NEWSLETTER
Justin Bons, founder and chief investment officer of European cryptocurrency fund Cyber Capital, has once again criticized the way ethereum's L2 solutions work. x.com/Justin_Bons/status/1829908379524882828″ target=”_blank” rel=”noopener nofollow”>a recent post by x On Saturday, Bons called these blockchain platforms designed to improve the scalability of the ethereum network dangerous because of their ability to steal users' funds without control.
Does ethereum L2's centralized design pose a problem?
According to Justin Bons, most major ethereum L2 solutions are centralized and there are often single servers responsible for running the platform's operations. Cyber Capital’s CIO claims that this design, which goes against Cypherhunk’s principle of decentralization and security, can be considered detrimental to investors as these chains can collapse at any time due to a singular event or even be manipulated to steal users’ funds.
To support these claims, Bons referred to Consensys' zkEVM Roll-up Linea network, whose administration on June 2, 2024 initiated a pause in block production due to a bug in the platform's smart contract.
The acclaimed cryptocurrency researcher also highlighted when the Optimism chain suffered a 2-hour downtime on February 15, 2024, due to a bug in the network’s centralized sequencer. In addition to these examples, Justin Bons' report also included similar incidents with other ethereum L2 solutions such as Starknet, ZkSync, Arbitrum, and Polygon, all of which can be attributed to the centralized nature of these projects.
Cyber Capital’s founder voices significant opposition to these L2 solutions, stating that they do not offer the same level of security and stability as the ethereum mainnet. He further states that while an adverse scenario such as the loss of user funds has not yet occurred, the fact that such a possibility exists is very worrying.
Interestingly, these statements follow previous claims by Bons that ethereum had formed a parasitic relationship with L2 whereby these platforms now operate almost independently of the mainnet, with significant control over liquidity and other factors crucial to the ethereum ecosystem.
ethereum braces for further price drop
In other news, popular cryptocurrency analyst Ali Martinez x.com/ali_charts/status/1829929261173490011/photo/1″ target=”_blank” rel=”noopener nofollow”>has a postulated that ethereum may maintain a bearish trend for the time being. It is worth noting that the prominent altcoin had a disappointing performance in August, losing 22.36% of its value. According to the MVRV (180-day) momentum, which measures the change in the ratio of market cap to realized value over 180 days, ethereum still appears to be largely overvalued. Therefore, its downtrend is likely far from reversing.
At the time of writing, the second-largest cryptocurrency exchange is trading at $2,500 with a slight loss of 0.99% over the past day. Meanwhile, the asset’s daily trading volume has decreased by 55.75% and is valued at $6.85 billion.
Featured image from Forbes India, chart from Tradingview
