Avalanche Co-creator Issues Warning Against Shady L2s

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In a recent warning, Emin Gün Sirer, the co-founder of Avalanche blockchain, said that the infiltration of certain layer-2 (L2) solutions in the crypto market has sent ripples across the industry. 

In his candid exposition on social media platform X (formerly known as Twitter), Gün Sirer sheds light on the looming risks posed to investors by what he terms “trash” projects. 

The Avalanche founder’s insights come at a crucial time when the crypto ecosystem is still reeling from recent events, including the high-profile crypto exchange heist orchestrated by Sam Bankman-Fried (SBF), the former FTX founder and CEO.

Avalanche Creator Shares Concerns

The Avalanche creator’s concerns revolve around the lax procedures governing the launch of L2 solutions, which have paved the way for bad actors to exploit unsuspecting investors. He points out several red flags characteristic of these risky ventures, urging users to exercise caution before diving in.

Shady L2 Projects and Their Issues

One prominent issue highlighted by Gün Sirer is the disconnect between the narrative surrounding these projects and their technical implementation

Many L2 solutions boast impressive marketing pitches that fail to align with their actual technological capabilities, leaving investors vulnerable to deception. Moreover, the Avalanche creator warned against projects with centralized sequencers lacking fraud-proof mechanisms, as they compromise the fundamental principles of decentralization and security.

Token Sales Solely for Fundraising

Another cause for concern is the prevalence of token sales conducted by L2 projects solely for fundraising purposes, without offering any tangible utility on the network. 

Gün Sirer emphasizes the importance of scrutinizing the motives behind such token sales, as they often signal dubious investment opportunities.

Avalanche Creator Draws Attention to L2 Networks

Furthermore, the Avalanche creator draws attention to the questionable practices of founders who engage in massive token sales before the official launch of their projects. Such actions raise serious doubts about the integrity of the project and its long-term viability.

In addition to these red flags, Gün Sirer proposes a practical approach for investors to discern genuine L2 solutions from the sea of offerings flooding the market. 

The Avalanche founder suggests identifying the pressing issues, or “blockers,” within the crypto space and assessing whether a particular project addresses these challenges effectively. For instance, scalability and integration with traditional finance (TradFi) are critical issues facing the crypto ecosystem today, and investors should prioritize projects that offer viable solutions in these areas.

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