The Cairo VM is intentionally tailored for Validity Proof systems and is not constrained by the limitations imposed by the EVM (Ethereum virtual machine).

CASM

CASM (Cairo Assembly) is the machine code that the Cairo VM runs. CASM is translated to polynomial constraints that enforce the correct execution of a program. CASM is a key component in the ecosystem because regardless of what the user sends to the Starknet sequencer, what’s proven is the correct CASM execution.

CAIRO ZERO

Cairo Zero, released in 2020, introduced the world’s first Turing-complete language for creating STARK-provable programs, revolutionizing verifiable computation. Cairo Zero programs were compiled locally into CASM and then sent to the Starknet sequencer.

It is important to not that Cairo Zero V2 overcomes the limitations of Cairo Zero, promising safer, more efficient contract writing.

SIERRA

Sierra serves as an intermediate representation between Cairo and CASM. This additional layer ensures that user code remains provable in all cases.

Cairo is the native smart contract language for Starknet, a permissionless decentralized Validity-Rollup.

Cairo is Rust-inspired, allowing developers to write Starknet smart contracts in a safe and convenient manner.

For every computation, it’s crucial to construct an Algebraic Intermediate Representation (AIR), which comprises a set of polynomial constraints that accurately represent the given computation. Initially coined as “CPU AIR,” Cairo is a virtual CPU and a singular AIR, capable of describing any computation with the same “generic” AIR.

There are different type of Cairo languages for example, the Cairo VM, CASM, Cairo Zero, Cairo, and Sierra.

Watch out for our next publication as we alight the differences between the Cairo languages

How does Starknet work?

As a Layer 2, Starknet processes transactions on its network and settles them on Ethereum to enhance scalability. It accomplishes this by compressing thousands of transactions into a data structure known as a "proof," which is then submitted to Ethereum as a transaction. This substantially improves throughput, or the number of transactions processed per second, and significantly reduces the cost per transaction. StarkNet utilizes a proprietary proof system called zk-STARK, or zero-knowledge scalable transparent argument of knowledge. This system verifies the correctness of transactions without disclosing confidential data, improving privacy and security. Starknet has two core components: Sequencer and prover. Sequencers are responsible for executing transactions and proposing blocks. They can process significantly more transactions per second than Ethereum nodes. Provers, on the other hand, provide a mathematical guarantee of the validity of the block transactions, which are then finally settled on Ethereum. Starknet is set to have its native token called STRK, which is expected to unlock in April 2024. StarkWare deployed the STRK token on Ethereum in November 2022. The total supply of STRK tokens is ten billion, and STRK will be used for covering transaction fees, governance and staking within the Starknet network.

The Optimism Token, or OP for short, was launched in May 2022 and serves as the native and governance token of the Optimism blockchain. Optimism operates on a democratic, community-driven governance system called the Collective. The community members can utilize the OP token for two main functions, namely governance and public goods funding through the Token House and Common House respectively.

The Token House

It is the Collective’s governance arm, wherein OP holders can use the tokens to vote on how the Optimism network is developed and managed. This includes proposals such as upgrading the protocol, adjusting inflation, managing the treasury, allocating grants, etc.

The Common House or The Citizen’s House

This arm involves OP holders supporting the projects that benefit the Ethereum ecosystem, such as developing tools, researching new solutions, and creating new applications. Essentially, in the Common House, the token holders can come together to propose, discuss, and vote on numerous retrospective public goods that require funding.

Moreover, talking about Optimism tokenomics, the initial total supply in circulation is about 4.3 billion OP tokens (4,294,967,296 to be precise). This initial supply will inflate at a rate of 2% per year.

DeFi Platforms: Optimism is well-suited for decentralized finance (DeFi) applications. DeFi platforms often suffer from high gas fees and network congestion on the Ethereum mainnet. By deploying on Optimism, DeFi projects can provide users with faster and more cost-effective transactions.

Decentralized Exchanges (DEXs): DEXs are a popular use case for Optimism. These platforms benefit from Optimism's low transaction fees and fast settlement, making it more efficient for users to trade assets and provide liquidity.

Token Swaps and Transfers: Optimism can be used for simple token swaps and transfers, which are common actions in the cryptocurrency ecosystem. Users can benefit from lower fees and faster confirmation times.

Gaming and NFTs: Online gaming and non-fungible token (NFT) platforms can leverage Optimism to provide a seamless and efficient user experience. Gamers can interact with blockchain-based games with minimal latency and cost, while NFT marketplaces can offer faster transactions for buying, selling, and trading digital collectibles.

