The Question

Are you optimistic or pessimistic about the future of the layer-2 chain known as Optimism? How do you think it will fare going forward compared to other L2s?

Make your case with Flipside data. Include at least three visualizations in your submission, and note any particularly interesting trend our outliers you see.

Method

In this dashboard, we are going to explore and compare Ethereum L2s (Optimism, Arbitrum and Polygon) in some metrics which are :

• weekly tx and user count per network
• weekly tx per user per network
• weekly new user count
• user retention
• time difference between first and second tx
• sectors by popularity in first transaction
• TPH per Network
• tot tx count per sector
• daily and total transaction status
• transaction failure share by sectors
• Daily swaps per network

Introduction

What is Optimism?

Optimism is a layer 2 chain, meaning it functions on top of Ethereum mainnet (layer 1). Transactions take place on Optimism, but the data about transactions get posted to mainnet where they are validated. It’s like driving in a less crowded side street while benefiting from the security of a highway.

Optimism is the second-largest Ethereum layer 2 with a total of $313 million locked into its smart contracts, as of this writing, according to Defi Llama. Arbitrum comes first with $1.32 billion.

Synthetix, a derivatives liquidity protocol, is the largest protocol on Optimism, with a total value locked (TVL) of $125 million. Uniswap, a decentralized exchange (DEX), is the second most popular protocol on the chain. As of this writing, there are 35 protocols on Optimism with at least $1,000 locked into their smart contracts.

How does Optimism work?

Optimism uses a technology called rollups, specifically Optimistic rollups.

They’re called rollups because they roll up (or bundle) the data about hundreds of transactions – non-fungible token (NFT) mints, token swaps … any transaction! – into a single transaction on Ethereum mainnet (layer 1). When so many transactions are rolled up into a single transaction, the blockchain transaction, or "gas," fee required to pay comes down to only one transaction, conveniently distributed across everyone involved.

And they’re called Optimistic rollups because transactions are assumed to be valid until they are proven false, or in other words, innocent until proven guilty. There’s a time window during which potentially invalid transactions can be challenged by submitting a “fraud proof” and running the transactions’ computations with reference to available state data. Optimism reimburses the gas needed to run the computation of the fraud proof.[1]

What Is Arbitrum?

Arbitrum is a layer 2 solution designed to improve the capabilities of Ethereum smart contracts — boosting their speed and scalability, while adding in additional privacy features to boot.

The platform is designed to allow developers to easily run unmodified Ethereum Virtual Machine (EVM) contracts and Ethereum transactions on a second layer, while still benefiting from Ethereum's excellent layer 1 security.

It’s built to address some of the shortcomings of current Ethereum-based smart contracts — such as poor efficiency and high execution costs — which have damaged the Ethereum user experience and frequently make transacting an expensive task.

Arbitrum uses a technique known as transaction rollups to record batches of submitted transactions on the Ethereum main chain, and execute them on a cheap, scalable layer 2 sidechain while leveraging Ethereum to ensure correct results. This process helps to offload most of the computational and storage burden Ethereum currently suffers from, while enabling new classes of powerful layer 2-based DApps.

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New York-based development firm Offchain Labs is currently building the Arbitrum product, as well as an entire suite of scaling solutions. The initiative is spearheaded by Offchain Labs co-founders Ed Felten, Steven Goldfeder and Harry Kalodner. Ed is a professor, Steven received his Ph.D, and Harry is a Ph.D. candidate at Princeton University. All three are blockchain experts with a passion for making cryptocurrencies more capable.[2]

What is Polygon ?

Polygon is a Layer 2 blockchain that aims to help Ethereum with its scalability. By acting as a Layer 2 protocol, Polygon doesn't aim to duplicate Ethereum's functionality. Instead, it helps improve transaction speeds and lower costs for developers.

To understand Polygon, you first need to know a little about Ethereum and a little blockchain developer lingo.

First, blockchain developers face a dilemma—the crypto community calls it the “blockchain trilemma”—when it comes to balancing trade-offs between decentralization, security and scalability.

It’s no secret that Ethereum has its issues. Specifically, the No. 2 crypto has a scaling problem, and this is seen when it comes to the speed of completing transactions.

Ethereum has primarily focused on decentralization and security at the expense of scalability. As a result, transactions can be expensive and slow. That’s where Polygon enters, with its focus on providing faster transaction speeds and lower costs than Ethereum.

Layer 1 blockchains like Ethereum provide developers with a platform to build and run dApps, smart contracts, non-fungible tokens (NFTs), and more. Polygon is a Layer 2 blockchain that aims to help Ethereum with its scalability.

By acting as a Layer 2 protocol, Polygon doesn’t aim to duplicate Ethereum’s functionality. Instead, it helps improve transaction speeds and lower costs for developers. Think of it as an express train that runs parallel to a local train, moving faster with fewer station stops.

Currently, Ethereum can process 14 transactions per second (TPS)—while Polygon achieves speeds of up to 7,000 TPS. This makes everything built on the blockchain much cheaper and quicker, like an HOV lane on the highway.

In the near future, experts anticipate that Ethereum will accelerate its TPS after its long-anticipated network upgrade in September 2022. But even after the Merge, Polygon’s lower fees should still attract developers and help the crypto maintain its narrative.[3]

Findings

• According to the obtained results:
  • The number of users and daily transactions related to Polygon is much higher than the other two competitors. other two were almost close to each other in the number of transactions, but in terms of the number of users, Arbitrum was more than Optimism. Therefore, regardless of the number of transactions per user, Optimism is higher than Arbitrum.
  • In terms of attracting new users, Polygon has maintained a multiple-fold difference compared to its two competitors. Arbitrom has performed better than Optimism in this index, so that in recent weeks, the number of new users of Arbitrom is two to three times more than Optimism.
  • In terms of user retention, All 3 L2s were in a same situsation by almost 70% retension ratio.
  • Majority of second transactions in all 3 chains were happened in the same day of first transaction .
  • In all 3 chans, Layer2 is the most popular section in the first transactions.Dex is second most popular in Arbitrum and Polygon and NFT is the second most popular in Optimism in First txs.

• In all three networks, DEX ranks first in terms of the number of transactions. In Optimism and Arbitrum, Layer2 ranks second. In Polygon, the dapp section is the second most popular.
• Polygon with 150k TPH is the most rapid one and Arbitrum ranks second with 13-16k and Optimism stands in third place wth 5-8k TPH.
• In terms of transaction failure, Arbitrom ranks first with 3.19% transaction failure. Optimism ranks second with 6.85% and Polygon ranks third with 7.97%.
• DEX Sector has the highest transaction error in Optimism and Arbitrom, but in Optimism, Defi has the highest amount of transaction error.
• The number of swaps and swappers, like other types of transactions, has been much higher in Polygon than the other two networks. Optimism has been ranked second in most weeks by registering a higher number of swaps and swappers than Arbitrum.
• Finally, we have reviewed ETH bridged to Ethereum L2s using Hop protocol. In this sense, polygon ranks first. Optimism and Arbitrum are ranked next.

Conclusion

In this dashboard, an attempt was made to examine, evaluate and compare the performance of different Ethereum L2s from various aspects. According to the presented and reviewed materials, it can be said that all three L2 are widely accepted and used by the users and their popularity is gradually increasing. Among them, Polygon has been able to attract more users and register a high number of transactions than others. The competition between Arbitrum and optimism in different sectors has different results. For example, in terms of the number of swappers or bridgers, Optimism recorded better results and in terms of TPH, Arbiterum could record better results. All in all, one can be optimistic about the future of Ethereum L2, especially considering the applications and good results they have brought.