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Optimism Says Ether Now Treated as Native Cryptocurrency Alongside OP Token

source-logo  coindesk.com 08 June 2023 19:41, UTC

Optimism, a layer 2 network atop the Ethereum blockchain, said its “Bedrock” upgrade has ushered in a new era for how the cryptocurrency ether (ETH) is treated in the ecosystem – as a native token.

Under the new setup, ETH functions natively on the network just like Optimism’s own OP token, according to a representative of the project.

“ETH is now being treated as the native token of both the Ethereum and Optimism networks, rather than as an ERC-20 token,” an OP Labs security engineer who goes by “Maurelian” told CoinDesk over email.

CoinDesk spotted the change in blockchain data – in the form of a transfer of more than $550 million of ETH out of the Optimism Gateway - the bridge crypto users use to move assets between the main Ethereum network and Optimism’s layer 2. It was the second-largest transfer of ETH in the past 14 days, data from blockchain analytics firm Arkham Intelligence shows.

The ETH, which belongs to users who had deposited the Ethereum cryptocurrency into Optimism, was transferred out of the bridge into a new smart contract on Optimism.

“The ETH balance of the Optimism bridge was moved to a new address,” according to Maurelian.

The $550 million transfer came on the same day as Optimism’s “Bedrock” upgrade, which included a series of changes ultimately designed, according to project officials, to help morph the layer 2 network into a “Superchain” of interoperable and composable blockchains, all built with Optimism’s OP Stack. The U.S. crypto exchange Coinbase is building its own layer 2 network called Base on Optimism.

The new resting place for the $550 million of ETH is the Optimism Portal, a smart contract responsible for passing messages between the main Ethereum blockchain and Optimism, serving “as both the entry and exit point to the Optimism L2,” according to Optimism’s GitHub page.

The “ETH in the portal represents all of the ETH on OP mainnet,” Optimism’s head of communications, Lynnette Nolan, told CoinDesk.

“With Bedrock, we’ve added a new method of making deposits via the new Optimism Portal contract. This approach treats ETH as a native token, so that an L1 to L2 transaction can have both ETH and data associated with it,” said Maurelian. “To achieve this, we needed to decouple the storage of ETH from the rest of the ERC-20 tokens in our bridge, and move it into the Optimism Portal.”

The Optimism Gateway, which doesn’t hold any ETH now, currently has more than $576 million worth of tokens, including USDC, USDT, WBTC and rETH, according to block explorer Etherscan.