The projects are launching a demo of the Synthetix Exchange, a platform to issue and trade synthetic assets, that’s powered by the so-called Optimistic Virtual Machine, a Layer 2 scaling solution based on Optimistic Rollups.
Those were all mouthfuls so let’s unpack: Layer 2 scaling solutions are technologies that remove some of the computation that’s on-chain (Layer 1) and take it off-chain, so that the network can be faster. Optimistic Rollups is one of these Layer 2 solutions, and the OVM is at the is what implements this system so that it can execute Ethereum smart contracts and act just like the Ethereum chain, at scale.
With Ethereum’s network utilization rate nearly maxing out at 91%, scalability is increasingly important if it wants a shot at becoming a platform for applications that reach mainstream adoption. Optimistic Rollups are a way for DeFi projects to work around this bottleneck and reach a level of performance usually associated with centralized systems.