Bitcoin builders defend venture capital's role in layer-2 growth

Hu told Cointelegraph that helium views galore VC firms successful the abstraction positively, arsenic they connection enactment to aboriginal ventures that request superior to physique infrastructure.

“You request developers, you request to unfastened up the full ecosystem foundation, everything,” Hu said. “You request to wage for the cloud, similar AWS oregon RPCs, each that, servers […] So, we person to person VC connected that.“

Hu challenged the accustomed Bitcoiner ethos that argues against outsider capital.

“It’s hard to say, okay, let’s bash a just mint, and past person a precise successful, steadfast treasury, and you person to wage each this stuff,” helium said. “It doesn’t enactment that way.”

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Lightning-only stance sparks debate

Not everyone agrees. Mike Jarmuz, a managing spouse astatine Bitcoin task superior steadfast Lightning Ventures, told Cointelegraph that Lightning is the lone L2 his institution has invested successful and is funny in.

He said, “Anything with a ‘token’ that allows for ‘staking’ and earning immoderate absurd APY involvement connected your Bitcoin should beryllium avoided.”

Lightning Network, connected the different hand, is increasing precise rapidly and makes Bitcoin transactions instant, astir escaped and scalable, Jarmuz said. Bitcoin Visuals data shows that the Lightning Network had a cumulative capableness crossed each channels equivalent to astir $452 cardinal astatine the clip of writing. He added:

“There is nary ‘token’ erstwhile utilizing the Lightning network. It’s Bitcoin. That to maine is the lone existent L2, astatine slightest arsenic of close now.“

Lightning Network capableness chart. Source: Bitcoin Visuals

Jarmuz said projects not gathering his criteria are “masquerading arsenic useful” portion doing thing for Bitcoin. Sidechains similar the Liquid Network and newer protocols specified arsenic e-cash and federations oregon Ark “are not wide used” but “are astatine slightest interesting,” helium said.

He recognized that those “do not impact a staked token, promising yield,” with projects that person those features, “just waiting for rug pulls and issues.”

“We don’t put successful that area,“ helium added.

Related: Spar supermarket successful Switzerland starts accepting Bitcoin payments

VCs seen arsenic enablers of Bitcoin growth

According to Hu, VCs bring liquidity, resources and acquisition to caller startups portion opening “up each the organization ideas and connections.” Those were important additions to Bitlayer’s resources arsenic well, helium said, noting that “we wouldn’t person that if those radical didn’t put successful us.”

He besides argued that VCs thin to backmost semipermanent infrastructure efforts alternatively than speculative projects similar memecoins oregon non-fungible tokens.

That acquisition was echoed by Walter Maffione, pb technologist astatine Lightning Network-based decentralized speech (DEX) Kaleidoswap, who told Cointelegraph that the protocol started arsenic an open-source task and raised a pre-seed concern from Fulgur Ventures and Bitfinex Ventures.

“Those funds were utilized to wage open-source developers and accelerate protocol development, not to physique a token oregon seizure governance rights,“ helium said.

Hu claimed that VCs person contributed importantly to processing layer-2 scalability solutions, wallets, Bitcoin lending and staking protocols. He added:

“All of them are VC-backed, including us. And immoderate of them are listed connected apical exchanges.”

Vikash Singh, main astatine Bitcoin VC steadfast Stillmark, told Cointelegraph that erstwhile selecting Bitcoin layer-2 protocols to put in, they see demonstrated information and robustness, proliferation and adoption of non-speculative usage cases and maturation of the exertion layer. Much similar Jarmuz, helium said that Stillmark believes that proof-of-work is the superior statement model.

Still, dissimilar Jarmuz, Singh said proof-of-stake oregon Byzantine fault-tolerant statement “may beryllium suitable for Bitcoin sidechains and rollups.”

Magazine: ‘Bitcoin furniture 2s’ aren’t truly L2s astatine all: Here’s wherefore that matters