Bitcoin Layer 2 options have gained important traction this 12 months however have additionally drawn their justifiable share of criticisms. Mempool founder Mononaut has strongly criticized them and identified a number of drawbacks from a technical standpoint.
Curiously, Mononaut’s stance positive factors help as Bitcoin Ordinals founder Casey Rodarmor.
Bitcoin Layer 2 Below Hearth
The primary 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 quicker transaction processing and decreased congestion, finally leading to decrease charges throughout the Bitcoin community.
Layer 2s additionally allow builders to combine good contract functionalities on the blockchain, thereby extending 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. Mononaut, for one, has discovered varied facets of those implementations defective. In a collection of tweets, the Mempool founder argued that if a Bitcoin Layer 2 resolution lacks help for the unilateral exit, it basically capabilities as a multi-signature system slightly than a real Layer 2 resolution.
Mononaut additionally criticized Layer 2 options that contain enterprise capital traders and introduce their very own tokens, calling them related pump and dump schemes.
He additionally stated those who provide “reciprocal rewards” based mostly on deposit quantities aren’t any totally different from pyramid schemes whereas concurrently warning the Layer 2s which are backed by upgradeable Ethereum contracts and managed by a single entity. He views these to be potential rug pulls ready to occur.
In response to Mononaut, Layer 2s that incentivize locking up cash for prolonged intervals are just like earlier scams similar to Hex 3.0. Furthermore, Mononaut cautioned towards these options that declare to be Bitcoin-native however are literally Ethereum multi-signature programs, labeling them as affinity scams.
He went on to focus on the hazard of those programs that lack complete technical documentation, equating them to the notorious Bitconnect rip-off disguised with superficial info.
Bitcoin Layer 2 Explosion This Season?
Outstanding Bitcoin educator Dan Held, who can also be one of the vital vocal proponents of Layer 2s on Bitcoin, expects an explosion of such options because the bull run unfolds.
In an interview with CryptoQuant, Held stated that the present Layer 2s, similar 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’re seeing plenty of contenders popping out of the woodwork. Once we take a look at how it will play out, I don’t assume there’s going to be a winner-take-all-all. There are plenty of totally different Ethereum L2s, some extra profitable than others, however I don’t assume there’s a winner beat all. We’re going to see an entire spectrum of various kinds of floor space for design and market technique. We’ll see an explosion of Bitcoin L2s and doubtless a few of these will probably be tens of billions of {dollars} market cap.”
