Beware of trash layer-2 solutions, Ava Labs CEO says: ‘Next cycle will have even worse behavior’

Emin Gün Sirer, the founder and CEO of Ava Labs, has issued a stark warning about the proliferation of subpar layer-2 (L2) solutions in the crypto space.

In a series of tweets, Gün Sirer expressed concern over the tendency within the crypto community to overlook red flags in favor of individuals (i.e., disgraced FTX founder Sam Bankman-Fried) who initially appear successful.

Many L2 platforms utilize centralized sequencers without fraud proofs, echoing manipulative tactics seen with some of Bankman-Fried’s ventures.

“The next cycle is going to be even more noisy, with even worse behavior. It has become really easy to launch a trash L2, and it’s fairly easy to do that trick, perfected by a certain chain that reorgs every other day, where you find someone who is actually doing real work and you parrot what they say, while angling for a photo op with [Ethereum founder Vitalik Buterin],” Gün Sirer said.

Inferior L2 solutions can be launched with ease, often employing deceptive practices such as selling tokens pre-launch or manipulating token valuations, he warned. Therefore, it’s important to identify critical red flags associated with these “trash L2s” — discrepancies between project narratives and technological capabilities, token dumping by founders, and overly restrictive token supply tactics.

To navigate through the noise in the crypto market, Gün Sirer proposed a simple litmus test: whether a project addresses significant obstacles facing the industry and offers genuinely innovative solutions. He urged vigilance and critical thinking to prevent the emergence of new bad actors in the wake of Bankman-Fried’s downfall.

Reacting to Gün Sirer’s remarks, Robert Sasu, a core developer at MultiversX, underscored the importance of decentralization, security, and proper design in blockchain projects. 

He acknowledged Gün Sirer’s points while promoting MultiversX as a platform that prioritizes these essential principles.

Meanwhile, another X user with the handle @nextalphaa countered Gün Sirer’s critique of Ethereum (ETH) L2 solutions, arguing that the permissionless nature of Ethereum allows for diverse projects to emerge. He encouraged following the journey towards maximum decentralization and transparency in the L2 space.

Gün Sirer’s cautionary words serve as a reminder of the ongoing challenges facing the crypto industry and the need for greater scrutiny and discernment in evaluating new projects and initiatives. As the community navigates through these complexities, maintaining trust and integrity remains paramount.