According to DefiLlama, TVL (total value locked) on the layer-2 scaling solution for Ethereum “Optimism”, has increased by 284% over the past month. The majority of TVL comes from lending activities on Aave through Optimism’s layer-2 chain.
The approaching The Merge has given the market a confidence boost and spurred investor interest in Ethereum products over the past 7 weeks, as reported by CoinShares. The Merge will be officially released on September 19.
As a layer-2 Ethereum blockchain, Optimism has scaled the ecosystem via Rollups, or off-chain computations, to speed up transactions. Transactions are recorded on Optimism and completed on Ethereum.
Optimism is currently the home of 35 protocols, including derivatives liquidity protocol Synthetix, decentralized exchange Uniswap, and automated market maker Velodrome. Due to the high volume of user orders on exchanges (including order cancellations), the current capacity of the Ethereum blockchain of 30 transactions per second seems to be overloaded and unable to meet user’s demand. However, some experts predict that the network could scale to 100,000 transactions per second after The Merge launched successfully.
“Currently, if Ethereum architecture and rollups are combined, Ethereum’s current transaction throughput levels of 15–45 TPS can scale up to 1,000 – 4,000 TPS”, Ally ZAch, researcher at Messari said.
That is also the reason why OP and other layer-2 tokens rebound strongly since the beginning of July. OP’s price has also increased spectacularly 300% in just over a month and is currently trading around $1.67.
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