Bitcoin Layer 2 solutions have been the subject of both praise and criticism this year. Mononaut, the founder of Mempool, has expressed his criticism and highlighted several technical aspects that should be taken into consideration. Interestingly, the creator of Bitcoin Ordinal shares the same viewpoint as Mononaut.
Layer-2 networks, which allow for bitcoin transactions on Bitcoin’s blockchain, are designed to increase scalability and improve transaction efficiency. By decongesting the main blockchain, transactions can be processed faster and network fees can be reduced across the entire bitcoin network.
Layer 2 solutions also offer developers the ability to integrate smart contract features, providing users with more opportunities. However, not everyone agrees with this idea. Mononaut, for instance, has found several flaws in the implementation of Layer 2 solutions. In a series of tweets, he argued that if a Bitcoin Layer 2 solution lacks unilateral exit cases, it essentially functions as a multi-signature system rather than a full-scale Layer 2 solution.
Mononaut further stated that schemes like MakerDAO, which operates on Ethereum and offers tokens in return for deposits, are no different from fraudulent pyramid schemes. He also pointed out that Test Layer 2s, which are backed by upgradeable Ethereum contracts and controlled by a single entity, pose potential risks. According to Mononaut, these systems are essentially hard blocks disguised as opportunities.
According to Mononaut, Layer 2 solutions that require users to lock up their coins for extended periods of time are similar to previous scams like Hex 3.0. Additionally, he criticized the simplicity of Ethereum’s multi-signature feature, calling it a mere “copy and paste” operation. He emphasized the inherent dangers of these technically undefined systems, comparing them to the infamous Bitconnect scam, where information was merely a facade.
Dan Held, a well-known Bitcoin educator and supporter of Layer 2 solutions on Bitcoin, believes that the release of such solutions is inevitable as the bull run gains momentum.
