Sovereignty vs Scalability—L1 or L2?
Binance founder and former CEO Changpeng Zhao (CZ) sparked a new debate in the crypto community. Crypto executives question whether AI-focused blockchain projects should be built on Layer 1 (L1) or Layer 2 (L2) networks.
The broader discussion is aligned with industry trends where AI and blockchain convergence is becoming the focus of developers and investors.
Where should AI live? Discussion on CZ fuel L1 and L2
CZ emphasized in a recent article on X (Twitter) that the core purpose of such projects is not to develop excellent blockchains. Instead, it is used Blockchain technology Support AI economics.
He noted that while L1 provides greater sovereignty and decentralization, it also requires more effort to maintain nodes and validators. By comparison, L2 network Providing convenience by leveraging existing ecosystems such as Ethereum Dispersed communication (dex), Permanent contractand tools that do not have significant leakage to the base layer.
“L1 vs L2…Is there a new AI project L1 or L2?…L1 cooler than L2 or the opposite? Old topic, but wonder if emotions have changed,” CZ Posingwelcome to the conversation.
Crypto analyst Hitesh Malviya believes L1 blockchain It is a superior choice. Analysts advocate for the network in order to seek to build their own consensus mechanisms, optimize performance and reduce validator costs.
However, he also warned that retention rates for many L1 projects still fell by 70-90% despite large fundraising and user acquisition efforts. Token generation event (TGE).
“…even if you keep users, you’ll only see a category or niche to capture the maximum traction. So if the destination already knows – retain drops, higher user acquisition costs, and niche-specific demand capture – then why not build an application chain using the L2 stack”, “hitesh” suggestion.
Given these challenges, he suggested that building an AI-centric blockchain as an L2 application chain is a more practical approach. This will allow for faster development, marketing and scalability.
At the same time, Walter from the BNB chain business development team supports L2. he emphasize Its accessibility to existing tools and infrastructure. His comments also suggest about CZ may attend the upcoming White House Crypto Summit.
AI and Blockchain: Layer 1, Layer 2 and Layer 3 debate
Investor and blockchain consultant Anndy Lian adds another dimension to the debate. In subsequent comments on X, he believes that AI is most efficiently deployed at Layer 3 (L3). He explained that in theory, AI can be implemented on L1, but because Safety and resource constraints.
“AI can be implemented on blockchain layer 1, 2 or 3… In practice, Layer 3 is the most efficient and frequently used place for AI, taking advantage of the advantages of blockchain while meeting the computing needs of AI,” Lian Explained.
On L2, blockchain consultants pointed out that AI can optimize scalability. However, AI is most commonly used in L3 and can provide multiple AI-driven applications while taking advantage of blockchain.
Meanwhile, CZ discusses the growing interest in AI-integrated L2 networks, where AI is in the blockchain ecosystem. June 2024, Binance Labs (Now Yzi Labs) Invest in zirconan AI-enhanced L2 network Zero knowledge summary Improve safety.
The investment marks Binance’s strategic focus on AI-Blockchain integration, which could impact CZ’s latest inquiries.
Ethereum co-founder Vitalik Buterin has also been actively discussing L1 and L2 scaling solutions. Last month, Butling outlined a roadmap for scaling Ethereum’s L1 and L2 protocols in 2025. However, he also warned recently Some L2 networks may fail Due to weak economic models and poor execution.
These statements further fuel the debate over whether AI projects should establish their sovereign chains or integrate with existing ecosystems.
Nevertheless, the timing of CZ’s question may indicate that he is measuring market sentiment for the new AI blockchain initiative. Given Binance’s investment in AI-driven L2 Solution And with growing interest in modular blockchain architectures, he may be testing waters of future risks.
The trade-off between sovereignty, scalability, and accessibility will affect the future of AI-Blockchain integration. This may make it crucial for developers and investors to carefully weigh their choices.
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