Guess What!? I’m Dumping My BITCOIN For Ethereum!!

I’m sure you know this, but layers can really
make things better in life. Layered food items like nachos, or burritos
are better than their non layered counterparts. Women’s hair is layered to make it look
prettier, give it more volume. And Ethereum, the blockchain is getting 2nd
layers to help with its performance. We’re not a food channel, nor a hairdressing
channel…we’re a blockchain based youtube channel, so let’s talk about ethereum layer
2.

Because it’s time for Chico Crypto!! Yup…It’s going to be a layer 2 summer
as the Layer 2s have arrived in many different forms. Rollups, optimistic or zk, EVM and Non EVM
sidechains, combinations of it all. It’s getting hard to keep track of….luckily
there is a great website that tracks much of the madness! ethhole.link… This calculates TVL based on token deposits
to the Ethereum bride contracts. With any layer 2, or sidechain that's EVM
compatible, the open ether blockchain can keep track of deposits to the layer or chain! Who is leading the pack?? Well it’s Polygon, formerly Matic & BSC,
nance’s smart chain! Based on the data, there is 29.29 billion
locked up in 2nd layers, Polygon has 11.13 billion of that & Binance has 10.57. Combined they make up 21.7 of that 29.29 billion. A large percentage of the pie & a very large
amount of money. Which is worrisome… everyone knows BSC is
centralized. The security of that over 10 billion is controlled
by a single entity. Binance. Mesari Crypto analyst and researcher, Wilson
Withiam, put out this tweet thread in April…diving into the validator design of Binance Smart
Chain, and it’s centralization.

He coucludes with this “It's hard not to
presume that each Binance Chain validator is in some way connected or tied to Binance. They each take turns producing blocks in a
seemingly predefined order. There doesn't appear to be any stake-weighted
mechanism to determine which one produces the next block. It seems to be a fully centralized racket…
one financial entity controlling over 10 billion in assets locked in a contract…that is just
way too much risk for me to support or even put some of my own assets in towards it. Polygon, I’m not going to deny is better
than Binance….but Polygon formerly Matic is a Binance IEO, and Binance is still their
number one based on stake, validator node. Why did I bring that up? Well the security of Polygon’s bridge to
it’s proof of stake chain, where most of the TVL is…is based on a multisig…and
I’ve talked about this before, the issue with this, but now Chris Blec, is running
with it and running hard.

He tweeted in the middle of last month “$8.66b
on Polygon is essentially secured by a 5-of-8 multisig admin key. Nothing else in DeFi comes anywhere close
to the centralization risk posed by Polygon. DeFi community needs to wake up on this issue. Which I agree with, because the entities of
the multisig, are anonymous, unknown to this day. What their true powers are…which is a risk,
when you have over 11 billion dollars locked up….

Now people may say I made the wrong call with
xDai as it’s TVL is nothing compared to Binance’s or Polygon’s but it’s still
pretty damn respectable. Over 136 million locked. This gets dang respectable when you compare
that 136 million to the TVL of others with higher marketcaps, like Avalanche and Fantom. Xdai is outdoing them…yet is on page 5 of
coingecko, way lower market cap… while they are on page 1. But there is a reason I like xdai…they are
honest in what they are.

They have their bridge validators fully public,
and it includes well known DeFi entities like: Gnosis, Metacartel, Request Network, RaidGuild,
Protofire, Burner Wallet, Anyblock Analytics & more! For changes to the bridges you need a 7/13
multisig. They expand upon this further in their governance
documentation and say: “In response to increased usage and value locked in the xDai bridge,
a proposal was introduced to extend security and decision making powers to a wider group
of participants (governors). The proposal was accepted, and governance
by means of a multi-signature Gnosis Safe was put into place initially on the Ethereum
side on 2 October, 2020. Once Gnosis Safe was deployed to xDai, updated
governance was enacted on the xDai chain on 23 October, 2020. At present there are 13 governors who are
responsible for managing bridge operations on both sides of the bridge (contracts are
deployed on the Ethereum and xDai side). 7/13 signatures are required to approve any
management proposal.

They are transparent about what their sidechain
is, and how the security of it is managed! It’s all in the documentation for anyone
to view and read….other Layer’s need to follow in xDai’s steps, and be transparent
about how the security of their layer or sidechain is taking place! You wanna know who it was that put forward
the idea that xDai should increase it’s security!? It was the xdai/POA team, back in September
of last year….Alex Kolotox, head of the Token Bridge team posted this post in their
forum: Increase number of participants in the xDai bridge management multsigs.

