Ethereum has proven itself to be an extremely popular computing platform, with both developer and user demand growing dramatically. Since May of 2020, the capacity used per block (a strong proxy for demand) has stabilized near 98%, meaning the network is functionally full. The dollar value settled per day has grown to a 30-day moving average of $9.15 billion USD, a 24x increase from one year ago.
The ecosystem of Ethereum applications is richer than ever before, driven by DeFi, NFTs, and a number of other use cases. Ethereum has also been a victim of its own success: its limited ability to support high throughput has, at various points, driven gas fees to unsustainable levels.
While there is little debate that scaling Ethereum is necessary to continue supporting the rapid growth of the network, this issue is sometimes framed as a competition between Ethereum 2.0, Layer 2 services, and “Ethereum killer” Layer 1s.
One lesson from internet history is that when you give developers a powerful new computing platform, they create applications at such a rapid rate that demand consistently outpaces supply. We believe the same will be true for Ethereum, and therefore that the answer to scaling is “all of the above,” including Ethereum 2.0, bridged Layer 1s, and Layer 2 solutions.
We’ve spent a great deal of time looking at various approaches and teams building Layer 2s, and today we’re thrilled to announce we are leading a $25 million Series A investment in Optimism. Optimism is an Ethereum Layer 2 scaling solution that uses optimistic rollups to achieve far lower fees, far lower latency, and far greater throughput versus Ethereum Layer 1 alone while also providing a world-class developer and user experience. Optimism’s exceptional team, carefully designed developer experience, major scaling benefits, years of research and testing, and full composability made it the obvious choice.
One of the most exciting things about what Optimism has built is that it can be seen in many ways as an extension of Ethereum — from its philosophy down to its tech stack. This close adherence to Ethereum development paradigms results in a very easy transition for developers, wallets and users: no new programming languages, minimal code changes to existing contracts required, and out-of-the-box support for the majority of existing Ethereum tooling.
We’ve gotten to know the Optimism team over the last several years, and have been extremely impressed. In addition to their undeniable technical acumen, Jing, Karl, Ben and the rest of the team have shown themselves to be hard working, earnest, and pragmatic, and the addition of Josh brings critical operational and legal expertise. Importantly, they are truly committed to the mission of scaling Ethereum. The Optimism mainnet, now live, is the result of years of dedicated effort, dating back to the team’s research at Plasma.
Optimism is currently in the midst of a phased rollout, and will be ready for large-scale production later this year. We are thrilled to partner with Optimism, and to help support the Ethereum ecosystem as it continues its rapid growth.