For those of you who may not know Arbitrum & Optimism are layer two protocols for Ethereum. As a super quick background, Ethereum is the largest decentralized smart contract platform (think Bitcoin but with more utility), but with its current structure its limited to processing only about 12 transactions per second, that is not enough to service the world’s financial system. One (of many) possible solution to that problem is to create layers “above” Ethereum that use Ethereum’s super robust infrastructure as a security layer. There are multiple technologies pursuing this area which I won’t get into but, Arbitrum and Optimism are two of the larger competitors that use a concept called optimistic roll ups in their design. Once again I will not go down the rabbit hole of trying to explain that technology in depth, needless to say it has lots of promise (maybe second only to ZK tech… no I’m not making up random words :).
Arbitrum and Optimism have been operating for a while now, up until recently I had not utilized them. They seem to work well, but I haven’t had the need. Well I’ve been hearing rumblings for a while about a possible airdrop of their tokens at some point in the future. What this means is that at some point each of these networks may create some kind of governance or payment token and they could distribute this token partially be handing it out free to participants in the network. This is a very common thing in the crypto industry, I have been the recipient of both the Uniswap airdrop as well as the Curve airdrop, both of which were significant windfalls. So my crypto sense have been tingling. Sadly do to my recent crypto fatigue I’ve dragged my feet on actually trying to use these networks. Well that ended recently, I made it one of my goals to take a small allocation from one of my main address and bridge some assets over to invest in each of the two systems. My goal was two fold, one, just to see how it works and get a feel for the user experience, and two knowing it could be rewarded in the future with some kind of participation reward. Once I bridged over the assets I put some in Aave and uniswap just as a place holder. Is there better places to put them? Probably but I haven’t done the work on that yet.
The nice part about these layer twos is that if at any point I want to change where I put my money, I can do it quickly and cheaply, not exactly how it works on Ethereum base chain right now. Ethereum base chain fees can be from a few dollars up to $10’s of dollars and $100’s if the activity has spiked, while my transactions on Arbitrum and Optimism were less than $1 each, after the cost of bridging the assets which was about $30 for each chain.
I honestly may be too late for both of these networks, they may have taken a snap shot of activity much earlier, they may decided to more richly reward earlier adopters, or they may never release a token. So there is a definite risk my efforts were a waste of time and gas (Ethereum transaction fees). BUT this is the exact kind of activity and learning that is so richly rewarded in the Crypto ecosystem.
So this is not an investment recommendation, but just an idea incase you’ve been sitting on the fence with trying these networks, it could be well rewarded later.