Justin Pons, founder and chief investment officer of European crypto fund Cyber Capital, has once again criticized the operations of Ethereum’s L2 solutions. X recent post On Saturday, Pons described these platforms, designed to improve the scalability of the Ethereum network, as dangerous with the potential to steal users’ funds with impunity.
Is Ethereum’s L2 centralized design a problem?
According to Justin Pons, most major Ethereum L2 solutions are centralized, with individual servers often responsible for running the platform’s operations. The CTO of Cyber Capital stated that this design, which contradicts the cypherhunk principle of decentralization and security, could be considered harmful to investors as these chains could collapse at any moment due to a single event or even be manipulated to steal users’ funds.
In support of these claims, Pons pointed to Consensys’ Linea Roll-up network, whose management began halting block production on June 2, 2024, due to a glitch in the platform’s smart contract.
The famous crypto researcher also highlighted the time when the Optimism chain underwent a two-hour downtime on February 15, 2024, due to a glitch in the network’s central sequencing device. In addition to these examples, Justin Bones’ report also included similar incidents with other Ethereum L2 solutions such as Starknet, ZkSync, Arbitrum, and Polygon, all of which can be traced back to the centralized nature of these projects.
The founder of Cyber Capital expressed his strong opposition to these L2 solutions, stating that they do not offer the same level of security and stability as the Ethereum mainnet. Additionally, he stated that while a negative scenario such as losing user funds has not yet occurred, the fact that such a possibility exists is very concerning.
Interestingly, these statements follow previous claims by Bones that Ethereum has formed a parasitic relationship with L2s as these platforms now operate almost independently of the mainnet, with significant control over liquidity and other critical factors of the Ethereum ecosystem.
Ethereum is poised for further price declines
In other news, popular cryptocurrency analyst Ali Martinez said: I assumedEthereum price is expected to continue its downward trend at the moment. It is worth noting that the prominent altcoin had a disappointing performance in August, losing 22.36% of its value. According to the MVRV Momentum (180-day), which measures the change in the ratio of market cap to realized value over a 180-day period, Ethereum still appears to be significantly overvalued. Therefore, its downtrend is likely far from reversing.
At the time of writing, the price of the second-largest cryptocurrency exchange is at $2,500, down slightly by 0.99% over the past day. Meanwhile, the daily trading volume of the asset has dropped by 55.75% and is worth $6.85 billion.
Featured image from Forbes India, chart from Tradingview
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