• CZ says L2 could possibly be a extra sensible alternative if it is about leveraging AI Economics’ blockchain
• AI initiatives don’t essentially require full sovereignty of L1
• The L1 offers you full management and possession, nevertheless it’s costly and time-consuming

Changpeng Zhao (CZ), former CEO and co-founder of Binance, shared his ideas on the controversy on this planet of blockchain.

He factors out that constructing on L2 could possibly be a extra sensible alternative if the central focus of the AI ​​challenge is to leverage AI Economics’ blockchain relatively than innovating the blockchain protocol itself.

CZ: Layer 2 supplies the practicality of AI cryptography

This implies they will profit from the reliability and safety of established L1 with out coping with persevering with to do it. Through the use of what’s already there, these initiatives can take options sooner and connect with an already energetic ecosystem on platforms like Ethereum.

The dialogue shouldn’t be new, however it’s nonetheless attention-grabbing to listen to the ideas of some of the influential individuals within the crypto world. Moreover, current market traits seem to underscore shifts that might present further insights.

For instance, many new initiatives, particularly in sectors like AI, have found that they don’t require full sovereignty of L1. As a substitute, leveraging L2 can present considerably decrease prices for scalability and safety required.

Layer 1 vs Layer 2: Key variations defined

L1 is a base blockchain for Bitcoin, Ethereum, Solana, and extra. As soon as constructed, you could have full management over your protocols, consensus mechanisms, and community settings. That is engaging as a result of it represents the true decentralization and full possession of blockchain design.

In the meantime, L2 options (akin to rollups and sidechains) run on a longtime L1. They supply further scalability and capabilities relying on the safety and ecosystem of L1 on which they’re constructed.

One of many primary variations is that creating and sustaining L1 is a large-scale effort. This requires establishing and pinning the community of nodes and validators. Alternatively, utilizing L2 implies that initiatives can skip the huge quantity of labor constructing a brand new blockchain. Consequently, L2 initiatives can leverage current distributed exchanges (DEXS), persistent markets (PERPS), developer instruments, and the broader group already energetic in L1.