Optimism (OP) Up 204% So Far This Year. Why?

There’s not a hotter cryptocurrency right now than Optimism (OP).

The Ethereum layer-2 (L2) rollup is up a staggering ~204% in 2023, and now, its much-anticipated Bedrock upgrade is officially up for a vote.

What Is Optimism?

Optimism is an Ethereum L2 rollup. Using Optimism is exactly the same as using Ethereum. The difference is what happens on the back-end.

What Optimism does is take transactions, batch them up (roll them up), and send them to Ethereum. Ever try buying an altcoin on Uniswap or SushiSwap, but the transaction fee is quadruple the price of the token itself? Well, that’s where L2’s like Optimism come into play. Instead of purchasing your tokens through Ethereum’s mainnet, users often take advantage of Optimism because the fees are ~20x cheaper.

With $927 million locked in the protocol, Optimism has become one of the most popular layer-2 rollups.

Why Is It Skyrocketing?

Because L2 rollups are widely seen as the future of Ethereum scaling, and Optimism is currently the largest L2 with a token. This makes it the best way to get direct exposure to L2s.

The combination of Optimism’s size, the success of native protocols like Velodrome and, and anticipation of Bedrock have led to the 204% rally in less than 6 weeks.

What Is Bedrock?

Bedrock is Optimism’s first protocol upgrade, and the improvements are numerous:

• Lower fees

• Shorter deposit times

• Improved node performance

• Improved Ethereum equivalence

Overall, it’s a huge upgrade for Optimism.

Why Is It Important?

Optimism has gotten off to a hot start, but the L2 space is increasingly growing more competitive.

• Its main rival, Arbitrum, just recently underwent its own protocol upgrade, and there is widespread speculation that an Arbitrum token is coming soon.

• Multiple zero-knowledge rollups, which Ethereum founder Vitalik believes is the future, are beginning to hit the market, including zkSync, StarkNet, and Scroll.

Optimism will need more upgrades like Bedrock if it wants to maintain its market share.

How Should You Play It?

Bedrock is definitely exciting, and Optimism has a bunch of momentum right now.

But, as we’ve advised you here multiple times on CoinSnacks, you should only invest in things you are familiar with. If you think you have the chops to keep up on the brewing L2 wars, look to add Optimism to your watchlist.