Ethereum (ETH), the largest blockchain for smart contracts, has been struggling with a scalability problem for years. As more users joined the Ethereum ecosystem, the network became more expensive and slower to use.
To solve some of that problem, starting in 2019, members of the Ethereum community came up with their own scaling solutions, called layer 2s or rollups. Optimism (OP) was one of the first on the market.
Now, Optimism’s technology is being widely used by many entities to create their own layer 2 networks. In 2024, Kraken, Uniswap, World Network (formerly Worldcoin), and Sony’s Blockchain Lab all leveraged Optimism’s technology to create their own scalable blockchains. Because the OP team was able to convince some of the largest crypto institutions to use their technology and join the ecosystem, Optimism’s founding team, led by Jing Wang, has been nominated for the 2024 Most Influential List from CoinDesk. This profile is part of CoinDesk’s Most Influential 2024 Package. For all this year’s nominees, click here.
“If you have to put your finger on the pulse of the lifeblood of the Optimism Collective, it’s Jing Wang,” Ben Jones, another co-founder of Optimism and director at the Optimism Foundation, told CoinDesk in an interview.
The founding team consists of some Ethereum OGs, including Wang, Jones, Karl Floersch, Mark Tyneway, Kelvin Fichter, and Kevin Ho. But their story dates back to 2016, when Wang met Floersch, a former researcher at the Ethereum Foundation (EF), before creating Optimism.
BO (before optimism)
“The first time we met, we sat in a circle. We were all talking, and every time a new person came into the circle, Jing made a specific point of making them feel included, and asked them a specific question, to integrate them in the rest of the experience,” Jones said when asked about his first solo encounter with Wang.
“That certainly hasn’t changed. In fact, as leader of the Collective on an increasingly large scale, she has only become more capable of doing such things.”
Read more: Will Optimism’s ‘Superchain’ Win the Ethereum Layer-2 Race?
Wang first got her start in crypto through the Bitcoin world, but expressed her frustration with the lack of women participating in that developer ecosystem, according to a talk she gave at a16z’s crypto startup school in July 2023. It was Vitalik Buterin, the creator of Ethereum was also a Bitcoin maxi, who convinced her to look into Ethereum, and introduced her to Floersch.
At EF, Floersch took Wang under his wing and gave her a writing project for a “textbook.” (The other project she was offered was a coding project, but was ultimately given to another student, Hayden Adams, who eventually created Uniswap, the largest decentralized cryptocurrency exchange on Ethereum today, according to DefiLlama.)
The “textbook” project that Wang began focusing her time on was Plasma, a scale design that predated rollups, and which ultimately became the precursor to what Optimism is today.
“That’s pretty crazy,” Wang said during the a16z talk about the beginnings of Optimism and Uniswap, “but that’s how it started.”
Plasma was primarily an academic exercise focused on scaling transactions on Ethereum. But eventually, along with Floersch, Wang founded the Plasma Group, a nonprofit organization that promoted the scaling of research.
According to Wang, after Plasma Group was founded, she saw that people really wanted a layer 2 with lower costs and fast transactions, so they turned around and came up with outlines for an optimistic roll-up.
Because Plasma was a non-profit organization, it was difficult for the team to find enough funding to turn their research into products. “We were fed up with trying to convince anyone other than our crazy selves to join a nonprofit that accepted donations, and we hoped this would continue to work,” Jones told CoinDesk. “We built very important public goods and scaled the infrastructure needed with blockchain to take over the world, and no one funded it.”
“So part of what we did was we pledged that no one else would ever have to be in that situation again, as we turned to optimism and built the Optimism Collective,” Jones added.
The technological growth of optimism
Optimism was created in 2019 and the network was operational by the end of 2021. Later, the company that operated Optimism split into two entities: OP Labs BPC, the main developer company that helped build the Optimism blockchain, and the Optimism Foundation, which helps manage Optimism’s governance system and fuels ecosystem growth.
Wang was the CEO of Optimism BPC before the split and became the CEO and executive director of the Foundation at the time of the split in 2022.
Optimism’s blockchain is powered by a technology called optimistic rollups, which bundles large amounts of transaction data into digestible batches, making it cheaper to transact on it than on Ethereum. Rollups have become so popular that a whole bunch of them have popped up since Optimism went live. Other notable names include Arbitrum, Blast, zkSync, Polygon, Starknet and Scroll.
As the big roll-ups started to gain traction, a new trend emerged in the leading layer 2 projects, known as ‘blockchain in a box’, where teams encouraged developers to clone their code so they could create their own could come up with code. low 2s. Before Optimism, the framework became known as the OP Stack and was released in 2023, during the major upgrade of the blockchain called ‘Bedrock’.
