I've been thinking about this a lot lately: bitcoin Layer 2 foundations need to start holding bitcoins in their treasuries. It makes perfect sense that they don't.
AND <a target="_blank" href="https://x.com/bigmagicdao/status/1876270012274749876″>apparently I'm not the only one
As someone who has seen this space evolve, let me explain why bitcoin Layer 2 fundamentals should listen <a target="_blank" href="https://x.com/bigmagicdao”>girl me too.
For years, bitcoin was known as a “digital rock”: a solid store of value, but not much else. But now, with the explosion of bitcoin Layer 2, bitcoin is becoming a “programmable rock.” These layers are adding functionality like smart contracts and scaling solutions, making bitcoin more versatile than ever.
But here's the thing: These projects raise millions of dollars from venture capitalists and investors, and most of that money ends up in fiat currencies like the dollar. That is a big mistake.
Because? Because fiat is a melting ice cube. Every year, is lost 5-10% of its value due to inflation. The longer you keep it, the less it's worth. On the other hand, bitcoin has a compound annual growth rate (CAGR) of <a target="_blank" href="https://cagrcalculators.com/bitcoin-cagr/”>about 70%. If these foundations kept their treasury in bitcoins instead of fiat money, their runway wouldn't stay the same: it would grow.
Imagine having 70% more resources each year to fund developers, grants and projects. That's the kind of advantage that could make or break a Layer 2 ecosystem.
Okay, okay, I get it: bitcoin is volatile and this foundation needs some stability. Because of this, it makes sense to keep 3 to 4 years of track in order. It would help cover short-term needs. But the rest? It should be in bitcoin. In the long term, this strategy could double or even triple the track record of these foundations, giving them the time and resources they need to succeed.
There is precedent for this too. Remember EOS? they raised 4.2 billion dollars in 2018 and allegedly bought 164,000 bitcoins with that. Today, that bitcoin is worth around $16 billion, although EOS itself disappeared from the map. Now, imagine if bitcoin Layer 2 foundations did the same but actually used their bitcoins to grow and sustain their ecosystem. The potential is enormous.
After all, these foundations are based on bitcoin. They believe in their future, so why not keep it in their treasuries? bitcoin is the best store of value there is. If you are running a bitcoin Layer 2 foundation, stop holding depreciating fiat currency and start holding bitcoin. It's not just a smart decision: it's he move.
This article is a Carry. The opinions expressed are entirely those of the author and do not necessarily reflect those of btc Inc or bitcoin Magazine.
