According to data from DefiLlama, the total value locked (TVL) on Optimism, a layer 2 scaling solution for the Ethereum blockchain, has increased 284% in the last month. The vast majority of TVL consists of users lending and borrowing assets on Aave through the Optimism layer 2 chain.
Investors have been bidding on digital assets related to the Ethereum ecosystem in anticipation of The Merge update, which will make the blockchain go from being a proof-of-work network to one based on proof-of-stake.
According to a recent call for Ethereum developers, the tentative date for The Merge to go live has been scheduled for September 19. As Ethereum’s layer 2 blockchain, Optimism seeks to scale the ecosystem using Rollups, or off-chain calculations, to speed up transactions. Transactions are recorded in Optimism and finalized in Ethereum.
The project hosts 35 protocols, including derivatives exchange Synthetix, decentralized exchange Uniswap, and automated market maker Velodrome.. Due to the sheer volume of user trading orders on exchanges (including cancellations), the Ethereum blockchain’s current capacity of 30 transactions per second is not equipped to handle such demand. However, some experts predict that the network could potentially scale to 100,000 transactions per second after The Merge upgrade, with Layer 2 solutions increasing that capacity even further.
Optimization blocks are built and executed at layer 2, while user transactions are bundled and sent to layer 1 of Ethereum. At layer-2, transactions are immediately accepted or rejected without a mempool, allowing for a fast user experience. In line with the development of the TVL, the project’s tokens have also shot up 300% over the same period.
Dai on Optimism
From 30 million to 140 million in 5 days. pic.twitter.com/AQlNWvX6c9
— Maker (@MakerDAO) August 9, 2022
Dai on Optimism
From 30 million to 140 million in 5 days.
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