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A trace driven methodology for logic synthesis and optimization is proposed. Given a logic description of a digital circuit C and an expected trace of input vectors T, an implementation of C that optimizes a cost function under application of T is derived. This approach is effective in capturing and utilizing the correlations that exist between input signals on an application specific design. The idea is novel since it proposes synthesis and optimization at the logic level where the goal is to optimize the average case rather than the worst case for a chosen cost metric. The paper focuses on the development of algorithms for trace driven optimization to minimize the switching power in multi level networks. The average net power reduction (internal plus I/O power) obtained on a set of benchmark FSMs is 14%, while the average reduction in internal power is 25%. We also demonstrate that the I/O transition activity provides an upper bound on the power reduction that can be achieved by combinational logic synthesis.