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The Ethereum Layer 2 (L2) ecosystem is facing significant scrutiny and criticism. Concerns are being raised about the centralization and security of L2 networks, with some arguing that they are permissioned and pose substantial risks. Critics highlight that major L2s, such as Arbitrum and Base, can potentially steal user funds through multi-signature (multi-sig) mechanisms and have centralized sequencers that can censor transactions. Additionally, the top Ethereum L2 by Total Value Locked (TVL) is trading below its bear market lows, raising questions about the viability of L2 business models. Comparatively, Layer 1 (L1) tokens are seen as having fewer principle-agent problems and more sustainable business models for selling block space. There's not a single L2 with a higher Fully Diluted Valuation (FDV) than Polkadot, Bitcoin Cash, or Filecoin.
A list of the top 10 L2s by market cap; a dystopian nightmare of centralization:🧵 Arbitrum - Can steal all user funds instantly with a multi-sig, has permissioned proposers, centralized operator can exploit MEV & centralized sequencer can censor Base - Can steal all user funds…
L2s still have a ways to go before we can consider them fully decentralized: - Remove multi-sig admin powers - Fully permisionless proof submission - Cheaper/faster ZK proof generation - Decentralized sequencing - Upgrade delays We will get there soon - it’s mostly a matter of…
Ethereum Layer 2s are not safe. They are permissioned networks. Stop the narritive. They are the biggest risk in all of crypto. To steal all the liquidity aka rugpull the L2's lets analyze how many anonoymous wallets need to agree. @blast 3 of 5 @Optimism 5 of 7 @0xPolygon 5 of…