DApps and Smart Contracts: Any decentralized application or smart contract built for Ethereum can be deployed on Optimism with minimal modifications. This allows developers to extend their reach and provide users with a more accessible and affordable experience.

Microtransactions: Optimism's low fees make it a suitable solution for microtransactions, where even small-value transactions can be executed efficiently.

Token Bridges: Optimism can be used to facilitate token transfers between different blockchains. Token bridges that connect Optimism to other blockchain networks enable cross-chain interoperability.

Scalable Protocols: Projects that require high throughput and scalability can utilize Optimism to expand their capabilities without the limitations of the Ethereum mainnet.

Data Aggregation: Optimism can be used for data aggregation services, enabling users and developers to access and analyze blockchain data efficiently.

Experimental Projects: Developers and innovators can explore various experimental projects and concepts on Optimism without the high costs and potential bottlenecks associated with the Ethereum mainnet.

It is important to note that the adoption of Optimism and Layer 2 solutions is an ongoing process, and the ecosystem continues to evolve. Many projects and use cases are actively exploring and integrating with Optimism to harness its benefits. As the Ethereum ecosystem matures and Layer 2 solutions become more widely adopted, additional use cases and opportunities may emerge.

Arbitrum

Arbitrum is an Optimistic roll-up technology much like Optimism. It’s believed that Arbitrum fine-tuned the source code of Optimism to form a distinct layer 2 network.

The main difference between optimism and Arbitrum is the way they handle fraud-proofs. Optimism uses a single round fraud-proof, while Arbitrum uses multiple round fraud-proof. With single-round fraud-proof, optimism carries out instant verification as it relies on Layer 1 to complete the transaction. So, this approach completes transactions quickly, but the consequence is a high gas fee. While multiple round fraud-proof takes time with validation during transactions but this helps reduce gas costs. Optimism is “only” EVM-compatible while Arbitrum uses an Arbitrum Virtual Machine, Optimism has a Solidity compiler while Arbitrum supports all EVM programming languages.

Polygon

Polygon is one of those scaling solutions referred to as sidechains. It is a Defi scaling solution. And unlike Optimism which relies on Ethereum’s Layer 1 for transaction security, this scaling solution runs parallel to Layer 1 and has a built-in security framework.

Polygon makes use of the same virtual machine Ethereum uses, so it’s easy to outsource smart contracts to Polygon. Polygon uses Matic tokens to secure its network and pay transaction fees, so users will have to exchange Ether for the protocol’s native MATIC Token.

zkSync

zkSync is a type of ZK-Rollup. “zk” stands for zero-knowledge, which means that one party can prove to another party that it possesses certain information (in this case, transaction details) without revealing the details. To confirm the validity, each transaction is moved to an off-chain prover which generates a cryptographic proof called ZK-SNARK. SNARK stands for Succinct Non-Interactive Argument of Knowledge. The proof generated is thereafter posted on Layer 1.

Optimism and zkSync are closely related but the zkSync method of validating transactions can be somewhat complex. It ensures a higher throughput and lower cost without giving up security. On the downside, ZkSync is not an ideal model for building DApps and the different ZK-Rollup apps cannot interact with themselves on Layer 2.

Generally, the difference between Optimism and All Other ZK-rollups are as follows:

Security Model: The fundamental difference between Optimistic Rollup and ZK-Rollup is the security model. Optimistic Rollup assumes most transactions are valid, and disputes are resolved on-chain. In contrast, ZK-Rollup provides a more secure approach, where cryptographic proofs ensure the validity of all transactions without relying on an off-chain dispute resolution process.

Transaction Finality: ZK-Rollup typically offers faster transaction finality because there's no need for a dispute resolution phase, as is the case with Optimistic Rollup.

Data Availability: ZK-Rollup's use of cryptographic proofs can make it more storage-efficient, as it doesn't rely on storing all transaction data on the Ethereum mainnet.

Use Cases: Optimistic Rollup may be well-suited for applications that require compatibility with the EVM and can tolerate some trade-offs in terms of security and transaction finality. ZK-Rollup is often chosen for applications where security is a paramount concern, and faster transaction finality is desirable.

It's important to note that both Optimistic Rollup and ZK-Rollup have their own advantages and use cases. The choice between them depends on the specific requirements and trade-offs that best suit the applications and projects being developed on these Layer 2 scaling solutions.

WATCH OUT FOR OUR NEXT ARTICLE ON OPTIMISM

Block Storage

The Optimism Blockchain stores its block on Ethereum using a smart contract called the Canonical Transaction Chain (CTC). The CTC comprises an append-only list of blocks that can only be added to, not changed or removed. Unless the Ethereum network itself goes through a reorganization, the CTC’s code ensures that newer transactions on Ethereum cannot alter the current list of blocks.

