Future technical developments
EIP-4844
In the two graphs in the previous section, if you compare the Transaction Fees collected from users (blue part) and the Revenue returned to the project (purple part), you will see a quite large gap. This comes from the costs of interacting with Layer-1, capturing and aggregating data. It can be said that the bottleneck in the business model originates from another bottleneck in the technical nature. That is when Layer-2 must inherently depend on Layer-1 Ethereum to ensure decentralization and security. However, going forward, that issue is expected to be addressed by EIP-4844.
See also: What is EIP-4844? What benefits will Layer-2 solutions have?
In a data analysis article from author “dcrapis” regarding the trading fee structure after EIP-4844, comparisons between Arbitrum and Optimism were also mentioned.
With a time frame of the first 2 months of 2023, when the Layer-2 market has the most exciting activities, the data parameters that the above Rollups send to Layer-1 are not too different during the day. Specifically:
Arbitrum: sends 100mb of data per day on average to ETH mainnet.
Optimism: sends 93mb of data per day on average to the ETH mainnet.
That shows that, even after EIP-4844 is implemented, the difference in calldata costs (ie recording and comparing transaction data with Layer-1) of the two projects will not be too large.
However, if compared with ourselves, both Optimism and Arbitrum will be able to cut a large amount of call data costs. Current estimates are about 10 times and some predictions also say that the data cost for each batch of Layer-2 transactions will be almost... free. Surely those participating in the DeFi market have had to wait a long time. Tired of receiving information about airdrops and Arbitrum (ARB) tokens. So today, now that we have clearly identified Arbitrum's tokenomics approach and implementation, let's try to make a few small comparisons with competitor Optimism (OP) to see these two layer-2s. What's the difference?
Note: The article below is not intended to suggest a valuation for the ARB token before listing. All content below is for informational purposes only as well as my personal perspective and should NOT be considered investment advice.
Overview of tokenomics
First, you can read through detailed information about how Optimism deploys tokenomics in the following article.
Tokenomics Research #8: Optimism (OP) – Positive short term, more long term
I will quickly go through to compare the Token Allocation of both projects in the table below:
Of course, assembling a few items between the two projects for comparison is a bit lame. Typically the sections "Ecosystem Fund" and "DAO Treasury", because the documents from Arbitrum have not yet mentioned in too much detail the purpose of "DAO Treasury". However, with the remaining items, we can somewhat compare them, because the purposes of use are quite similar.
Overall, Arbitrum's allocation will not be biased towards the user community and project builder audience like Optimism. This is indicated in the allocation section for Airdrop, Team, and Investors in the first rounds and the biggest difference may be the support funding portion redistributed to the project (Grant).
Many of you are also wondering why Arbitrum's percentage seems quite odd. This is because Arbitrum's supply is unlimited and will continue to bloom over time (with a commitment of no more than 2% per year).
Both layer-2 will use ETH as the fee unit and their native tokens will be used for administration and grant support to the community.
Operational situation
Thus, using ETH to pay gas fees and costs related to recording data and interacting with Layer-1 will cause both Arbitrum and Optimism to maintain the same model: (Revenue from transaction fees translation/activity on layer-2) – (data cost for Layer-1) = Remaining profit for Foundation.
In this part, from my personal perspective, Arbitrum has been quite "filtering" when choosing the solution to issue the following token, while maintaining the airdrop story, creating motivation for users to continuously make online transactions. network, thereby bringing in a large amount of revenue without spending too much money in the form of tokens issued and grants to the ecosystem.
The amount of fees paid by users and the revenue returned to Arbitrum's project. Source: Token Terminal.
The most impressive times when Arbitrum operates take place in July 2022 and February 2023. In the above two timelines, the total amount of fees collected is approximately 2.9 million USD and Revenue / revenue (in this case, the Arbitrum portion earned after deducting Layer-1 data costs) reached 785 ~ 900 thousand USD.
On the contrary, with Optimism, a large amount of tokens allocated to the Grant segment will be a cost burden if the project does not have a reasonable voting and selection plan, to minimize token selling pressure and costs. as emmision.
Total user fees paid and Revenue of the Optimism project. Source: Token Terminal.
