Avalanche's Turkish founder, Emin Gün Sirer, issued a harsh warning about the proliferation of Layer-2 (L2) projects in the cryptocurrency market, especially after Ethereum's latest Dencun update.
Sirer warned that many of these L2 projects, which he called “garbage,” are trying to fill the void left by FTX founder Sam Bankman-Fried (SBF), who has been accused of fraud. He criticized these projects for using centralized sequencers without anti-fraud practices and for divesting their founders' personal tokens before launch. He likened these practices to manipulation games played by SBF:
“We all ignored the big red flags about SBF because he 'looked smart' and 'made a lot of money.' “And then it turns out he's an idiot, a sociopath, and he's stealing our money.”
Sirer also warned that the next cycle will be even more violent and worse behavior will be displayed:
“It's become really easy to start a garbage L2, and it's pretty easy to do this trick, perfected by a particular chain that gets rebuilt every day, where you find someone who does real work and parrot what they say while taking a photo with Vitalik.”
Sirer summarized several red flags that characterize these “garbage” L2s:
- Project discourses that do not match the project technology.
- Projects selling tokens now to raise money for future technology development.
- Founders selling their personal tokens before launch.
- Very low number of public tokens.
Sirer urged the crypto community to be extra careful and cut through the noise by questioning whether a developer is truly bringing something game-changing to address the biggest issues facing cryptocurrencies right now:
“There are only a few real problems in crypto at any given time. For example, scalability and performance were prominent issues in the last cycle, and Avalanche and Solana presented two approaches to overcome them.”
Sirer believes the current issues relate to supporting multiple use cases on the same platform and integration with traditional finance (TradFi).
“Things are extremely easy for garbage L2s, and we may be facing a new group of sociopaths lining up to fill the void left behind by SBF,” Sirer warned.
*This is not investment advice.