We told you about layer 2 on Ethereum and even made a video on the subject, today we are going to present to you a tutorial on one of these layer 2 solutions. It is perhaps one of the best known, namely the one we rightly names Optimism.
To quickly summarize what a layer 2 consists of, it consists of moving transactions and related calculations from the main chain to a secondary chain.
I quickly remind you that the Optimistic Ethereum layer nevertheless remains very fresh and very recent. You must be aware of the risks linked to various bugs that may occur. Likewise, transferring funds to another network is not a decision to be taken lightly. Even though Optimism is a secure layer 2 on Ethereum, the protocol is still in its infancy (it is not yet a fully public, permissionless and decentralized finished product). Don't forget that the challenge is a discipline in which we are the explorers 😉
How to use Layer 2 Optimism
You should know that to use Optimism, the first thing is to have a MetaMask wallet. This is in fact the usual wallet that we use for DEXs even if there are other alternatives. This is the most popular and therefore the one we recommend and use for this tutorial.
I would also like to quickly explain to you how it works in practice. Optimism Gateway works similarly to other blockchain bridges: users deposit funds into a smart contract on Ethereum, which are then immediately locked, and provide a representation of those tokens issued on Optimism. So, when we withdraw our funds on Optimism, they are burned and then on Ethereum, they are unlocked. This explains why it takes a week for the withdrawn funds to become available.
Step 1 (optional): Deposit ETH on your Wallet (on test networks)
If you are a beginner and not very comfortable with the Challenge, you can practice without risk. To make it even more secure, in fact, we recommend that you practice with a first Testnet transaction to get used to it. In a simple demonstration, we can use the Kovan test network as layer 1 and the Optimism-Kovan test network for layer 2. Remember that these are precisely test networks for doing tests ;)QED.
So, opening Metamask, select the network "Kovan Test Network". You use it as layer 1. Then, as you don't have ETH, there, you will have to earn some via faucets. You can type "Kovan Testnet Faucet" and you will find sites like https://ethdrop.dev to receive free ETH on your Kovan network. You will receive them in a few seconds and you can start your tests quietly.
If you don't want to go through the testing phases, you can directly use your ETH from your main Ethereum network. Most normally in the world, then.
Once you have ETH or other tokens in your wallet, well, we can start considering Optimism.
Step 1: Add your networks to MetaMask
You can add the following networks to improve your experience and switch from one network to another.
So this is the first step to add the “Optimistic Ethereum” network to your wallet. It is a very simple process and is no different than when you add the Polygon network, Fantom, Binance Smart Chain or any other EVM compatible chain. (By the way, here we are talking about an Optimistic layer 2 but it will also be the same steps for other layer 2s like Arbitrum and ZK-Sync in the future).
The quickest way to do this is to use chainid.link. This is a tool that gives the network information to enter on Metamask's "localized RPC". I'll give you the links below, no worries.
For the Optimistic Ethereum Testnet (Kovan)
To do this, you need to click on “Localized RPC” in your MetaMask tab.
If you want to copy and paste information to fill out, you can use this link here.
Add the Optimistic Ethereum Testnet
To do this, again, you need to click on “Localized RPC” in your MetaMask tab.
If you want to copy and paste information to fill out, you can use this link here from Optimistic Ethereum.
When you do your transfers on the test networks, tell yourself that it is exactly the same thing when you use Ethereum Mainnet for layer 1.
I would like to tell you right away that this can take a little time and above all be aware that for withdrawals from L1 to L2, it can take a whole week to do this. It’s really very important to realize this.
Step 2: Go to the Optimism Gateway
Optimism URL: https://gateway.optimism.io. It is in effect a gateway to transfer your funds. If you want to know more, we wrote an article on bridges/bridges on the blockchain.
So, as you see, this is typical of what we see in decentralized exchange platforms. There, you have to go to the upper right corner and select the amount you want to deposit on layer 2 Optimism.
Now you need to select the amount of ETH or even other tokens (currently only ETH, wBTC, SNX, USDT, DAI, UNI, LINK and EURT are supported). Then, you click on “Deposit”.
Quick reminder: If this is your first time making a deposit, you'll also have to pay the usual Ethereum fees to approve the contract.
To do this, you must sign the transaction on Metamask and wait (a few minutes and even up to 20 minutes!) for the funds to be moved. You can verify your transaction on the blockchain however on Etherscan.
Once you have your funds available, the page will display that the transaction is (finally) complete. You can also verify the transaction on Optimistic Etherscan if you want.
And it's good! You officially want on Ethereum layer 2!
Step 4: Uniswap v3 alpha on optimism
Now we can use the funds we deposited on our layer 2 to exchange them directly on Uniswap. To do this, go to Uniswap and there on Metamask, choose from your drop-down list the layer where you deposited your funds.
And there you can trade your ETH tokens in exactly the same way as you would on Uniswap on your normal network.
You will see that the transaction speed and confirmation time on Optimistic are very high.
Now you can trade at a lower cost thanks to layer 2.
Step 5: Do liquidity mining with liquidity pools on Uniswap V3 on the Optimistic network
We've been waiting for a long time and today version 3 of Uniswap welcomes Optimism in a wonderful way.
So, of course, it's an alpha version and so it's still limited in terms of functionality. And, having tested it, I can tell you that it is already very good.
In theory, it's really similar to what you do on Uniswap when you add liquidity.
Optimism updates and expected collaborations
You should know that for the moment Optimism is still very centralized, that is to say that it is the development team which ultimately controls the protocol. Thus, they are the ones who decide which tokens can be listed or refuse certain ones on the network.
Likewise, and this is for example what we are observing right now when I am writing this Optimism tutorial, upgrades lead to network outages. Of course the team warned us of these breakdowns. This means that users cannot perform operations during these periods. It's important to keep this in mind.
Although less of a concern for users, the team also has the ability to whitelist contracts and assets, meaning they have authority over deployed projects and assets supported by the network. Additionally, at least one planned upgrade to Optimism in the next few months, which could cause a network outage (the team will give advance warning). This means that users will not be able to make any transactions during this period.
? Similarly, the issue of withdrawals being unavailable for a week (when transferring these funds to Ethereum layer 1) could be resolved when the Optimism network has its main network. Solutions to this problem are still being worked on, as with Maker's Optimism Dai Bridge. We will talk about it again when the time comes (it is planned for Q3/Q4 2021).
I also have to tell you about a (really) highly anticipated collaboration: Zapper.fi.
Zapper integrates with Optimism
Zapper is indeed a large project which has integrated Uniswap and Optimism.
In fact, it was an asset management platform that then began supporting Uniswap’s Optimism liquidity pools. On Zapper, soon, users will be able to trade, provide liquidity and transfer assets directly between Optimism and other networks even (and this directly on Zapper).
Conclusion on layer 2 Optimism
It must be said that layer 2 Optimism is very interesting, especially for those who want to avoid the gargantuan fees on Ethereum. Using Uniswap thanks to Optimism is very fast and is confirmed instantly. The costs are also so much lower!
With a swap costing around 0,00001767 ETH, on the former, compared to 0,023 ETH, on the mainnet. We can also explore the state ofOptimism on Etherscan for those who want to know the updated status.
This can be a good option for those who want to stay on Ethereum and not be "forced" to go to different blockchains like Polygon and Binance for example.
Of course, layer 2 is certainly Optimistic but not optimal, especially if we consider the week to withdraw your funds with fees which are not less on top of that!
The major problem being (for me for example) the limit of supported assets. We can manage a list of tokens which will grow over time. It makes our mouths water, right?
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Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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