Ava Labs CEO Warns of Substandard L2 Initiatives, Says Subsequent Cycle Will Be Worse

Emin Gün Sirer, the founder and CEO of Ava Labs, has sounded an alarm on the rise of substandard layer 2 (L2) options within the crypto area.

Drawing parallels with the fallout from the FTX collapse, he cautioned traders in regards to the risks related to investing in these “trash” tasks.

Ava Labs Founder Highlights L2 Purple Flags

On March 23, Sirer took to X to voice his issues in regards to the crypto neighborhood’s behavior of ignoring warning indicators, particularly concerning folks seen as profitable at first look. He warned that the upcoming cycle would doubtless see heightened noise and worsened habits. Sirer added that it’s straightforward to launch low-quality L2 options, tempting people to interact in such practices.

Hey y’all,

All of us ignored the large purple flags related to SBF as a result of “he seemed sensible” and “he made some huge cash.” Then it turned out that he was dumb as rocks, was a sociopath, and was simply stealing our cash.

The following cycle goes to be much more noisy, with even…

— Emin Gün Sirer🔺 (@el33th4xor) March 23, 2024

The Ava Labs CEO outlined particular points concerning the hole between advertising and marketing guarantees and the technical realities of some L2 tasks.

A serious purple flag he famous was the presence of centralized sequencers in these tasks, which lack fraud-proof mechanisms. He additionally cautioned in opposition to L2 options with token gross sales just for fundraising functions and not using a clear utility inside their community, which regularly alerts a scarcity of substantive worth or innovation.

Sirer additional warned that the challenge founders’ untimely promoting of native tokens might point out a insecurity within the long-term viability. As well as, if a restricted variety of tokens are in circulation, they’re susceptible to cost manipulation by artificially inflating the challenge’s worth and deceptive traders about its potential.

To distinguish between real L2 tasks and people that aren’t, Sirer advises that traders search options that deal with the core points within the crypto area, comparable to efficiency, scalability, and seamless integration with conventional monetary methods. Sirer additional talked about the significance of L2 platforms supporting completely different use instances with advantages past technical enhancements.

He confused the significance of wanting into challenge founders’ ethical character and habits since moral misconduct signifies a challenge’s lack of integrity.

Numerous Views on L2 Options

In response to Sirer’s insights, Robert Sasu, a core developer at MultiversX, has echoed the significance of foundational blockchain qualities comparable to decentralization, safety, and considerate design.

Decentralisation, safety and proper building by design issues. A number of L2s miss most of those factors. I can agree along with your worlds, however don’t overlook different ecosystem who scale not less than as a lot if no more: like MultiversX.

In case of blockchain let’s not overlook that…

— Robert Sasu (@SasuRobert) March 24, 2024

Then again, @nextalphaa introduced a special perspective to the dialogue on Ethereum’s L2 options. The consumer highlighted Ethereum’s permissionless and inclusive nature, arguing that it promotes completely different tasks that contribute to the ecosystem’s targets of extra transparency and decentralization.

In the meantime, Ethereum’s L2 ecosystem has skilled substantial progress, reaching a complete locked worth exceeding $38 billion. A milestone in October 2023 noticed transaction exercise on L2 networks surpass these on the Ethereum mainnet. At the moment, these L2 networks course of about 5 occasions as many transactions because the mainnet, in response to L2beat.