- Ethereum co-founder Vitalik Buterin has said he will not invest in layer 2 projects in the foreseeable future.
- His statement comes amid an intense debate on the benefits that these protocols have on the main blockchain.
As a seasoned researcher with years of immersion in the dynamic world of blockchain technology, I find myself intrigued by Vitalik Buterin’s recent decision to abstain from investing in layer 2 projects. Given his pivotal role in the creation and development of Ethereum, it’s fascinating to observe how he navigates the ever-evolving landscape of this space.
Vitalik Buterin, a co-founder of Ethereum [ETH], has publicly declared that he won’t be putting his money into layer 2 networks, following his recent transfer of approximately $1.3 million worth of STRK, the native token associated with the Starknet layer 2 platform.
In a recent post on platform X, Buterin mentioned his intention to give away all earnings derived from layer 2 tokens either to charitable causes or to bolster the wider Ethereum community.
He said,
I don’t plan on investing in L2s or other token-based projects for the time being. When I provide funds to projects, it’s primarily because I believe in their value, often when other aspects of the ecosystem may not fully appreciate them.
His statement comes amid a raging debate on the value that layer 2s bring to the underlying layer 1 blockchain.
Layer 2 network debate intensifies
Over the last year, there’s been significant expansion in second-layer networks, as indicated by a staggering 200% increase in Total Value Locked (TVL), according to L2Beat statistics. Conversely, this growth spurt has yet to be mirrored in first-tier blockchains.
In its Crypto Monthly Recap for August 2024, asset manager VanEck said layer 2s were “cannibalizing” Ethereum revenues.
As a crypto investor, I observed that at the start of the year, the Ethereum blockchain generated approximately $6 million in earnings. However, come August, this figure had significantly decreased to around $1.2 million, with transaction activity seemingly shifting away from the Ethereum mainnet.
VanEck stated,
The approach Ethereum has taken to enhance its capacity to handle transactions by moving them to layer 2 (L2) blockchains hasn’t yet resulted in an increase of value for Ether (ETH).
Essentially, the CEO of Bitwise Invest, Hunter Horsley, expressed a similar perspective. He pointed out that layer 2 solutions enhance Ethereum’s value by serving as its settlement layer. However, he also suggested that these solutions could potentially have a detrimental effect overall, as they tend to be more closely connected to the users.
Solana, Ethereum communities clash
The layer 2 debate has also caused a divide between the Solana and Ethereum communities.
Significantly, the conversation began following Anatoly Yakovenko, a co-founder of Solana, expressing his viewpoint that these networks are “leeching.
In a later announcement, Austin Federa, the Head of Communications at Solana Labs, clarified that “Solana-like solutions” are referred to as “Network Extensions” rather than layer 2 networks.
Ethereum community member Ryan Berckmans responded, saying that the term Network Extensions was just semantics, as these protocols did the same thing as layer 2s.
The host of The Rollup podcast, AyyeAndy, said,
In simpler terms, network extensions can be considered as Layer 2 networks, but it’s important to note that Layer 2 networks are not exactly the same as network extensions. This is like saying both a rectangle and a square fit the definition of a geometric shape, but they are not identical entities.
Amidst ongoing disputes and a general downturn in the crypto market, it seems that the pace of growth in layer 2 systems is starting to decelerate. Over the past seven days, the total value locked (TVL) in the top five layer 2 platforms by TVL has decreased.
Read More
- CYBER PREDICTION. CYBER cryptocurrency
- ZK PREDICTION. ZK cryptocurrency
- LDO PREDICTION. LDO cryptocurrency
- FARM PREDICTION. FARM cryptocurrency
- BADGER PREDICTION. BADGER cryptocurrency
- DOP/USD
- Yellowjackets Season 3 Reveals First Cast Photos and One of Them is Devastating
- JASMY PREDICTION. JASMY cryptocurrency
- DEEP PREDICTION. DEEP cryptocurrency
- AVAX PREDICTION. AVAX cryptocurrency
2024-09-07 07:04