Ethereum

Vitalik Buterin shuns layer 2 investments for THIS reason

Published

1 year ago

September 7, 2024

DCS Team

Credit : ambcrypto.com

contributor

Posted: September 7, 2024

Ethereum co-founder Vitalik Buterin has stated he is not going to spend money on layer 2 initiatives within the close to future.
His assertion comes amid intense debate over the advantages these protocols have on the primary blockchain.

Ethereum [ETH] co-founder Vitalik Buterin has acknowledged that he has no plans to spend money on layer-2 networks. This comes days after he moved $1.3 million in STRK, the native token of the Starknet Layer 2 protocol.

In a publish on X, Buterin noted that he would donate all proceeds from layer 2 tokens to charity or to assist the broader Ethereum ecosystem.

He stated,

“I additionally haven’t any plans to spend money on L2s or different token initiatives within the close to future. My purpose in giving cash to initiatives is to assist issues that I believe are priceless, particularly in circumstances the place different components of the ecosystem could also be undervaluing them.

His assertion comes amid a raging debate over the worth that layer 2s add to the underlying layer 1 blockchain.

The layer 2 networking debate is heating up

Layer 2 networks have proven important progress over the previous 12 months, with Whole Worth Locked (TVL) growing by nearly 200% per 12 months. L2Beat info. Nevertheless, the identical progress has not been noticed on layer 1 blockchains.

In his Crypto Monthly Summary Earlier than August 2024, asset supervisor VanEck stated layer 2s have been “cannibalizing” Ethereum income.

VanEck famous that the Ethereum blockchain recorded $6 million in income firstly of the 12 months. By August, this quantity had dropped to $1.2 million as transactions have been pushed from the Ethereum mainnet.

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VanEck acknowledged:

“Ethereum’s resolution to enhance scalability by pushing transactions to L2 blockchains has thus far didn’t drive worth to ETH.”

The same view was shared by Bitwise Make investments CEO Hunter Horsley. He noted that whereas layer 2 brings worth again to Ethereum by utilizing it as a settlement layer, they’ll have a internet unfavorable affect as a result of they’re nearer to the customers.

Solana and Ethereum communities collide

The layer 2 debate has additionally created a rift between the Solana and Ethereum communities.

Notably, the discourse began after Solana co-founder Anatoly Yakovenko declared that these networks are “parasitic.”

Supply:

Later, head of communications at Solana Labs, Austin Federa, stated declared that “L2-like issues on Solana” are “Community Extensions” and never Layer 2 Networks.

Ethereum group member Ryan Berckmans responded, saying that the time period Community Extensions was simply semantics as these protocols did the identical factor as layer 2s.

The host of The Rollup podcast, AyyeAndy, said,

“Mainly, community extensions are L2s, however L2s will not be community extensions. It’s a rectangle and a sq., one definition matches the opposite.”

As the talk continues, the layer 2 ecosystem seems to be witnessing a slowdown amid broader bearish market sentiments. Over the previous week, the TVL for the highest 5 layer 2s has fallen attributable to TVL.