The rapid growth of Bitcoin L2 has led to the emergence of many projects of varying quality in the market. Many projects are simply marketing themselves under the name of Bitcoin L2 without bringing any innovation or improvement. In response to this, Mononaut, the founder of Mempool, has raised seven criticisms of Bitcoin L2 and used the Mezo project, led by Pantera, as an example for criticism.
Bitcoin L2 projects are sprouting up like mushrooms after rain, with as many as 73 projects in the Chinese community statistics of X Account BitVM. However, many projects are launching under the narrative of Bitcoin L2 without any substantial progress, resulting in inconsistent project quality.
In this regard, Mononaut, the founder of Bitcoin browser Mempool, criticized the Mezo project, which raised $21 million led by Pantera, and pointed out that Bitcoin L2 projects should not possess the following seven characteristics. This comment was later retweeted by Casey Rodarmor, the founder of Ordinals, who commented that “this is a fact.”
Mononaut’s seven criticisms of Bitcoin L2 projects, according to the post, include:
1. Lack of unilateral exit function: If Bitcoin L2 does not support users’ unilateral exit, then it is essentially a multi-signature wallet rather than a true L2. (Note: Unilateral exit means allowing users to directly return their assets from the L2 layer to the Bitcoin main chain (L1) without the consent or intervention of any third party.)
2. Involvement of venture capital and token issuance: Bitcoin L2 with venture capital backgrounds and self-issued tokens are essentially pump-and-dump garbage coins.
3. “Mutual rewards” based on friends’ deposits: Bitcoin L2 that offers a mutual reward mechanism based on friends’ deposit amounts is actually a pyramid scheme.
4. Reliance on upgradable Ethereum contracts controlled by a single entity: If Bitcoin L2 is backed by upgradable Ethereum contracts controlled by a single entity, there is a risk of being scammed (Rug).
5. Long-term lock-up reward mechanism: Bitcoin L2 that encourages long-term lock-up of assets to earn rewards is essentially a variation of Hex (a well-known cryptocurrency Ponzi scheme).
6. Claiming to be Bitcoin-native but actually an Ethereum multi-signature wallet: Bitcoin L2 that claims to be Bitcoin-native but is actually an Ethereum multi-signature wallet is an affinity scam.
7. Lack of technical details, only emphasizing investment returns: Bitcoin L2 without a technical whitepaper that only focuses on how to deposit BTC and calculate returns is no different from Bitconnect (another well-known Ponzi scheme in the cryptocurrency industry).
These criticisms by Mononaut align with Bitcoin Magazine’s three key standards for Bitcoin L2, which defined the standards in response to the chaos in Bitcoin L2 projects. Only L2 protocols that meet these standards will be included in their coverage:
1. Using Bitcoin as the native asset: L2 must be designed fundamentally to use Bitcoin as its primary token or unit of account, and there must be a mechanism to pay transaction fees in Bitcoin for the L2 system. If there are tokens, they must have Bitcoin support.
2. Using Bitcoin as the settlement mechanism to execute transactions: L2 users should have control and be able to return assets to L1 through a mechanism that is either trusted or trustless.
3. Dependence on Bitcoin’s functionality: If the Bitcoin network completely fails but the related system can still operate, then the system is not a Bitcoin L2.
These standards correspond to Mononaut’s criticisms of projects that claim to be Bitcoin-native but actually rely on Ethereum multi-signature wallets or issue their own tokens, implying that these projects lack support from Bitcoin.
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