Ethereum Layer - 2 Solutions Compared: Polygon vs Optimism vs Arbitrum

11 SEP 2023
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Ethereum Layer - 2 Solutions Compared: Polygon vs Optimism vs Arbitrum

Polygon, Optimism, and Arbitrum are the three well-known Layer 2 scalability options for the Ethereum blockchain. Each of these chains seeks to deal with the issues that have affected the Ethereum network, such as scalability, high transaction fees, and slow transaction speed.

In this blog post, we will compare and contrast these three solutions to help you understand their key differences and how they stack up against each other in the ongoing L2 Wars.

There are multiple technologies that can be used to scale ethereum like rollups and sidechains
Overview of ethereum scaling solutions

What is a Layer 2 protocol?

Ethereum blockchain interacts with layer 2 solution by batching transactions and then sending them to ethereum
Interaction between Ethereum and L2 chains

A Layer 2 protocol is a scaling option for blockchains that runs on top of the principal blockchain. By unloading some of the workload from the primary blockchain, it is intended to enhance its performance. By batching transactions, leveraging off-chain computing, and other methods, Layer 2 protocols can do this.

There are multiple ways to scale Ethereum with L2 or layer 2 chains. Rollups and Sidechains are two of the most widely used methods for scaling Ethereum. A form of scalability solution called rollups entails combining numerous transactions into one and submitting them to the Ethereum blockchain as one transaction. By dividing the cost of an Ethereum transaction and the modest cost of rolling up batches of transactions among users, the cost of transactions is decreased.

On the other hand, sidechains are distinct blockchains that function separately from Ethereum and are linked to the Ethereum Mainnet through a two-way bridge. Sidechains may include unique block parameters and consensus procedures, which are frequently created for quick transaction processing.

The nature of the bridge contracts used by rollups and sidechains to lock cash from the main chain to the other network is the primary distinction between them. In sidechains, the bridge contract might be given knowledge of the main or side chain but does not confirm its accuracy. Rollups, in contrast, demand greater resources from Ethereum while maintaining main chain security. Both rollups and sidechains have distinct benefits and drawbacks, and developers can select the one that best suits their requirements.

The most widely used blockchain platform for creating decentralized applications (dApps) at the moment is Ethereum. The platform has struggled to handle the growth in users and transactions, causing slow processing times and high gas fees. Layer 2 scaling solutions solve these problems by processing transactions on a separate layer before adding the data to the main Ethereum chain. This maintains the network’s security and decentralization while allowing faster transactions, lower costs, and greater scalability.

Let's now examine these three Layers one by one:

What is Polygon and how Polygon works?

Polygon (formerly known as Matic Network) is an L2 scaling solution, to improve scalability and lower transaction costs. With Ethereum's security, liquidity, and interoperability, it aspires to combine the flexibility and scalability of alternative networks. Polygon's fundamental concept is that it processes transactions off of Ethereum using sidechains. Following the completion of a batch of transactions, it sends them back to the Ethereum blockchain along with validity proofs that guarantee the information is correct.

What is Optimism and how Optimism works?

Optimism is another popular Layer 2 scaling solution that uses optimistic rollups to increase scalability and reduce gas fees. Optimistic rollups work by bundling multiple transactions together into a single rollup before posting the data back to the main Ethereum chain. This keeps the Ethereum network secure while enabling quicker transaction speed and reduced fees.

What is Arbitrum and how Arbitrum works?

Arbitrum is a Layer 2 scaling solution that also uses optimistic rollups to increase scalability and reduce gas fees. Like Optimism, it bundles multiple transactions together into a single rollup before posting the data back to the main Ethereum chain. However, Arbitrum also offers additional features such as Nitro mode, which allows for even faster transaction processing times and lower fees.

So how do these three solutions stack up against each other in the ongoing L2 Wars?

While all three solutions aim to address the same challenges of scalability, high transaction fees, and slow transaction processing times on the Ethereum network, there are some key differences between them.

Difference between Polygon and Optimism:

Layer 2 scaling options for Ethereum include Polygon and Optimism. Optimism has a faster transaction speed and lower transaction fees than Polygon, which is more decentralised and has a bigger ecosystem.

While Optimism makes use of Optimistic Rollups, Polygon uses a combination of sidechains, Plasma, and PoS to accomplish scalability. As a result, Polygon is able to handle more transactions per second than Optimism, but its transactions are also less secure than Optimism's.

