Mempool Founder Mononote Raises Red Flag on Bitcoin Layer 2 Implementation

Bitcoin Layer 2 solutions have received a lot of attention this year, but they've also received their fair share of criticism. Mempool founder Mononot strongly criticized them and pointed out several weaknesses from a technical point of view.

Interestingly, Mononaut's stance has received support from Bitcoin Ordinals founder Casey Rodermore.

Bitcoin layer 2 on fire

The main purpose of Bitcoin Layer-2 networks – which serve as secondary protocols built on top of the Bitcoin blockchain – is to enhance and improve transaction efficiency. This is achieved by offloading transactions from the main blockchain, resulting in faster transaction processing and reduced congestion, ultimately resulting in lower fees in the Bitcoin network.

Layer 2s also allow developers to integrate smart contract functionality on the blockchain, thereby extending the protocol's capabilities.

facts.

— Casey (@rodarmor) April 11, 2024

However, not everyone is a supporter of this concept. Mononaut, for its part, found various aspects of these applications flawed. In a series of tweets, Mempool's founder argued that a Bitcoin Layer 2 solution without support for one-party exit essentially acts as a multi-signature system rather than a true Layer 2 solution.

Mononot has criticized Layer 2 solutions that involve venture capital investors and promote their own tokens, calling them similar pump-and-dump schemes.

He also said that it is no different from pyramid schemes that offer “reverse rewards” based on the amount of deposits, while warning that Layer 2s are backed by scalable Ethereum contracts and controlled by a single entity. He sees these potential rug pullers.

According to Mononaut, Layer 2s, which encourages locking coins for longer periods of time, is similar to earlier cheats like Hex 3.0. Moreover, Mononaut warned against solutions that claim to be native to Bitcoin but are actually Ethereum multi-signature systems, such as affinity scams.

He highlighted the dangers of these systems without comprehensive technical documentation, likening them to the Bitconnect scam and matching people's data.

Bitcoin layer 2 explosion this season?

Renowned Bitcoin educator Dan Held, one of the proponents of Layer 2s on Bitcoin, expects an explosion of such solutions as the bull run unfolds.

In an interview with CryptoQuant, Held believes that while top 2s like Lightning Network, Liquidity and the lesser-known Rootstock lack their own merits, the new revival will pave the way for many new players.

“We're seeing a lot of competitors coming out of the woodwork. Looking at how this is going to play out, I don't think there's going to be a winner-takes-all. There's a lot of different Ethereum L2s, some more successful than others, but I don't think there's a winner-take-all. There's a lot of different platforms for design and market strategy.” We will see an explosion of Bitcoin L2s and perhaps some of these will have a market value of tens of billions of dollars.