Bitcoin Layer 2 solutions have been highly praised this year but they have also faced criticism. Mononaut, the founder of Mempool, has expressed his concerns and highlighted several technical aspects that should be considered. Interestingly, the creator of Bitcoin Ordinal shares the same viewpoint as Mononaut.
The purpose of Layer-2 networks, which are alternative networks that enable bitcoin transactions on Bitcoin’s blockchain, is to increase scalability and improve transaction efficiency. By relieving congestion on the main blockchain, transactions can be processed faster and network fees are reduced across the entire bitcoin network.
Furthermore, Layer 2 solutions allow developers to incorporate smart contract features, offering more opportunities for protocol users. However, not everyone agrees with this perspective. Mononaut, for instance, has found certain aspects of Layer 2 implementation to be lacking. In a series of tweets, he argued that if a Bitcoin Layer 2 solution does not include cases of unilateral exit, it essentially functions as a multi-signature system rather than a full-scale Layer 2 solution.
Mononaut also criticized tokens that require deposits, such as MakerDAO on Ethereum, comparing them to fraudulent schemes like pyramid schemes. He pointed out that Test Layer 2s are backed by upgradeable Ethereum contracts and controlled by a single entity, which he sees as potential risks disguised as solid foundations.
According to Mononaut, Layer 2 solutions that involve long-term coin lockup share similarities with scams like Hex 3.0. He also dismissed the simplicity of multi-signature on Ethereum, describing it as a mere “copy and paste” operation. He emphasized the potential dangers of these technically ambiguous systems, comparing them to the deceptive nature of Bitconnect.
Dan Held, a well-known Bitcoin educator and advocate of Layer 2 solutions on Bitcoin, believes that the release of such solutions is inevitable when the bull run gains momentum.