Optimism TVL increases nearly 300% M/M before The Merge upgrade

Ethereum scaling solution surpassed $1 billion in total value locked in weeks.

According to data from DefiLlama, the total value locked (TVL) on Optimism, a layer 2 scaling solution for the Ethereum blockchain, jumped 284% in the past month. The vast majority of TVL consists of users lending and borrowing assets on Aave through Optimism's Layer 2 chain.

Investors have offered digital assets tied to the Ethereum ecosystem ahead of The Merge upgrade, which will see the blockchain transition from a proof-of-work network to one based on proof-of-stake .

According to a recent call to Ethereum developers, the tentative go-live date for The Merge is set for September 19th. As a layer 2 Ethereum blockchain, Optimism seeks to scale the ecosystem through rollups or off-chain computations, to speed up transactions. Transactions are recorded on Optimism and finalized on Ethereum.

The project hosts 35 protocols, including derivatives exchange Synthetix, decentralized exchange Uniswap, and automated market maker Velodrome. Due to the high volume of user trade orders on exchanges (including cancellations), the current Ethereum blockchain capacity of 30 transactions per second is ill-equipped to handle such demand. However, some experts predict that the network could potentially scale up to 100,000 transactions per second after The Merge upgrade, with Layer 2 solutions further enhancing this capability.

Optimism blocks are built and executed on layer 2 while user transactions are aggregated and submitted to Ethereum-1 layer. On Layer 2, transactions are immediately accepted or rejected without a mempool, enabling a fast user experience. In correspondence with the development of TVL, the p...