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- Ethereum co-founder Vitalik Buterin has stated he won’t put money into layer 2 initiatives within the foreseeable future.
- His assertion comes amid an intense debate on the advantages that these protocols have on the primary blockchain.
Ethereum [ETH] co-founder, Vitalik Buterin, has come out to state that he doesn’t plan on investing in layer 2 networks. This comes days after he moved $1.3M value of STRK, the native token of the Starknet layer 2 protocol.
In a submit on X, Buterin noted that he would donate all proceeds from layer 2 tokens to charity or to help the broader Ethereum ecosystem.
He stated,
“I additionally don’t intend to take a position into L2s or different token initiatives within the foreseeable future. My purpose with giving initiatives cash is to help issues that I feel are priceless, particularly in circumstances the place different elements of the ecosystem would possibly undervalue them.”
His assertion comes amid a raging debate on the worth that layer 2s deliver to the underlying layer 1 blockchain.
Layer 2 community debate intensifies
Layer 2 networks have recorded a lot progress over the previous yr, with the Complete Worth Locked (TVL) surging by almost 200% per L2Beat knowledge. Nevertheless, the identical progress has not been seen in layer 1 blockchains.
In its Crypto Monthly Recap for August 2024, asset supervisor VanEck stated layer 2s have been “cannibalizing” Ethereum revenues.
VanEck famous that at the start of the yr, the Ethereum blockchain recorded $6M in revenues. In August, this sum had dropped to $1.2M, as transactions have been pushed from the Ethereum mainnet.
VanEck said,
“Ethereum’s resolution to enhance its scalability, pushing transactions to L2 blockchains, has to this point did not drive worth to ETH.”
An analogous view was shared by the CEO of Bitwise Make investments, Hunter Horsley. He noted that whereas layer 2s drive worth again to Ethereum by utilizing it as a settlement layer, they’ll have a internet damaging influence as they’re nearer to customers.
Solana, Ethereum communities conflict
The layer 2 debate has additionally triggered a divide between the Solana and Ethereum communities.
Notably, the discourse began after Solana co-founder, Anatoly Yakovenko, said that these networks are “parasitic.”
Supply: X
In a while, the Head of Communications at Solana Labs, Austin Federa, stated that “L2-ish 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 usually are not community extensions. It’s a rectangle and a sq., one definition matches the opposite.”
As the controversy rages on, the layer 2 ecosystem seems to be witnessing a slowdown amid broader bearish market sentiments. Within the final week, the TVL for the highest 5 layer 2s by TVL has dropped.
Supply: L2Beat
