Co-founder of Avalanche blockchain, Emin Gün Sirer, has raised an alert on the infiltration of sure layer-2 options, which poses dangers to traders. In an X post on March 23, the Ava Labs boss expressed issues over these “trash” initiatives whereas educating customers on a number of of their widespread traits.
Hey y’all,
All of us ignored the large pink flags related to SBF as a result of “he looked smart” and “he made a lot of money.” Then it turned out that he was dumb as rocks, was a sociopath, and was simply stealing our cash.
The subsequent cycle goes to be much more noisy, with even…
— Emin Gün Sirer🔺 (@el33th4xor) March 23, 2024
Purple Flags To Watch For In L2 Tasks – Avalanche Co-founder
In line with Gün Sirer, the rise in substandard L2 initiatives represents the subsequent large hazard within the crypto ecosystem following the crypto trade heist pulled off by former FTX founder and CEO Sam Bankman-Fried (SBF). The distinguished crypto determine argued the procedures concerned in launching an L2 resolution had been moderately free, permitting the inflow of dangerous actors who created initiatives with no precise worth.
Within the curiosity of selling investor safety, Emin Gün Sirer then proceeded to record a number of pink flags that accompany these dangerous L2 options. Firstly, he said that there’s often a discrepancy between the undertaking’s narrative and expertise, i.e., its advertising pitch doesn’t align with its technical implementation.
Examples of such initiatives are these with centralized sequencers with out fraud-proof, which is in opposition to the cryptocurrency ideas of decentralization and safety. Emin Gün Sirer additionally highlighted L2 options that conduct token gross sales to lift funds moderately than for a selected, sensible objective on the community, indicating it was prone to be a doubtful funding.
Moreover, the Avalanche co-founder additionally spoke about L2 initiatives through which founders bought their private native tokens earlier than the launch. Whatever the motive, Gün Sirer characterised a big quantity of native token gross sales pre-launch as a large pink flag.
One other level the crypto determine highlighted was initiatives with low-float tokens which permit for synthetic inflation of the token’s worth by means of manipulation ways as generally carried out by SBF. Lastly, Gün Sirer suggested traders to concentrate to undertaking founders’ morals and habits and screening for any type of private misconduct.
Associated Studying: Crypto Scams Persist: Exit Scams, Hacks Cost Crypto Sector $160 Million In February
The Easy Authenticity Take a look at By Emin Gün Sirer
Along with the pink flags talked about above, Emin Gün Sirer additionally proposed a easy take a look at that would assist traders in screening by means of the plenty of L2 initiatives being launched every day for genuine, worthwhile ventures.
Firstly, the Ava Labs founder advised figuring out the primary points – referred to as “blockers” – within the crypto house at any time. He said that, for instance, points akin to scalability and efficiency had been fairly vital till blockchains akin to Avalanche and Solana emerged with options.
Emin Gün Sirer believes that supporting a number of use circumstances on the identical platform in addition to integration with conventional finance (TradFi) are presently vital points dealing with the crypto ecosystem. Earlier than investing in an L2 resolution, the Avalanche co-founder advises customers to evaluate the place the undertaking provides a real resolution to those challenges.
Complete crypto market valued at $2.368 trillion on the every day chart | Supply: TOTAL chart on Tradingview.com
Featured picture from Forbes, chart from Tradingview