He said “Over the last moth we have observed
a growth of popularity of the xDai chain which is increasing the volume of DAI tokens in
the xDai bridge. With this increase we believe the management
of the xDai bridge should be delegated to the wider set of participants rather than
4 projects (POA Network, Giveth, Protofire, MakerDAO) with the consequent change of the
signatures threshold.” The xdai team personally, wanted to boost
security back in September of 2020. How much TVL did xdai have back then? Under 1 million dollars as seen from DeFi
Pulse..aka, the team thought security should be boosted for even that amount! Don’t you think the security of Polygon’s
$11 billion plus should be more than a 5/8 multisig where the signers are anonymous!? I think so….I hope the Polygon community
thinks so, and I hope the Polygon team thinks so. Does the community? Most likely, as it’s majority the people’s
funds…..does the Polygon team? From how they block people on Twitter who
are critical of it, and ask questions…I’m not too sure… But Layer 2 is about to get really layered
this summer. Now some people out there don’t consider
xdai, polygon, or BSC a second layer of ethereum due to each of the chains having their own
consensus and security.

These people say a true Layer 2, inherits
the security of the layer 1… Rollups are the solutions hailed by the Ether
greats, as supporting scaling while the development of ETH2 was taking place. That’s why in the beginning of the year..the
man himself, Vitalik Buterin, dropped this BLOG “An incomplete guide to rollups”
and said “Rollups are all the rage in the Ethereum community, and are poised to be the
key scalability solution for Ethereum for the foreseeable future” Vitalik dives into the 2 dominant flavor of
rollups, Optimistic and ZK…the properties of each, how they work, benefits, possible
drawbacks.

He ended his blog with these words “There
are many kinds of rollups, and many choices in the design space: one can have an optimistic
rollup using fraud proofs, or a ZK rollup using validity proofs. The sequencer can be either a centralized
actor, or a free-for-all, or many other choices in between. Rollups are still an early-stage technology,
and development is continuing rapidly, but they work and some (notably Loopring, ZKSync
and DeversiFi) have already been running for months. Expect much more exciting work to come out
of the rollup space in the years to come.” Soooo, from that BLOG back in January, Vitalik
mentioned 3 rollup solutions that had been running for months, Loopring, ZKSync, and
DiversiFi… Back in January it seemed Loopring and ZkSync
would be competitors, going against eachother….

But in March it was announced Loopring had
invested in ZKSync in a strategic ecosystem funding round. In that blog they said this “We are also
close to enabling trustless trades natively in zkSync, facilitated by liquidity providers. This will be an intermediate step before the
advent of ZK rollup smart contracts, which will enable NFTs, AMMs, DEXes, and aggregators
(such as Loopring, Curve or Mooniswap) to fully migrate onto zkSync” Back in March they were talking about NFTS,
AMMs and DEXs like Loopring being able to port over to ZKsync…which the ZKsync twitter
clarified. March 27th they said this could be happening
in May…NFTs and Swaps. Well May was last month did you hear anything
about NFTs on Layer 2 and swapping on zksync? Well like always…Delays happen!! The testnet was released May 24th, only the
testnet…and diving into the testnet blog they said this regarding the mainnet “The
zkSync 1.x mainnet upgrade including swaps, NFTs, the new event system, and permissionless
token listing will be initiated in May and live after the 2-week upgrade timelock to
give users time to opt out.” They initiated the upgrade on June 2nd, as
seen from their tweet, which 0xmons clarified below.

2 weeks, it goes live. 2 weeks from June 2nd, would put zksync’s
BIG upgrade happening June 16th…. This is a big upgrade, as it’s going to
allow layer 2 compatibility and swapping between AMMs, and DEX’s…like Loopring, but if
you look at their other AMM and DEX partners, we could have some big announcements. There is Curve, there is Balancer, and their
is the aggregator 1inch….. Although, there is one thing I find extremely
SUS about this zksynce upgrade. NFTs…why? Well as we know Gamestop announced their foray
into Ethereum based NFTs, with the launch of the landing page nft.gamestop.com…..now
who did gamestop bring on to lead this division of their company? Matt Finestone, former head of business development
for none other than Loopring….and guess what is the last thing Matt retweeted? None other than zksync….Gamestop’s NFTs
on zksync??? Chico thinks the writing’s on the wall…Cheers
I’ll see you next time!.

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