Optimism Layer-2 Is Upgrading: Is This What Bulls Want?

Optimism, one of the most popular Ethereum layer-2 platforms, will release the Bedrock upgrade on June 6, 2023.

The layer-2 provider on Ethereum says the release is “highly anticipated” by the community and will introduce some changes that make the protocol even more scalable, reducing transaction fees.

As it is, Optimism offers an off-chain, general-purpose platform where users can deploy smart contracts and launch decentralized applications (DApps) in a low-cost, highly scalable, and secure environment.

Optimism uses roll-ups and bundles transactions before confirming them on the Ethereum mainnet. This move relieves the mainnet, helping reduce fees by re-routing demand to an off-chain solution.

According to Optimism, Bedrock will be a hard fork. It means validators will have to update to the latest version. Optimism’s documentation reads that “the network will retain the same chain ID, transaction history, and state. The first block of the new network will be the last block of the old network +1.”

These changes that come with the Bedrock hard fork will improve scalability, usability, and security. 

For instance, the developer of the layer-2 protocol says there will be better Ethereum Virtual Machine (EVM) equivalence since, even after the upgrade, Optimism will remain compatible with the base layer, that is, Ethereum. Accordingly, users will continue deploying smart contracts as before the upgrade. 

The Bedrock upgrade will introduce a new two-step withdrawal process to the Optimism Mainnet bridge that will improve its security & make exploits much more difficult

One of the architects of two-step withdrawals, @vex_0x, explains howhttps://t.co/qs6Dtsz2nO

— OP Labs (@OPLabsPBC) March 22, 2023

Moreover, Bedrock introduces a new fee structure that makes fees more predictable and efficient. Overly, developers expect transfer or smart contracts deployment fees to drop. Presently, L2fees data shows that simple transfers on Optimism cost $0.30. Meanwhile, swapping tokens will cost $0.45.

On the security angle, Bedrock introduces a 2-step withdrawal process and a more robust sequencer. With a better sequencer, developers hope user funds will be better protected. At the same time, there will be better usability with the introduction of the Optimism Portal, allowing for easy cross-domain messaging.

Despite all these changes, it remains to be seen whether OP, the native token of Optimism, will rise. As of writing on May 16, the token is down nearly 50% from February 2023 high. However, considering gains in Q1 2023 formation, the OP uptrend remains. 

Still, traders need more signals before committing. In recent days, OP has been trending lower, breaking below the critical support level in early May. Whether OP bears will press on will be seen in the sessions ahead. Even so, what’s clear is that OP prices have been stagnating, finding support at 1.64.

Related Reading: OP Plummets 7% As Optimism Postpones Hardfork

Ahead of the June 6 Bedrock upgrade, OP prices could recover, shaking off the bears of May, and align with the primary trend set in motion in Q1 2023.