Optimism Overtakes Arbitrum, Complete Guide to Rollups

AUG 09, 2022 • 4 Min Read

Craig Sweney

Disclosure: Delphi Ventures is invested in ETH, Celestia & Arbitrum. Members of our team are also invested in ETH, OP & AAVE. These statements are intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token. This content is for informational purposes only and you should not make decisions based solely on it. This is not investment advice.

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🚨 In Case You Missed It

  • Notable celebrities‘ addresses received ETH from sanctioned Tornado Cash wallets. List includes Jimmy Fallon, Shaquille O’Neal, Dave Chappelle and others.
  • Circle froze $75,000 of USDC linked to addresses sanctioned by the US Office of Foreign Assets Control.
  • Infura and Alchemy, crypto infrastructure providers, blocked RPC requests to Tornado Cash, preventing users from accessing the application.
  • FTX and Circle confirmed they will only support the Proof-of-Stake version of Ethereum after the final Merge.
  • FTX and Reddit announced a partnership to tokenize community points using Arbitrum.

📊 Optimism Overtakes Arbitrum in TVL

  • On August 6, the total value locked (TVL) on Optimism overtook the TVL on Arbitrum for the first time.
  • We saw a drastic increase of 78% within two days as TVL rose from $555 million on August 4 to $992 million on August 6. Currently, the TVL stands at $1.1 billion.
  • Almost all of the increase in TVL can be attributed to the launch of OP incentives on Aave v3. The protocol is set to distribute 5m OP tokens to users of its Optimism money markets over the course of 90 days.
  • The TVL on Aave v3 increased by over 1,400% since the launch of OP incentives on August 4. Over the following two days, over 85k ETH worth of assets were bridged from Ethereum to Optimism.
  • The price of OP actually led the drastic rise in TVL, increasing by 72% over the last week of July.
  • On August 31, Arbitrum is launching Nitro, an upgrade to decrease gas costs and increase transaction speeds. Soon after, Arbitrum plans to resume the Odyssey event, which can serve as a potential catalyst to reverse this trend.
  • For more on L2s, Delphi members can read our Delphi Pro report here.

The Complete Guide to Rollups

  • Current rollups settle to Ethereum where they have a smart contract deployed on the base layer. As rollups decentralize and smart contracts become battle-tested, these rollups could scale Ethereum and approach the same level of security.
  • You can also build rollups on top of these rollups, so-called “L3s.” These potentially offer even higher scale and customizability.
  • Sovereign rollups are another option – they post data to a base layer like Ethereum or Celestia but then choose not to rely on it for settlement.
  • Enshrined rollups would be years away, but Ethereum may be able to upgrade its own settlement layer to a zkEVM someday. It could even deploy many parallel instances.
  • Even more speculative – enshrining a rollup in Celestia someday could make sense. It gives Celestia a way to bridge its token to other rollups and back in a trust-minimized way. It could capture additional value by subsidizing Celestia’s security budget. It could serve as a settlement layer for other rollups.
  • Value accrual is important for the economic security of a base layer asset. This means capturing fees and other forms of MEV. Understanding how value will flow in the modular stack is critical to design.
  • For more information, Delphi members can read the full Delphi Pro report here.

🐣 Notable Tweets

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