Chains under the OP Stack would join the ‘Superchain’, a network of blockchains built with Optimism’s technology that would be interoperable, allowing liquidity to be shared between chains, while all adhering to the governance and ethos of Optimism, known as the Collective. The Superchain should also address the idea of fragmentation, making it easier for all blockchains in that ecosystem to communicate with each other and transfer funds seamlessly.
“That’s really important to us: that developers have a good experience and don’t have to deal with each of these individual chains in a complete and total silo, because it will make their lives easier as well,” Jones said.
Competitors like Arbitrum, Polygon, and zkSync also began releasing their stacks, and soon the battle to get users and companies to build on their kits was on.
The OP Stack’s first major customer was Coinbase’s Base network, which brought the largest US exchange on-chain in August 2023. Since then, many other major companies in the crypto industry have also come to market with their own Layer-2s and leveraged the OP Stack to roll it out. Uniswap, World, Kraken, and Sony’s Blockchain Labs have all announced their layer-2s that will be built with OP Stack this year, making Optimism the clear winner.
Base is currently the second largest Layer-2 with $9.8 billion in the protocol, ahead of OP, which has $6.5 billion according to L2 Beat. Of the 52 rollups that are live, 24 are built on OP Stack with $19 billion in it.
According to a spokesperson for the Optimism Foundation, as of November 2024, layer 2s on the OP Stack were responsible for 52.7% of all Ethereum layer 2 transactions.
Jones attributes OP Stack’s success to how easy it is for developers to create their own chains. “There is a lot of complexity in running a chain. And the reality is that having good infrastructure that is reliable, easy to manage and maintain, and doesn’t fail is a super important part of the story,” he told CoinDesk.
Pay-For-Play: a winning strategy?
Optimism’s competitors have noted that part of OP’s strategy to get new networks to use their technology involves handing out large sums of OP tokens in the form of subsidies. Optimism Foundation officials previously told CoinDesk that these grants should help developers boost their building on the stack, and in return they should benefit the Collective and other networks in Optimism’s Superchain.
When Base went live, Coinbase shared that it would receive 118 million OP tokens, which at the time of launch was $1.55, worth approximately $182 million (at the time of writing it is now worth $283 million). In return, Base committed to share 2.5% of total sequencer fee revenue or 15% of profits (whichever is greater) to the Collective as a contribution to the Optimism ecosystem.
Since then, some projects have been less forthcoming about how many tokens they would receive from the Optimism Foundation for building on OP Stack. CoinDesk first reported that Kraken would receive 25 million OP tokens for building on OP Stack, worth $100 million at the time of the deal, now worth $60 million.
According to Kraken officials, the payout was in line with other major projects received from Optimism.
Uniswap, Sony and Worldcoin all declined to comment on how many tokens they will receive from Optimism over time. Other smaller projects have shared the number of OP tokens they will receive in grants. For example, Celo gets 6.5 million tokens and BOB gets 750,000 tokens.
Optimism Foundation officials previously told CoinDesk that they leave it up to the projects to disclose the amounts of their grants. A spokesperson shared with CoinDesk that the Optimism ecosystem has been transparent about their treasury, and that the Kraken deal is under their
‘partnership fund’, which ‘goes to certain projects to help support the initial development of the chain’.
“I think it’s fair to say that there are a lot of teams where subsidies are used as a very common practice in the industry,” Jones told CoinDesk. “We will not shy away from helping our developers grow, in a sector where subsidies are helpful.”
The lack of transparency about how many OP tokens have been allocated to chains raises questions about the extent to which these subsidies have been incorporated into those deals.
But Jones argues that handing out OP tokens shouldn’t be seen as just handing out money. These projects use Optimism’s technology for free (as it is open source) and help improve Optimism’s code and software. In other words, they are rewarded for their work on the larger OP ecosystem, which is then contributed to the Collective.
“I would also say that it is extremely important to understand that we are building a system of governance that is intended to give a voice to the people in our positive-sum system,” Jones said.
“I think the biggest thing to drive home is that this thing (OP Stack) is successful, even in the parts of the world where the subsidies aren’t included,” Jones added. “Second, I think it is fundamentally limiting to talk about these subsidies in terms of a certain number of OP tokens, without understanding what those OP tokens are for. And I think it is absolutely a critical part of the strategy for us to unify the set of projects that make up the Superchain.”
Optimism’s bet is that simple technology plus subsidies will be a winning strategy. But for now, only time will tell whether optimism remains the winner in Ethereum scaling.
