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Cyber Capital Founder: The growth of the L2 project has a detrimental effect on the health of the Ethereum ecosystem

Cyber Capital Founder: The growth of the L2 project has a detrimental effect on the health of the Ethereum ecosystem

Bitget2024/08/29 06:30

PANews reported on August 29, according to Bitcoin.com, Justin Bons, the founder and Chief Information Officer of European cryptocurrency fund Cyber Capital, issued a warning about the growth of Layer 2 (L2) projects. He believes this trend poses a potential threat to the healthy development of the Ethereum ecosystem. Bons pointed out that choosing to expand Ethereum through L2 rather than focusing on the main chain (Layer 1) itself is a decision with misconceptions.

He further elaborated that this decision-making direction has led to a series of problems: firstly, it has resulted in underutilization of the Ethereum main chain; secondly, because destruction costs have not effectively curbed inflation but instead pushed up ETH's inflation rate due to large amounts of activity flowing into L2 projects; furthermore, liquidity in the L2 ecosystem is dispersed across multiple unconnected islands exacerbating system fragmentation.

Bons also criticized L2 chains for their lack in value accumulation and pointed out these chains' decentralization level and security are inferior compared to Ethereum's base chain which carries risks such as being used for stealing user funds or censoring transactions. He emphasized that since L2 projects have independently developed and accumulated value it is now almost impossible without damaging existing project values ​​to solve scalability issues through base chains which will directly affect users holding related tokens.

Bons bluntly stated: "Expanding ETH will destroy all capital and fees earned by L2 because venture capitalists cannot profit directly from Layer 1 expansion. These projects actually distort public interest turning them into rent-seeking platforms on VC chains." He believes that Ethereum's current situation stems from over-transferring scaling tasks towards centralized decisions at L2 concluding: "Such outcomes are inevitable when we are subject to centralized decision-making processes."

Earlier news reported Justin Bons stating that Ethereum’s Layer-2 networks were essentially stealing users and transaction fees from Ethereum.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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