Decentralized chains need two things above all – security and scalability. These are requirements that are almost industry clichés today. But there are also aspects that accelerated the growth of the crypto ecosystem after the birth of the firstborn cryptocurrency – Bitcoin.
Due to constraints such as congestion in Layer 1 chains, the Layer 2 and Layer 3 functions quickly populated the crypto-verse. But where do Bitcoin and other chains go from here? AMBCrypto spoke to Muneeb Ali, co-founder of the Stacks project, to better understand this. He argued
“Bitcoin is the most decentralized, most secure and largest network with the largest market capitalization. But even if we end up with a multichain world that we seem to be headed towards, you still have a big bitcoin economy. “
Expand crypto verses
As of November 2021, there are over 7000 cryptocurrencies. Well, many may agree that the market is only expanding right now and is still a long way from being saturated. But even if it does get full, I would argue that Layer 1 solutions like Bitcoin and Ethereum can be described as the lifeblood of the crypto ecosystem.
Various use cases aside, as currency, real estate, digital gold, or stocks, they have piqued investor interest. Your Sybil resistance mechanisms such as PoS and PoW have ensured decentralized security. Indeed, so Ali,
“Layer 1s are sovereign systems – Bitcoin and Ethereum, for example, can exist on their own. Like Lightning, an L2 cannot exist without Bitcoin and Arbitrum cannot exist without Ethereum. Stacks cannot exist without Bitcoin. “
Macroeconomics and crypto commentator Natasha Che, on the other hand, is betting that the evidence of stake chains will be a fundamental future in crypto space. While POS survival is a fair argument given its sustainability benefits, it leaves Bitcoin out.
While competition is fierce and many Layer 1s will die, it is clear that multiple PoS Layer 1 chains and their scaling layers will co-exist in the future and become the collective floorboard of the metaverse.
– Tascha (@RealNatashaChe) October 30, 2021
Survival of the fittest
So we have good reasons to believe that Bitcoin, as a Layer 1 solution, will be able to keep its solid base in the future. That being said, the upcoming Ethereum 2.0, Cardano, Solana, and Algorand may also be the ones who see the light at the end of the tunnel, along with other smart Layer 1 POS solutions.
We must not forget that the survival of some Layer 2 chains depends on the strength of the Layer 1 solutions. For example, what will be the added value of Polygon after Ethereum 2.0?
Source: Reddit
We know that Ethereum will make protocol changes to its base code when transitioning to Ethereum 2.0. And as a result, Ethereum 2.0 will be “64 times more scalable than Ethereum”. Even so, Polygon, an L2 scaling solution for Ethereum, is going nowhere, according to Polygon co-founder Jayanti Kanani.
In fact, Kanani had previously argued
“I am 100% sure that in a few weeks ETH 2.0 will be overloaded with the demand …… the demand is 1,000 times higher than ours. You need L2 scalability. “
Since he is optimistic about the future added value of his Layer 2 chain, we have to remember the “under-explored” potential of Layer 1.5. The co-founder of Stacks added:
“L2s can scale L1s, but adding entirely new functionality to an L1 over an L2 is more difficult because they’re limited to the underlying L1 programming skills.”
However, Ali explained that Layer 1.5 chains can not only build on the security of the L1 chains that they rely on, but can also add additional functionality outside of L1 programming. This in turn can “potentially open up new apps and markets for these L1s”.
Future placement of layer 1.5
Contingency brings uncertainty. And that’s what we can say about most second-layer solutions at this point. But will independent layers end up competing with layer 1 solutions? Ali thinks it is only true “in some” Ways, “added
“In the short term, I think there is less competition because the bitcoin market is so little explored. Bitcoin is a trillion dollars in assets that few people use for anything other than store of value … “
He concluded by underlining his belief that as the rest of the market grows, “only the Bitcoin ecosystem has plenty of room for growth.”
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