Optimism is a Layer 2 scaling solution for Ethereum that aims to increase the throughput of the Ethereum network and decrease transaction fees. It does this by implementing a technology called Optimistic Rollup.
Optimistic Rollup is a technology that allows the Ethereum network to process more transactions by taking computations off-chain while keeping the data on-chain. This significantly reduces the gas fees and speeds up transaction times.
The fundamental principle behind Optimistic Rollup and Optimism involves making optimistic assumptions. Instead of verifying every transaction on-chain, Optimistic Rollups assume that all transactions are valid by default. Then they move the computation and state storage off-chain into a sidechain.
If an invalid state transition is detected, anyone can submit a proof, called a “fraud proof,” to challenge it. The proof is then reviewed on-chain, and if it’s confirmed to be fraudulent, the bad actor is penalized and the fraudulent state transition is reverted.
By using Optimistic Rollups, Optimism aims to maintain the security of the Ethereum network while scaling up its capacity for transaction processing. This is crucial as Ethereum becomes increasingly popular and the demand for space on the Ethereum blockchain grows.