The birth story of Optimism: 3 people, 5 years, 9 billion dollar valuation

Original Author: 律动 BlockBeats

In early May, Messari conducted an in-depth analysis of Optimism in its report, giving it a valuation of $9 billion. After several rounds of massive financing, Optimism has become a consensus among top VCs like a16z and Paradigm. With the announcement of airdrops, Optimism has once again become a hot topic in the market.

Undoubtedly, the arrival of OP is another landmark event in the history of crypto development, symbolizing the opening of a new chapter in Ethereum's scalability. Behind this historic moment are several "Ethereum geeks" writing legendary stories.

The Plasma Dream

In mid-2017, Vitalik and Joseph Poon co-authored a paper titled "Plasma: Scalable Autonomous Smart Contracts," where they first proposed the Plasma architecture. This was one of the earliest solutions to address Ethereum's scalability issues. At that time, the crypto game Crypto Kitty was extremely popular, leading to a surge in transaction volume on the Ethereum chain. People had to wait over ten minutes to purchase a crypto cat while paying exorbitant gas fees, making Ethereum's scalability a pressing issue.

Shortly after the Plasma proposal, it resonated strongly with three core Ethereum developers and researchers, who came together to form a nonprofit research group called Plasma Group to build and realize Vitalik's "ultimate vision for Ethereum."

Among the three, Karl Floersch was the most "Optimistic," always smiling and speaking passionately, a true optimist. Karl was an OG developer at the Ethereum Foundation and had a close relationship with Vitalik. Upon seeing the paper, he was thrilled and took immediate action.

Jinglan Wang is an experienced blockchain evangelist. She joined the Bitcoin club at MIT, starting her crypto journey, later becoming a blockchain product manager at Nasdaq and founding the trade finance company Eximchain. She then co-founded the Blockchain Education Network with Jeremy Gardner to help schools around the world establish blockchain clubs.

Ben Jones was also an early researcher and developer at Ethereum, but in his spare time, he often produced parody songs based on Ethereum under his stage name Weird ETH Yankovic, making him the artist among the three.

At that time, Rollup had not yet emerged, and Plasma was all the rage. This small group of "Ethereum enthusiasts" began to doodle wildly on whiteboards every day, brainstorming new ideas, and held monthly conference calls to share new designs for implementers, enjoying a very pure and exhilarating time.

Plasma Group members discussing designs

However, as research progressed, some key design limitations of Plasma became increasingly apparent. The team realized that Plasma lacked a crucial element, and its development stagnated in 2019.

"But can it run Uniswap?"

Let's rewind to 2017, when a mechanical engineering graduate named Hayden Adams had just lost his first job. He reached out to his friend Karl Floersch, who was then developing Casper, and received the reply: "Congratulations, this is the best thing that could happen to you!" Karl told Hayden, "Ethereum is the future, and your mission is to write a smart contract."

At that time, Hayden didn't even know how to code, but feeling down, he decided to give it a try. So, Hayden spent two months learning the basics of Ethereum, Solidity, and JavaScript, and on Karl's suggestion, created an AMM on Ethereum. He named it Uniswap.

The initial version of Uniswap

As a believer in crypto economics, Karl was excited when he saw Uniswap, and at a developer conference, he introduced Hayden and Uniswap to Vitalik. After browsing the contract code on his phone, Vitalik directly told Hayden, "You should apply for funding from the Ethereum Foundation." Not long after, Jinglan also got to know Hayden through Karl and became an important advisor to Uniswap.

Karl, Vitalik, and Hayden at the Ethereum Industry Development Summit

The rest is history; Uniswap grew into a unicorn in the crypto space, leading DeFi Summer to its peak. Why mention this story? Let's continue.

Back to Plasma Group, the team launched the testnet in 2019. During the initial testing phase, Plasma indeed showed excellent results. Because the Plasma architecture did not have to deal with the issue of Validity, it theoretically could achieve unlimited scalability.

However, it wasn't long before Plasma's fatal problems emerged. When the testnet was first launched, applications like MakerDAO and Uniswap had not yet created a frenzy, so people's understanding of smart contract applications was still weak. But with the onset of DeFi Summer, Uniswap had a tremendous impact on the crypto industry, and various applications began to emerge on Ethereum, making Uniswap an indispensable daily tool for many crypto players.

Thus, when Plasma Group reported to Vitalik, the first question they were asked was, "Can it run Uniswap?"

