Nikita Zhavoronkov, the Lead Developer at Blockchair & 3xpl, has recently disclosed that Ethereum Layer 2 solutions (L2s) are detrimental to the Ethereum ecosystem. According to Zhavoronkov, there is a significant decrease in the network dominance while inflation revival labeled as a “coin printer” destroys its ultrasound money status.
The root cause of this issue is the custody mode of present corporate L2s, which deviates much from Ether’s foundational principles, such as decentralization and permissionlessness. These L2s have admin keys and can be used by anyone for fund theft at any time, nullifying the ethos of trustlessness.
High costs on Ethereum’s main network drive users away to other blockchains. This weakens Ethereum’s leadership and reduces funds for security. Those using Layer 2 solutions also take fees away from the main network’s validators. So, Ethereum has to create new Ether tokens to boost security, going against its aim of having a limited supply.
Constantly moving funds between networks and splitting liquidity also make mainstream adoption difficult. This shows that on-chain scaling is crucial for Ether. However, some entities profit from Layer 2 fees, so they have no incentive to improve Ethereum’s integrity.
Ethereum’s L2 Conundrum Sparks Community Discord
The crypto community has responded fervently to Zhavoronkov’s allegations. Some members question the validity of accusations, citing the lack of evidence and attributing malice to scaling choices. Zhavoronkov maintains his stance, likening custodial L2s to a futile attempt at scaling akin to donning wigs for hair growth. He points to the lucrative business model of L2s, which incentivizes collusion with developers, undermining progress on Ethereum’s Layer 1.
Some other community members asserted that certain L2 solutions do work well. They don’t think these solutions will let people steal money or cause problems with liquidity right away. However, Zhavoronkov doesn’t agree. He says L2 security systems have weaknesses and could still cause liquidity to be split up in bad ways. Nevertheless, Ether’s scaling puzzle remains unresolved as stakeholders grapple with basic questions of decentralization, security, and scalability.
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