• Ava Labs' CEO highlighted purple flags to think about earlier than investing in a brand new L2 mission.
• In accordance with Shiller, ignoring these purple flags might result in outcomes just like the FTX collapse.
• Schiller defined that there are only some actual blockers in cryptocurrencies at a time, so customers must be cautious of them.

Emin Gun Sirer, CEO of Ava Labs, highlighted the purple flags that customers ought to take into account earlier than investing in new L2 initiatives within the subsequent cycle. Shiller mentioned ignoring these purple flags can result in comparable outcomes to Sam Bankman Freed, who many individuals adopted primarily based on superficial traits.

Siler raised purple flags in a latest put up about X, stating that the shortage of a story that matches the mission's know-how is the primary signal of unsustainability. For instance, he believes that centralized sequencers and his L2 with no proof of fraud are unsustainable and incompatible with cryptocurrencies.

The founders of Ava Labs don’t presently help initiatives that promote tokens as a way to increase funds to do work that can later result in one other know-how. He says his third a part of the Howey check will certify workout routines resembling safety choices.

Siler went on to check Bankman Freed to founders who dump their private tokens earlier than launch. He believes their properties are comparable and will probably yield the identical outcomes. He added that making eight figures in pre-launch gross sales to “thank our employees” is about the identical as Bankman Freed stealing customers' cash as a result of they're “competent altruists.” He identified that.

Schiller believes that initiatives utilizing low-float tokens are dangerous and unsustainable. He cited Bankman Freed's sample of manipulating the valuation of low-floating tokens and utilizing this to their benefit in borrowing for instance for customers to be taught from. Moreover, blockchain specialists suggested customers to not overlook the founder's behavioral patterns. For instance, “founder complaining about operating out of cocaine” is a sign that nobody ought to take calmly.

The founding father of Ava Labs defined how cryptocurrency customers can check the reliability of recent initiatives. He identified that there are only some actual blockers in cryptocurrencies at a time. For instance, scalability and efficiency had been open points within the final cycle, and Avalanche and Solana offered his two approaches to tackling them.

Siler believes the blockers on this cycle should do with supporting a number of use instances on the identical platform and integrating with TradFi. He suggested customers to scrutinize new initiatives to see if they create one thing progressive to handle the vital points going through cryptocurrencies.