Block Production

The Optimism Blockchain produces and processes transactions or ‘deposits’ using a special node called the sequencer. The primary functions of the sequencer include:

• Instantly confirming transactions & updating states

• Producing & executing blocks on layer 2

• Submitting user transactions on the Ethereum mainnet.

After receiving the transactions from the users, the sequencer batches them into blocks. It then utilizes its own virtual machine, equivalent to the Ethereum Virtual Machine (EVM), followed by submitting the blocks to the CTC as calldata – a way of storing data on Ethereum without executing it. The CTC also publishes state roots, which represent the state of the Optimism Blockchain after each block as hashes.

Block Execution

To execute blocks and verify transactions, the Optimism Blockchain utilizes another type of node called the Verifier. It utilizes the state roots or hashes published by the sequencer. It verifies the transactions by comparing them with the state roots it calculates by replaying the transactions on its own virtual machine. If they match, it indicates that the transactions are valid and consistent. In case they don’t, it means the transactions are invalid or there is a discrepancy in the state. In such an event, the verifier can challenge the sequencer by submitting fault proof to the Ethereum chain and claim a reward.

The assumption that the transactions are valid can be challenged within seven days (commonly called the Challenge Window) of the state commitment. A challenger can typically utilize Ethereum’s data availability and the sequencer’s Merkle root to identify errors or manipulations during the challenge window.

Security Mechanism

When it comes to addressing security challenges and risks, Optimism is currently working on two primary issues: Smart contract security risks and protocol upgrades.

Concerning smart contract security issues, while Optimism has undergone several audits, it doesn’t guarantee a bug-free protocol. However, the protocol is offering a $2 million bounty if the whitehats can find bugs in a codebase.

As far as protocol upgrades are concerned, optimism currently uses a centralized mechanism, wherein fast upgrade keys are used to make quick changes to the protocol. This allows the team to fix any issues or improve protocol faster.

Ethereum is known to be one of the most secure and decentralized blockchains. However, the network haven’t  been able to scale beyond 30 transactions per second  as a result, Ethereum has limitations in the number of transactions it can handle per day. When it reaches its maximum capacity for the transaction, congestion occurs and the network cannot scale anymore. When the block space gets scare, the gas fee goes up and the transactions takes longer time to process, this problem was what brought up the wonderful idea behind OPTIMISM.

Optimism is a layer-two blockchain for Ethereum using optimistic rollups as scaling technology. It is one of Ethereum’s biggest scaling solutions with over $250 million in TVL at the time of writing. Optimistic rollups outsource the execution of transactions to a L2 solution like Optimism.

The transactions on Optimism are rolled up into batches that get relayed to the Ethereum mainnet, which only records the new chain state. Since their validity is assumed, the rollups are called optimistic. A rollup's validity can be challenged for up to seven days, which is why withdrawals from Optimism to Ethereum take seven days.

The roll-up technology optimism operates combines  a series of transactions on Ethereum’s layer 1 into a single transaction. While the rollup is executed on Optimism layer 2, the transaction data is processed on Ethereum’s layer 1.

·         In Optimism Rollup, most of the transaction processing happens off-chain, making transactions faster and less costly. The blockchain serves as a "rollup" that primarily validates and settles disputes. All transactions are assumed as valid, so it doesn’t undergo many computations on layer 2. What it does is move the transaction to layer 1 without verifying it, which leads to a significant increase in scalability. If there is suspicion of fraud in a transaction, Then Optimistic roll-ups will run a fraud-proof, which verifies it using data on Layer 1.

·         Optimism Execution: It's called "optimistic" because it operates on the assumption that most transactions are valid. Transactions are processed quickly, but if a dispute arises, the blockchain's smart contract can be used to verify the accuracy of the transactions.

·         Scalability: Optimistic Rollup significantly improves the throughput and scalability of the underlying blockchain by offloading transaction processing. This makes it more cost-effective and reduces congestion on the main blockchain.

·         Security: While Optimistic Rollup offers scalability, it relies on the assumption that participants will act honestly. If a participant disputes a transaction, the smart contract on the main blockchain resolves the issue by  doing a fraud-proof for verification. This validity of the transaction can be challenged within a week.

WATCH OUT FOR OUR NEXT ARTICLES ON DIFFERENT OPTIMISM DAPPs AS WE DIVE DEEPER INTO THE OPTIMISM