Justin Bons, founder and chief investment officer of European cryptocurrency fund Cyber Capital, has once again criticized the operations of Ethereum L2 solutions. In a recent article published on X on Saturday, Bons called these blockchain platforms designed to improve the scalability of the Ethereum network dangerous, capable of stealing user funds without oversight.
Is Ethereum L2’s centralized design a problem?
According to Justin Bons, most major Ethereum L2 solutions are centralized, with single servers often being responsible for running the platform’s operations. Cyber Capital’s CIO states that this design which goes against Cypherhunk’s principle of decentralization and security, can be considered harmful to investors as these chains can collapse at any time due to a singular event or even be manipulated to steal users’ funds.
To support these claims, Bons referred to Consensys’ zkEVM Roll-up Linea network, whose management initiated a pause in block production on June 2, 2024 due to a bug in the platform’s smart contract.
The acclaimed crypto researcher also highlighted the moment when the Optimism chain suffered a 2-hour outage on February 15, 2024, due to a bug in the network’s centralized sequencer. In addition to these examples, Justin Bons’ report also includes similar incidents with other Ethereum L2 solutions such as Starknet, ZkSync, Arbitrum, and Polygon, all of which can be attributed to the centralized nature of these projects.
The founder of Cyber Capital expresses strong opposition to these L2 solutions, claiming that they do not offer the same level of security and stability as the Ethereum mainnet. Furthermore, he states that even though an adverse scenario such as the loss of users’ funds has not yet occurred, the fact that such a potential exists is very concerning.
Interestingly, these statements follow Bons’ previous claims that Ethereum had formed a parasitic relationship with L2s, whereby these platforms now operate almost independently of the mainnet, with significant control over liquidity and other factors crucial to the Ethereum ecosystem.
Ethereum is about to experience another price drop
In other news, crypto analyst Ali Martinez speculated that Ethereum could still maintain a downtrend for the time being. Notably, the major altcoin produced a disappointing performance in August, losing 22.36% of its value. According to the MVRV Momentum (180 days), which measures the change in the market value to realized value ratio over 180 days, Ethereum still appears significantly overvalued. Therefore, its downtrend is likely far from a reversal.
At the time of writing, the second-largest cryptocurrency exchange is trading at $2,500, with a slight loss of 0.99% over the past day. At the same time, the asset’s daily trading volume has decreased by 55.75% and is valued at $6.85 billion.
Featured image from Forbes India, chart from Tradingview