In addition, Polygon offers a larger ecosystem of dApps and projects than Optimism, giving consumers who want to utilise Polygon additional possibilities. However, Optimism is a more appealing choice for those who want to cut spending on fees because to its faster transaction times and reduced transaction charges.

The ideal option for you will ultimately rely on your unique demands and preferences. Polygon is an excellent option if you're searching for a more decentralised solution with a sizable ecosystem. Optimism is a wise choice if you want transactions that are quick and affordable.

Difference between Arbitrum and Optimism?

The two Layer-2 scaling options for Ethereum—Optimism and Arbitrum—offer faster transaction times and lower fees than the Ethereum mainnet. However, they differ in terms of architecture, security, and functionalities.

The architectures used by Arbitrum and Optimism are sidechain and optimistic rollup, respectively. Accordingly, Optimism is a layer-2 solution that works on top of Ethereum, whereas Arbitrum is a distinct blockchain that is connected to Ethereum.

To make sure that its transactions are secure, Arbitrum combines optimistic verification with fraud proofs. Optimistic verification is used to quickly complete transactions while fraud proofs are used to identify improper transactions. Single-round fraud proofs are used by Optimism to guarantee the security of its transactions. Compared to Arbitrum's method, this one is easier to apply and more effective, but it is also less secure.

In general, arbitrum costs are less expensive than optimism fees. This is due to the fact that Arbitrum is not required to purchase gas on the Ethereum mainnet. In general, optimism fees are more expensive than arbitrum fees. This is due to the fact that Optimism must spend money on gas on the Ethereum mainnet.

Although Arbitrum is not now DAO-governed, it will be in the future. A DAO in optimism is in charge of overseeing and developing the protocol.

Both Optimism and Arbitrum are hopeful L2 scaling solutions for Ethereum. Although Optimism has a better developed ecosystem and is simpler to use, Arbitrum is thought to be a more scalable and safe option. The option that is best for you will depend on your individual requirements & preferences.

The best method to decide between Arbitrum & Optimism is to take your individual requirements and preferences into account. Arbitrum is an excellent option if you're seeking for the most scalable and secure solution. Optimism is a good option if you're searching for a solution that's simple to use and has a more developed ecosystem.

Key differences between Polygon, Optimism & Arbitrum:

There are multiple networks improving Ethereum's transactions speed and reducing gas fees. Each has it's own adantages and disadvantages

Which Layer 2 solution should you choose for your project?

It's impossible to say which of Optimism, Arbitrum, and Polygon is ideal because it depends on the particular requirements of your project in terms of transaction speed and gas fees all three of them significantly outperform the original Ethereum network.

However, there are some distinctions in their methods and capacities Polygon is a flexible and adaptable solution due to its multi-chain design and support for various scaling techniques developers wanting to move their dApps may benefit from its zkEvm technologies compatibility with the Ethereum Virtual Machine.

It is simple for developers to move their dApps to Ethereum thanks to the Optimism roll-up mechanism however because of its emphasis on optimistic rollups it might provide less flexibility.

In terms of scaling techniques as Polygon although it uses optimistic rollups as well Arbitrum’s ecosystem and degree of decentralization are different from those of optimism the ideal option for your project will ultimately depend on your unique demands and preferences before choosing a platform its important to analyze its features and capabilities.

To conclude, Polygon, Optimism, and Arbitrum are all robust Layer 2 scaling solutions for Ethereum, providing considerable enhancements in transaction speed and gas fees. Each platform has its distinct features and capabilities, and the optimal choice for your project will hinge on your specific requirements and priorities.

Polygon’s multi-chain system and support for various scaling methods make it a flexible and adaptable solution, while Optimism’s rollup technology is highly compatible with Ethereum. Arbitrum also employs optimistic rollups but differs from Optimism in its ecosystem and level of decentralization. It is advisable to consider the features and capabilities of each platform before making a decision.

