layer 2 crypto is worthless

layer 2 blockchains are a stupid idea and will never work for the mass adoption of blockchain tech. to come to this conclusion, we’ll have to go on a journey.

what’s the point of crypto? for you and i to bank ourselves.

currently, my bank charges 21% interest on my credit card. how do they fund my credit card, though?

from our bank accounts, which give 1% interest on our deposits. so they take our money, make 21% off it, and give us back 1%.
the point of crypto is to make the whole 21%, not the 1%.

to get rid of banks, we need to understand how they work.

the International Organization for Standardization (ISO) is one of the few international organizations that doesn’t specialize in money laundering. they developed a standard for money payment systems called ISO 20022.

“ISO 20022 is clearly the preferred choice of messaging standard for market infrastructures (MIs) around the world. By 2025, all reserve currency high value payments systems (HVPS) will have fully transitioned to rich ISO 20022, and more than 90% of HVPS value worldwide will move on ISO 20022 rails.” — Swift

keywords: reserve currency high-value payments systems (HVPS). this implies that each reserve currency (CAD, USD, GBP, etc.) has its own payment system.

all the banks in Canada are connected to the same payment system and transact in CAD. banks in Canada speak in CAD, while the banks of England speak in GBP, they don’t understand each other. this is why my debit card doesn’t work in England.

money translators are organizations like VISA, Mastercard, and Swift, but they don’t translate for free. this is why my VISA credit card works in England.

what does this have to do with the collapse of L2s?

L2s on ETH were created cause fees and wait times were too damn high. The number of transactions were significantly greater than the 7 TPS that ETH can handle. to address the problem, Polygon made an ETH within ETH. ETHception.

let’s pretend everyone transacting on ETH moves onto some L2. now all of our L2s have more TPS than they can handle. wait time goes up. then L2 fees do too. the problems of ETH don’t go away by entering ETHception.

but you can make more L2s. how many different L2s are you gonna want your money to exist on? imagine trying to wrap your head around what chain wETH, aETH, bETH, and dETH exist on. how are you even gonna spend your alphanumeric-ETHs? you’d want death, not dETH.

in that case, an L2 bridge that connects all the L2s. this works. then we all start using them (assuming there won’t just be one bridge). now our bridge L2 has more TPS than it can handle. wait time goes up. fees too.

an ETH within an ETH within an ETH! eventually, we’ll all end up in this place, alone, with nobody to send money to.

limbo, from the movie Inception

an L2 does the same job as VISA, but now my money is stuck in another language, and i have to pay to convert it back. L2 bridges have crazy fees and wait times compared to VISA, so why would I touch any of them?

polygon bridge wait times and fees on jan 9, 2023 (1 ETH = $1325 USD)

i can't believe the audacity of polygon to write that little note under their wait time. imagine asking visa to translate your money, and they told you to use mastercard because it's faster.

i want to use my time and brainpower to make more poor financial decisions, not sort through different types of ETH (wETH, sETH, dETH, comETH…).

we already have L2s, they’re called reserve currency payment systems, and their bridges are called VISA and SWIFT. the current money system is infinitely more efficient and simple to use. ETHception can never replace the current monetary system. there must be a better solution.

this same logic applies to having a bunch of L1s with THORchain bridging them together. nonsense.

Burn the L2 bridges and let the fire light the way.

the first version of the internet was probably shit too. that doesn’t mean they put bandaids on it, they abandoned it altogether. that’s why there are so many L1s and L2s, technology keeps getting better. i’m pretty sure ETH will eventually be abandoned like the early internet. it just doesn’t work. we need an L1 with true infinite scalability for crypto to work.


Back to blog

Leave a comment