Bitcoin Layer 2 options have gained vital traction this yr, however have additionally acquired their fair proportion of criticism. Mempool founder Mononaut has strongly criticized them and identified a number of disadvantages from a technical standpoint.
Apparently, Mononaut’s place has assist from Bitcoin Ordinals founder Casey Rodarmor.
Bitcoin layer 2 underneath hearth
The principle goal of Bitcoin Layer-2 networks – which function secondary protocols constructed on prime of the Bitcoin blockchain – is to enhance scalability and transaction effectivity. That is achieved by offloading transactions from the principle blockchain, resulting in sooner transaction processing and fewer congestion, in the end leading to decrease charges throughout the Bitcoin community.
Layer 2s additionally permits builders to combine good contract functionalities on the blockchain, increasing the capabilities of the protocol.
Information. https://t.co/DuEOB4dXlN
—Casey (@rodarmor) April 11, 2024
Nevertheless, not everyone seems to be a fan of this idea. For instance, Mononaut has discovered a number of elements of those implementations to be flawed. In a collection of tweetsthe Mempool founder argued that if a Bitcoin Layer 2 answer doesn’t assist the one-sided exit, it primarily capabilities as a multi-signature system relatively than a real Layer 2 answer.
Mononaut additionally criticized Layer 2 options involving enterprise capital traders introducing their very own tokens, calling them comparable pump and dump schemes.
He additionally mentioned that these providing “mutual rewards” based mostly on deposit quantities are not any completely different from pyramid schemes, whereas concurrently cautioning the Layer 2s which might be backed by top-up Ethereum contracts and managed by a single entity. He sees these as potential carpet pullers ready to occur.
In accordance with Mononaut, Layer 2s that encourage holding cash for longer intervals are just like earlier scams like Hex 3.0. Moreover, Mononaut warned towards these options that declare to be Bitcoin native however are literally Ethereum multi-signature techniques, labeling them as affinity fraud.
He then highlighted the hazard of those techniques that don’t have intensive technical documentation, equating them to the notorious Bitconnect rip-off, disguised with superficial data.
Bitcoin Layer 2 explosion this season?
Distinguished Bitcoin educator Dan Held, who can also be some of the vocal proponents of Layer 2s on Bitcoin, expects an explosion of such options because the bull run unfolds.
In an interview with CryptoQuant, Held mentioned that the present Layer 2s, akin to Lightning Community, Liquid and the lesser-known Rootstock, have their very own inefficiencies, however nonetheless believes that the most recent resurgence might pave the way in which for a lot of new gamers.
“We see a number of contenders popping out of the woodwork. how this can play out, I do not suppose there shall be a winner-take-all. There are various completely different Ethereum L2s, some extra profitable than others, however I do not suppose there’s one winner that may outdo all. We’ll see an entire spectrum of various floor varieties for design and market technique. We’ll see an explosion of Bitcoin L2s and it’s probably that a few of these can have a market cap of tens of billions of {dollars}.”
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