Rising popularity of centralized L2 solutions undermines Ethereum values

by Giorgi Kostiuk

2 years ago

Made with AI

Centralization of L2 solutions
Influence of centralized lobby
Ethereum losing dominance

Centralized second-layer solutions for Ethereum (ETH) pose a threat to the network's core values, according to Justin Bons, founder and CIO of Europe’s oldest crypto fund Cyber Capital.

Centralization of L2 solutions

L2 solutions should not be treated as 'extensions' of Ethereum, as they do not inherit its qualities and can both steal and censor users' funds. This statement was made by cryptocurrency expert Justin Bons in his recent X thread.

Moreover, none of Ethereum's L2 solutions have incentives to decentralize over time, as this step would compromise the income from running sequencer nodes.Justin Bons

Influence of centralized lobby

Bons highlights the growing importance of the L2 lobby. The success of Base, a Coinbase-linked Ethereum L2, demonstrates what can be achieved by this manner of scaling. According to L2Beat, Base accounts for 17.52% of all Ethereum L2s' TVL, replacing OP Mainnet as the second largest solution.

Ethereum losing dominance

Finally, Ethereum might be losing its dominance in the smart contracts segment as developers move to more democratic L1s. The prominence of L2s within the network shows that Ethereum has already crossed the Rubicon, becoming a platform for profit-oriented companies that have deprived it of the chance to scale L1 in a more decentralized and inclusive way.

Thus, the growing popularity of centralized second-layer solutions poses a risk to the values of decentralization inherent in the Ethereum network, potentially altering the distribution of power and influence in the cryptocurrency ecosystem.

Tier I

Sector: #18291

Sealed Hiding Place Room

Resource Cache

Tier I

Requires 25% Tier Progress to Claim

Meme Cache

Tier I

Requires 50% Tier Progress to Claim

Equipment Cache

Tier I

Requires 75% Tier Progress to Claim

After collecting, hiding places will be stored in your inventory and can be opened with Keys.

Tier I

Sector: #18291

25%

50%

75%

100%

Tier II

Survivors rescued:

0 / 600

Survivors

0/0

Transmit Signal

Broadcast this sector's coordinates to other rescuers.

Other news

Strive Increases Bitcoin Holdings to 26,355 BTC

Strive has disclosed a purchase of 1,355 BTC, raising its total Bitcoin holdings to 26,355 BTC.

Aisha Farooq3 hours ago

Broadcom Set to Gain from Alphabet's Custom TPU Sales

Broadcom is set to benefit from Alphabet's decision to sell custom TPUs to external data centers, enhancing its AI semiconductor revenue through a long-term agreement until 2031.

Bayarjavkhlan Ganbaatar11 hours ago

Alphabet Enters Hardware Market with Custom TPUs for Data Centers

Alphabet announces the sale of its custom-made Tensor Processing Units (TPUs) to external data centers, marking a significant move into hardware sales.

Tenzin Dorje11 hours ago

CoinsBee and TRON DAO Launch Discount Campaign for USDT Payments

CoinsBee, in collaboration with TRON DAO, is launching a campaign that offers eligible users a 2% discount on purchases made with USDT on TRON.

Mohamed Farouk12 hours ago

USDT on TRON Surpasses Bitcoin as Most Used Payment Method on CoinsBee

USDT TRC20 on the TRON network has become the most used on-chain token and payment option on CoinsBee, surpassing Bitcoin and Ethereum in payment activity.