The exciting peak period of Optimism took place in May 2022, even after information about the airdrop was announced. That move can be explained by Optimism dividing the airdrop amount into many different parts. By the end of 2022 and early 2023, activity on this layer-2 starts to get bustling again to prepare for the second airdrop, this is also the time when OP price sets a new ATH.
Considering the scope from the beginning of 2023, Arbitrum is slightly better in terms of revenue, but as mentioned above, whether the project can attract cash flow to stay after the airdrop announcement will be vital. Meanwhile, Optimism still has a "card up its sleeve" which is the next airdrop rounds.
Regarding TVL and trading volume, it can be seen that there is a significant difference between Arbitrum and Optimism. If standing alone and separate from Ethereum, Arbitrum is the 4th largest blockchain in TVL with 1.98 billion USD in locked value and 561 million USD in 24h volume, then Optimism ranks 6th but only has 981 million USD in TVL with 42, 4 million USD volume 24h.
Future technical developments
EIP-4844
In the two graphs in the previous section, if you compare the Transaction Fees collected from users (blue part) and the Revenue returned to the project (purple part), you will see a quite large gap. This comes from the costs of interacting with Layer-1, capturing and aggregating data. It can be said that the bottleneck in the business model originates from another bottleneck in the technical nature. That is when Layer-2 must inherently depend on Layer-1 Ethereum to ensure decentralization and security. However, going forward, that issue is expected to be addressed by EIP-4844.
In a data analysis article from author “dcrapis” regarding the trading fee structure after EIP-4844, comparisons between Arbitrum and Optimism were also mentioned.
With a time frame of the first 2 months of 2023, when the Layer-2 market has the most exciting activities, the data parameters that the above Rollups send to Layer-1 are not too different during the day. Specifically:
Arbitrum: sends 100mb of data per day on average to ETH mainnet.
Optimism: sends 93mb of data per day on average to the ETH mainnet.
That shows that, even after EIP-4844 is implemented, the difference in calldata costs (ie recording and comparing transaction data with Layer-1) of the two projects will not be too large.
However, if compared with ourselves, both Optimism and Arbitrum will be able to cut a large amount of call data costs. Current estimates are about 10 times and some predictions even say that the data cost per Batch transaction of Layer-2 will be almost...free.
Expanded structure
In particular, Arbitrum will also launch the Orbit product branch and begin to introduce the concept of Layer-3. Meanwhile, Optimism introduces the OP Stack mechanism and the Superchain model.
Basically, Optimism and Arbitrum will continue to be a platform for other projects to build in the form of App-chain. However, Arbitrum's Layer-3 will favor a layering mechanism (ie Layer-3 is built on top of Layer-2). Meanwhile, OP Stack's Superchain will lean towards a core network model and the surrounding chains will take advantage of the toolkit developed by Optimism to deploy the product.
This technical detail will open up a new change in tokenomics and business aspects, as the native tokens of the two projects will be able to be used to capture an amount of value from projects built around the technology suite. their great-grandfather. Typically, Coinbase's Base has announced it will deduct a portion of its transaction fees to deposit back into Optimism's Treasury.
Potential opponents
Any business model will need a competitive advantage. And it looks like the two Optimistic Rollups in this article will face quite a few challenges in the future as the zkEVMs are on the way.
However, with the two upgrades BedRock with Nitro, it is easy to see that both Optimism and Arbitrum leave open the possibility of switching to the zk-Rollups mechanism if necessary. This can be considered a layer of protection, helping these two names to ensure first-mover advantage, attract a large amount of cash flow and projects in advance, while still ensuring the ability to move flexibly. become active in the future if directly attacked.
Conclusion
From my personal perspective, Arbitrum and Optimism have many similarities in terms of model implementation and technical settings, and neither side has a significant competitive advantage. As for just one detail in the tokenomics design, I think Optimism is more community-oriented, while Arbitrum chooses an approach that wants to ensure more control to easily coordinate activities within the community. net.
Hopefully the above article will bring value and interesting perspectives to you. Hopefully the above information will help you make reasonable investment decisions for yourself. For now, hello and see you soon in a new article.
