- Binance has integrated the Optimism Network, a scaling solution aimed at helping the Ethereum blockchain run calculations off-chain and only post transaction data to it.
- Theoretically Optimism is capable of reducing transaction fees on Ethereum by 100x or more.
- Optimism speeds up Ethereum transactions by establishing them on another blockchain using data compression techniques.
Binance, the world’s largest crypto exchange by trading volume, ad the integration of Optimism Network, a scaling solution of Layer 2, which aims to address certain problems found in the main blockchain without the need to modify it.
In this sense, Optimism is a solution intended to help the Ethereum blockchain perform calculations off-chain and only post transaction data to it; and in theory, Optimism is capable of reducing transaction fees on Ethereum by 100x or more.
Binance also informed its community via its blog post that “will open withdrawals for ETH on the Optimism Network once there are enough assets” in the wallet of the crypto exchange.
Why is it necessary to integrate this type of solutions?
If you closely follow the information provided by Bitcoin Mexico, you will know that the Ethereum blockchain has a scaling problem. That is, each node in the blockchain has to store and process data, but there is a limit to the amount of information that can be processed in a given time.
So, As the ecosystem on the Ethereum blockchain has grown (read DeFi, NFT, GameFi, etc), the network has experienced a bit of a bottleneck and, consequently, transaction fees have increased significantly. As transaction costs rise, obstacles are created for retail investors when interacting with the network.
This is where Layer 2 scaling solutions for Ethereum come in and Optimism is one of many out there today. This solution speeds up Ethereum transactions by establishing them on another blockchain using data compression techniques.
Optimism uses a technique, called Optimistic Rollups, that allows you to roll up multiple transactions into one, settle them on another blockchain, and once a series of transactions is concluded, the results are sent and protected on the Ethereum mainnet.
All this is achieved thanks to the existence of the Layer 2 solution since it allows Layer 1, that is, the Ethereum blockchain, to deal with security and decentralization, while Layer 2 deals with scalability.
According to Dune Analytics, Optimism has reduced Ethereum transaction fees by 98 times on average over the last 30 days.
By integrating this solution, Binance has already opened Ethereum deposits with Optimism, every user of the crypto exchange will be able to find their deposit address using the Optimism Network. However, ETH withdrawals using this network will be enabled later.
Are Layer 2 solutions here to stay?
This is a question that many in the crypto community are debating, and it is that these types of projects were built in search of solving an existing problem in the Ethereum blockchain. Essentially, the lack of scalability.
However, as many will know, the Ethereum blockchain has some important months ahead of it. In fact, recently Vitalik Buterin, co-founder of Ethereum, confirmed that the “merger” will happen in August of this year. As long as there are no problems.
The merger marks the long-awaited upgrade of the Ethereum blockchain which, if successful, will allow the main blockchain to transition from Proof of Work to Proof of Stake, and as a result, Ethereum is expected to become greener. and efficient.
Thus, both the future of Ethereum and that of Layer 2 solutions will probably be defined in the coming months.
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