Vitalik Buterin shuns layer 2 investments for THIS reason

• Ethereum co-founder Vitalik Buterin has mentioned he is not going to spend money on layer 2 initiatives within the foreseeable future. 
• His assertion comes amid an intense debate on the advantages that these protocols have on the principle 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 price of STRK, the native token of the Starknet layer 2 protocol. 

In a put up on X, Buterin noted that he would donate all proceeds from layer 2 tokens to charity or to help the broader Ethereum ecosystem. 

He mentioned,

“I additionally don’t intend to speculate into L2s or different token initiatives within the foreseeable future. My purpose with giving initiatives cash is to help issues that I feel are precious, particularly in instances the place different elements of the ecosystem may 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 12 months, with the Whole 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 mentioned layer 2s had been “cannibalizing” Ethereum revenues. 

VanEck famous that initially of the 12 months, the Ethereum blockchain recorded $6M in revenues. In August, this sum had dropped to $1.2M, as transactions had been pushed from the Ethereum mainnet. 

VanEck acknowledged,

“Ethereum’s answer to enhance its scalability, pushing transactions to L2 blockchains, has to this point didn’t 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 unfavourable impression as they’re nearer to customers. 

Solana, Ethereum communities conflict

The layer 2 debate has additionally brought about a divide between the Solana and Ethereum communities. 

Notably, the discourse began after Solana co-founder, Anatoly Yakovenko, acknowledged 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 neighborhood 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, 

“Principally, community extensions are L2s however L2s will not be community extensions. It’s a rectangle and a sq., one definition suits the opposite.”

As the talk 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