Decentralized chains predominantly want two issues – Safety and scalability. These are necessities which might be virtually business clichés now. However, they’re additionally facets which have accelerated progress within the crypto-ecosystem after the start of the first-born cryptocurrency – Bitcoin.
Owing to limitations like congestion on Layer 1 chains, Layers 2 and three functionalities shortly populated the crypto-verse. However, the place are Bitcoin and different chains headed from right here? AMBCrypto spoke to Muneeb Ali, Co-founder of the Stacks undertaking, to know this higher. He argued,
“Bitcoin is probably the most decentralized, most safe, largest community with the most important market cap. However even when we find yourself with a multichain world, which it seems like we’re heading in the direction of, then you definitely’ll nonetheless have an enormous Bitcoin financial system.”
Increasing crypto-verse
As of November 2021, there are over 7000 cryptocurrencies in existence. Now, many would possibly agree that at this stage, the market is just increasing and is way from saturation. However, even when it will get crowded, I might argue that Layer 1 options like Bitcoin and Ethereum might be referred to as the lifeblood of the crypto-ecosystem.
Other than totally different use circumstances, they’ve garnered investor curiosity as a forex, property, digital gold, or as shares. Their Sybil resistance mechanisms like PoS and PoW have provided decentralized safety. Actually, based on Ali,
“Layer 1s are sovereign techniques — Bitcoin and Ethereum, as an example, can exist by themselves. An L2, like Lightning, can’t exist with out Bitcoin, and Arbitrum can’t exist with out Ethereum. Stacks can’t exist with out Bitcoin.”
Then again, macroeconomics and crypto-commentator Natasha Che is betting that proof of stake chains can be a foundational future within the crypto-space. Whereas the survival of POS is a good argument contemplating its sustainability advantages, it leaves Bitcoin out.
Whereas competitors is fierce & many layer 1s will die, it’s clear that a number of PoS layer 1 chains & their scaling layers will coexist in future, and turn out to be the collective floorboard of the metaverse.
— Tascha (@RealNatashaChe) October 30, 2021
Survival of the fittest
So, we have now robust causes to imagine that Bitcoin can keep its agency footing sooner or later as a Layer 1 resolution. Other than that, upcoming Ethereum 2.0, Cardano, Solana, and Algorand, amongst different Layer 1 POS good options, may also be those to see the sunshine on the finish of the tunnel.
With that, we can’t overlook that the survival of some Layer 2 chains stays contingent on the power of Layer 1 options. For instance, what can be Polygon’s worth addition after Ethereum 2.0?
Source: Reddit
We all know that Ethereum will make protocol modifications to its base code because it transitions to Ethereum 2.0. And, in consequence, Ethereum 2.0 will become “64 occasions extra scalable than Ethereum.” Regardless of that, Polygon, which is an L2 scaling resolution for Ethereum, just isn’t going anyplace, based on the Polygon co-founder Jayanti Kanani.
Actually, Kanani had beforehand argued,
“I’m 100% positive ETH 2.0 will get jammed in a number of weeks with the demand……the demand is 1,000 X than the place we’re. You have to L2 scalability.”
Since he’s optimistic about his Layer 2 chain’s future worth addition, we must bear in mind the “underexplored” potential of Layer 1.5. Stacks’ co-founder added,
“L2s can scale L1s, however it’s more durable so as to add utterly new performance to an L1 through an L2 given they’re restricted to the underlying L1 programming capability.”
However, Ali defined that Layer 1.5 chains can’t solely construct upon the safety of the L1 chains they depend on however may also add extra performance outdoors L1 programming. This, in flip, can “doubtlessly open new apps and markets to these L1s.”
Future placement of Layer 1.5
Contingency brings uncertainty. And, that’s what we will say about most second-layer options at this level. However, will impartial layers find yourself competing with Layer 1 options? Ali thinks it’s only true “in some methods,” including,
“Brief time period, I believe it’s much less of a contest, as a result of the Bitcoin market is so underexplored. Bitcoin is a trillion {dollars} in belongings that few individuals are utilizing for something apart from a retailer of worth…”
He concluded by underlining his perception that with the expansion of the remainder of the market, “there’s tons of room for progress simply within the Bitcoin ecosystem.”
