Ethereum scaling

Glad to see that you Guys are enjoying my analysis!

Just wanted to quickly talk about something – and that is Ethereum scaling.

More specifically, the numerous layer 2 solutions out there.

I hold some MATIC in my portfolio because of how Polygon has helped Ethereum scale with its side chain solution. On top of this, you had that news that Polygon has merged with Hermez which is bringing a whole host of scaling solutions to its platform.

However, what I find really exciting is what has been going on in the Optimistic rollup space. More specifically, the scaling solutions being developed by Optimistic Ethereum & Arbitrum.

I had been using Optimism on and off for the past month, testing out it's Uniswap integration. I found it to be relatively seamless and the swap fees were miniscule. For example, a USDC <> ETH swap cost $4. When I compared it to a mainnet swap, gas fees on the latter were $67! Moreover, the swap was executed in 0.27 seconds.

There is reasonable token support on Uniswap V3 on Optimistic Ethereum. However, it still lacks many dApp integrations. These are apparently on the way.

I also found that the withdrawal fees on Optimism were quite high.

However, over the past few days I have been trying out Arbitrum, and it really is mind melting.

It functions much the same way as optimism but there is more dApp support and fees are cheaper. That is because there are multiples more users on Arbitrum than there are on Optimism. This means that the fees on rollup exit are quashed down.

I have executed multiple swaps and compared it to fees that would be incurred on mainnet. In total, it's about 10 times cheaper!

It makes sense to me then why there has been so much excitement around Arbitrum (it’s TVL is almost 14 times higher than Optimisms).

The only issue that one may have with Optimistic Ethereum and Arbitrum over other scaling solutions is the need for a 7 day wait on withdrawal. This is because of in-built challenge periods that you have with optimistic rollups.

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