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Key Takeaways

  • Arbitrum does not have a token
  • Both Arbitrum and Optimism are designed to help solve Ethereums congestion issues
  • Both Arbitrum and Optimism are EVM compatible
  • Optimism has a token that you can trade

Arbitrum Vs Optimism

What is the one thing both Arbitrum and Optimism have in common? Ethereum.

Unless you have been living under a rock you will have noticed Ethereums rising gas fees and slowing transaction speeds and the chain experiences more and more congestion due to the popularity of it and sheer volume of traffic.

This is where both Arbitrum and Optimism come in, both designed to help Ethereum scale by using what we call Layer 2 technology. But which is better? What network should you be using?

Why We Need Layer 2s

As the crypto space grew and Ethereum quickly became the go to chain for DeFi and NFTs it saw an explosion of volume and traffic causing the network to experience severe congestion issues resulting in rapidly rising transaction costs.

With transaction costs reaching upwards of $50 something had to be done, this is where layer 2 chains such as Optimism and in a sense Arbitrum come in. Offering an EVM compatible chain for developers to execute smart contracts on without having to face Ethereum congestion.

EVM compatibility 

Being EVM compatible any smart contract built for Ethereum can also run on these layer 2 chains making it very easy for developers to make the move across and makes up for the reason in the recent explosion in layer 2 technology.

Low Cost

Being a layer 2 both Arbitrum and Optimism are designed to lower the cost of transactions making it cheaper for both developers and end users to use.

What is Arbitrum?

Arbtitrum isn’t so much a layer 2 network itself rather it is what is called a layer 2 solution built to solve the congestion issues that Ethereum has been experiencing. It does this by allowing developers to build EVM (Ethereum Virtual Machine) contracts and deploy them on Arbitrum benefiting from its speeds and low congestion while still giving the developers Ethereum quality security.

Arbitrum works by using a technology called optimistic rollups. This allows smart contacts from Ethereum to run on Arbitrum recording data and sending it back to the main Ethereum chain. Majority of the transactions are completed on layer 2 allowing for much faster development and lower fees, before being sent off to layer 1 Ethereum.

Optimistic roll ups and layer 2 solutions can get quite confusing and in depth so instead of boring you in this quick comparison of Arbitrum and Optimism you can check out this link to read more about how optimistic roll ups and Arbitrum works.

What makes Arbitrum different from other layer 2 networks is that Arbitrum doesn’t actually have its own token. So if someone is offering to sell you Arbitrum tokens it is a scam.

What is Optimism?

Optimism is a “low cost and lightning fast Ethereum L2 blockchain”.

Optimism is built by Ethereum developers as a chain to run alongside Ethereum and allows developers to scale and speed at a fraction of the price. Boasting upwards of 10x the speed of Ethereum and built to be EVM compatible, Optimism has quickly become a chain that Ethereum developers are favoring.

With an ecosystem boasting over 100+ projects we can see that developers are quickly making the switch over to optimism and taking advantage of its speed and low transaction costs. One of the reasons Optimism came to popularity so fast is due to it using the same language as Ethereum so dApps can easily be moved over from Ethereum to Optimism.

Optimism really came to light a few months ago when its TVL (total value locked) exploded pushing the chain into the DeFi space as it went from $200 million TVL to over $1 billion in a matter of a month.

Which One Should You Be Using?

From an investment point of view Optimism makes the most sense as you can directly buy their native token OP while Arbitrum does not have a token that you can buy and sell.

Both of these networks can easily be used with the popular crypto wallet Metamask

As a developer it is a bit more of a difficult decision, with both layer 2s being EVM compatible you can switch between them if desired however Optimism does have a lot of grants and a large community of developers which I think gives it a slight edge over Arbitrum in the development sector as well.