart contracts in languages like C, C+, and Rust, broadening the developer base.
In the battle of Arbitrum vs. Optimism, there is no clear winner.
Each brings unique advantages to the table. The decision of which to use depends on your specific requirements and the trade-offs you are willing to make.
As blockchain technology evolves, we can only anticipate further improvements and innovations in rollup solutions.