Pros & Cons of building on Polygon
Building on Polygon gives low gas fees and high efficiency but suffers from lack of decentralization

Pros of building on Polygon:

  • High throughput: Compared to Ethereum's 15 transactions per second, Polygon can execute up to 65,000 transactions per second. This makes it perfect for applications like gaming and DeFi that demand a large volume of transactions.
  • Low gas fees: Compared to Ethereum, Polygon has substantially lower gas fees, making it more feasible to use.
  • Security: The foundation of Polygon is Ethereum, one of the most secure blockchains now in use. Apps created on Polygon will therefore inherit Ethereum's security.
  • Developer-friendly: Polygon employs the same programming language (Solidity) as Ethereum and is developer-friendly. Because of this, developers may easily port their current applications to Polygon.
  • Efficiency: Since Polygon does not need all nodes to execute every transaction, it is more efficient than Ethereum. This can conserve resources and energy.


Cons of building on Polygon:

  • Dependency on Ethereum: For security and finality, Polygon is reliant on Ethereum. This implies that Polygon would be exposed if Ethereum were to suffer a security leak.
  • Competition: Other Layer 2 scaling options for Ethereum exist, like Optimism and Arbitrum. This necessitates Polygon engaging in competition for both consumers and developers.
  • Lack of standardisation: Choosing a Layer 2 scaling solution might be challenging for developers because there is no one standard for these solutions.

Pros & Cons of building on Optimism:
Building optimism gives reduced gas fees and high scalability but has limited smart contract functionalities

Pros of building on Optimism:

  • Reduced fees: On Ethereum, optimistic rollups can dramatically lower transaction costs. This is due to the off-chain processing and state storage freeing up resources on the Ethereum mainnet.
  • Scalability: Optimistic rollups can greatly improve Ethereum's capacity to scale. This is due to the fact that they have a higher transaction processing rate than the Ethereum mainnet.
  • Compatibility with Ethereum: Optimistic rollups are compatible with Ethereum, therefore dApps created on them can be integrated with dApps created on the Ethereum mainnet without any issues.
  • Trustless finality: Optimistic rollups are capable of achieving trustless finality, which gives consumers the assurance that their transactions will be completed and settled despite the presence of hostile actors on the network.

Cons of building on Optimism:

  • Limited smart contract functionality: Optimistic rollups are still under development, and they do not support all of the features and functions of the Ethereum blockchain. For example, they cannot yet be used to deploy certain types of smart contracts, such as those that require randomness or timelocks.
  • Security risks: Optimistic rollups rely on a fraud-proving scheme to detect cases where transactions are incorrectly calculated. While this scheme works in theory, there is always a risk of malicious actors exploiting vulnerabilities in the system.
  • Longer withdrawal times: When withdrawing funds from Optimism, there is a 7-day challenge period during which anyone can challenge the validity of the withdrawal. This can make it difficult to use Optimism for applications that require fast withdrawals, such as decentralized exchanges.
  • Higher gas fees: While Optimism can significantly reduce gas fees for on-chain transactions, there are still some gas fees associated with using the network. These fees can be higher than the gas fees on other layer 2 solutions, such as Arbitrum.

Pros & Cons of building on Arbitrum:

Building on Arbitrum has the advantage of a higher EVM compatibility but suffers from a lack of decentralisation

Pros of building on Arbitrum:

  • High EVM compatibility: Arbitrum is one of the most EVM-compatible rollups, enabling it to support Ethereum contracts and transactions that have not been updated. Because of this, developers may easily port their current dApps to Arbitrum without having to make any significant changes.
  • Low cost: Transactions on Arbitrum are significantly less expensive than those on the Ethereum mainnet. This makes it an excellent option for dApps, like DeFi applications, that demand a high rate of transactions.
  • Faster transactions: Transactions on the Arbitrum network move far more quickly than those on the Ethereum mainnet. This makes it a viable option for dApps, such gaming dApps, that need real-time or nearly real-time transactions.
  • Scalable: Arbitrum has the ability to scale to accommodate many transactions. It is therefore a wise choice for dApps that anticipate rapid expansion in the future.
  • Secure: The Ethereum mainnet protects Arbitrum. This indicates that it inherits Ethereum's level of security.

Cons of building on Arbitrum:

  • Decentralisation: Arbitrum is still in development and is not yet completely decentralised. Given that a tiny number of validators now govern the network, there is a slight chance of centralization.
  • Congestion: During peak hours, Arbitrum may face congestion. Higher transaction costs and slower transaction speeds may result from this.
  • Absence of a native token: Arbitrum lacks a native token. As a result, users have no reason to join the network other than to take advantage of Arbitrum's advantages, which include lower transaction costs and quicker transaction times.

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