ETH Layer 2 Arbitrum and Optimism protocols continue to receive traction

  • Arbitrum and Optimism have grown steadily.
  • Arbitrum has around 50% market share, while Optimism has 30%.

Arbitrum and Optimism, optimistic accumulation protocols based on Ethereum, have seen steady growth in terms of transactions since the beginning of 2022. In September 2022, the protocols experienced a new all-time high based on the number of transactions.

The main difference between the two protocols is that Arbitrum does not have a governance token, whereas Optimism officially announced the introduction of its token in April 2022 and released it in May 2022.

After the governance token was released, Optimism’s transaction count began to increase rapidly. As a result, the protocol saw growth after the token officially went live on exchanges on May 31. This move sparked interest and belief in a potential launch of the Arbitrum token.

After that, both protocols saw a steady increase in transactions and continued to rise.

Currently, Arbitrum holds the highest Total Value Locked (TVL) of any Layer 2 network, with nearly 50% market share. If we talk about Optimism, it has a market share of almost 30%, according to data from L2Beat.

Compared to protocols, the closest layer 2 in terms of market share is held by Metis, which has a market share of 2.71%. Metis released a 26-week incentive program on July 26, which resulted in an almost 60% increase in its TVL. Although it has since declined to just above where it was before the release.

Layer 2 networks acquire the security of Ethereum and should minimize the cost of transactions.

Difference between the two protocols

As the two protocols are defined as optimistic aggregates, they also have fundamental differences.

To validate transitions, Optimism uses single-round cheat proofs implemented on Layer 1, similar to how Artibrum uses multi-round cheat proofs performed off-chain. If we compare, Arbitrum’s fraud protection is more effective and cheaper.

Also, since both protocols are EVM compatible, Optimism uses Ethereum EVM while Arbitrum uses its own Arbitrum virtual machine. As a result, Optimism only has a Solidity compiler and Arbitrum supports all languages ​​compiled by EVM.

Optimism and Abitrum both launched in 2021. Currently, Optimism has 15 dApps, the most popular being the Synthetix ecosystem with $147 million in TVL, and Lyra with $67.43 million in TVL .

While Arbitrum has 228 active projects, with the most prominent classifications being exchange and lending, some of its exciting projects are Curve, Cream Finance, and Uniswap.

Steve Anderson
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