And Then They FUD You - The Daily Gwei #388
You know you're winning when the FUD begins.
Whenever something starts gaining traction in the Ethereum ecosystem it inevitably comes under fire from critics. It happened with DeFi, it happened with NFTs, it happened with Proof of Stake and now it’s happening with the layer 2 ecosystem. Though, this FUD is usually a very good sign that we are on the right track - after all, if critics have to resort to misinformation to discredit something then it means they don’t actually have any valid points.
What I find particularly hilarious about the FUD being thrown at layer 2’s is that it’s some of the most insane mental gymnastics that I’ve ever seen. I see talking points like “layer 2s won’t driver value to ETH” which is literally wrong - it’s not a matter of opinion - it’s a matter of fact. This is because layer 2s have to pay for their security in ETH at layer 1 which is then burnt which is an unavoidable cost that directly drives value to ETH. But of course, the critics choose to ignore this fact because it gets in the way of the narrative that they are trying to spread - that is, that layer 2s leech value from ETH.
The second major piece of FUD that I’ve seen around layer 2s comes from alt-L1 enthusiasts and honestly, this is just because of they have heavy bag bias. When layer 2s really take off and work as advertised there will quite literally be no use for most, if not all, of these alt-L1’s that pride themselves on their “cheap transactions” which they of course achieve via centralization. So the adherents of these ecosystems are incentivized to discredit layer 2 technology in any way that they can - even if that means resorting to misinformation - because they feel that their investments are being threatened.
Lastly, what I imagine is going to happen as the layer 2 rollout progresses is that these alt-L1 ecosystems will quietly pivot to being “layer 2 friendly”. It’s already happening in a limited fashion right now - we’ve all seen the narrative around how layer 2 technology isn’t exclusive to Ethereum - but this misses the entire point of what layer 2s are. There is literally no benefit for a layer 2 to settle on anything but the most decentralized, secure, permissionless and open smart contract platform in existence - and that’s Ethereum with no close second - so I don’t imagine the layer 2 ecosystems of other chains to take off in any sort of long-term sustainable way (though I could see some short-term speculation-fueled games playing out).
At the end of the day, the technology doesn’t really care about this FUD or the narratives - if it works, it works - and we all know that layer 2s do indeed work. With layer 2 technologies like rollups actually live and gaining adoption, there is no more debates to be had around how Ethereum is going to scale, the only debate is how long will it take and what percentage of the overall market will Ethereum and its layer 2 ecosystem capture. Of course, my bet is that Ethereum + layer 2 will be the dominant force for the foreseeable future - leaving all of the alt-L1s completely in the dust and hopefully finally killing the “Ethereum can’t scale” FUD once and for all.
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.