Layer-2 scaling solution for Ethereum – Optimism – has found a major backer in Andreessen Horowitz.
Andreessen Horowitz Leads $25 Million Round
The race to become the first Layer 2 scaling solution to fix the high gas fees woes for the largest smart contracts platform is heating up. The demand – both institutional and retail – for Layer 2 scaling solutions has experienced an uptick in recent times amid skyrocketing Ethereum transaction costs pushing as high as $40 on February 23.
Already, the likes of Matic Network (now Polygon), Arbitrum, and Optimistic are burning the midnight oil to become the first Layer 2 solution that is able to tackle Ethereum’s unaffordable gas fees problem at the earliest.
Against this backdrop, major venture capital firm Andreessen Horowitz (A16z) recently announced it is leading Optimism’s $25 million Series A investment round.
The official announcement reads in part:
“We’ve spent a great deal of time looking at various approaches and teams building Layer 2s, and today we’re thrilled to announce we are leading a $25 million Series A investment in Optimism. Optimism is an Ethereum Layer 2 scaling solution that uses optimistic rollups to achieve far lower fees, far lower latency, and far greater throughput versus Ethereum Layer 1 alone while also providing a world-class developer and user experience.”
For those not in the know, Optimism leverages “rollups” to bundle transactions together using smart contracts on an Ethereum side-chain before broadcasting them to the mainnet. Through this, Optimistic is not only able to achieve lower fees but also lower latency, and greater throughput vis-a-vis transacting on Ethereum’s Layer 1 mainnet.
At present, Optimism is in the midst of a phased roll-out and is expected to be ready for large-scale production toward the end of 2021.
Layer 2 Solutions Couldn’t Come Earlier
While Ethereum has, for a long time, enjoyed its status as the largest and most active smart contracts platform, the recent surge in transaction fees has hindered the small, retail investors from being able to transact on the platform.
The high gas fees have resulted in several quality projects migrating to competing chains with lower gas fees, as is evident from the astronomical price increase for BNB courtesy of increased user activity on Binance Smart Chain.
As recently reported by BTCManager, a DeFi user accidentally paid 24.94 ETH (around $42k at the time) in gas fees to move funds to Uniswap.