One major drawback of the Plasma child chain architecture is that transferring funds between the L2 and L1 layers takes a long time, sometimes requiring users to wait up to a week. This also made it impossible for general-purpose smart contracts like Uniswap to operate on Plasma. Despite Ben leading the technical team in many attempts, the issue of "running Uniswap" remained unresolved.

In this way, Plasma Group found itself stumped by the unicorn it had nurtured, and the Plasma solution, once seen as the "EndGame" for Ethereum's scalability, seemed to have entered a technical dead end. Now, the three "scalability pioneers" of Plasma Group had to find a new solution.

Eureka!

Just when the team was at a loss, Karl stumbled upon an article Vitalik published in 2014, which mentioned a concept called Shadow Chain, which, as the name suggests, is to create a shadow for Ethereum. The team immediately realized that Vitalik's design could be applied to the Optimistic model they were designing for Plasma.

Comparison of data validity and usability among various scalability solutions

With the help of the community, Optimistic Rollup was born. This new architecture could run any Ethereum smart contract while significantly reducing Ethereum's gas costs. Undoubtedly, it opened a new chapter in Ethereum's scalability.

Optimistic Rollup drew from Plasma's design but sacrificed its nearly unlimited scalability to run a virtual machine called OVM (Optimistic Virtual Machine), which also allowed Optimistic Rollup to run all applications that could run on Ethereum.

This time, the team finally solved the ultimate problem faced by Plasma—OR could run Uniswap!

To showcase the team's new solution, Karl reached out to his old friend Hayden and created a decentralized trading application called Unipig based on OR, demonstrating it at the Ethereum Devcon conference.

Unipig application Demo

After nearly three years, Plasma Group finally had its "Eureka Moment."

Optimistic Ethereum

The demo at the Devcon conference not only excited Ethereum developers but also attracted capital looking for potential opportunities. Shortly after the Unipig demo, top VCs like Paradigm began to reach out.

In January 2020, with $3.5 million in support from Paradigm and IDEO, Plasma Group transitioned from a nonprofit research organization to a for-profit startup, officially giving birth to Optimism.

A month later, Optimism launched the alpha testnet for OVM, followed by a soft launch of the mainnet in early 2021, receiving immediate support from leading projects like Uniswap, Compound, and Synthetix. When the mainnet officially launched in the summer of the same year, Optimism once again received strong backing from its "brother" Uniswap, becoming the first ecosystem to launch the V3 version after Ethereum.

The biggest feature of Optimism is that its development carries a strong Ethereum upper-layer will. The ultimate goal of Optimism is not to become a new force but to become Ethereum itself, which is why we often hear the team use the term Optimistic Ethereum.

It is this philosophy that led to the biggest upgrade of Optimism—EVM equivalence, greatly reducing Optimism's footprint and providing developers with a "one-click deployment" and "plug-and-play" experience. In the subsequent Bedrock upgrade, the team also introduced Cannon fault proofs, further reducing the differences between Optimism and upstream geth to just 300 lines of code.

Of course, to better and faster achieve these upgrades, the Optimism team has made tremendous efforts. Once, a team member named Mark set up a tent on the roof of the Optimism office to ensure the smooth operation of the testnet.

Team member Mark setting up a tent on the roof

The team's enthusiasm for the future of Ethereum scalability and their hard work have also continuously attracted capital to Optimism. In February last year, a16z led a $25 million Series A round for Optimism, and in March this year, Optimism completed a $150 million Series B round at a valuation of $1.65 billion.

Today, Optimism has nearly 40 members, including EIP signers, product engineers, and protocol guides. At the end of 2021, the team removed the whitelist for deployment, opening up the Optimism ecosystem to everyone. From there, Optimism has deployed over 50 applications, bridged more than 60,000 ETH from the Ethereum mainnet, with a total on-chain value exceeding $900 million, while transaction fees have decreased by 40% compared to before.

In an official blog post, Optimism stated:

“It’s hard to believe that in just over a year since the launch of the Optimism mainnet, we have:

Saved users over $1.1 billion in gas fees, deployed over 6,800 smart contracts, welcomed over 300,000 unique addresses, achieved over $900 million in on-chain value, facilitated over $17.4 billion in transaction volume, generated over $24.5 million in revenue, and donated over $1 million to public welfare funds.”

Today, with the arrival of the new governance mechanism Optimism Collective, Optimism has once again sparked heated discussions in the entire crypto community. The airdrop of Optimism's native governance token OP is not just a current market hotspot but also another landmark event in the entire history of crypto development.

With the arrival of OP, Ethereum has opened another new chapter. As a line from Margin Call says—"Remember this day boys, remember this day."