Latest Layer 2 News and Insights | Yellow.com

Justin Bons, founder of Cyber Capital, has criticized Ethereum's Layer-2 (L2) solutions. He calls networks like Arbitrum, Base, and Optimism a "dystopian nightmare of centralization." Bons targets several top L2 solutions. He argues they have centralization risks that could allow network operators to control user funds. The centralization comes from "multi-sig" controls and centralized sequencers. These can potentially manipulate transaction order or freeze funds. Bons highlights specific vulnerabilities. Arbitrum and Base rely on multi-sig controls and permissioned proposers. This could allow instant access to user funds by a centralized authority. "Arbitrum – Can steal all user funds instantly with a multi-sig, has permissioned proposers, centralized operator can exploit MEV & centralized sequencer can censor," Bons stated. He noted similar issues with Base. "Base can steal all user funds instantly with a multi-sig, permissioned proposer can also steal all user funds, the centralized validator can freeze all funds, a centralized operator can exploit MEV & the centralized sequencer can censor." Optimism faces similar centralization concerns. Bons points out its ability to exploit maximal extractable value (MEV) and censor transactions. The industry reaction was mixed. Crypto pundit DBCrypto supported Bons' claims. He questioned the incentives for L2s to adopt a shared sequencer model. "Coinbase currently makes how many millions a month off Base? OP and ARB hold around 50% L2 market share currently? Will they choose to join a shared sequencer and give up much of their earnings?" DBCrypto asked. Bons expressed concern about broader implications. He cited naivety of engineers and misaligned venture capital incentives as factors. "VCs make much more money off ETH in the short term if it continues with L2 scaling," he concluded.

Hinkal Protocol has launched its Shared Privacy Protocol. The new system enables confidential transactions across multiple blockchains. The announcement came at EthCC 7. Hinkal outlined several key features of the protocol. Stakers can deploy native and staked assets. This generates additional yield. Yield tokens remain tradable on other decentralized applications. Traders benefit from an expanded Shielded pool. This obscures trading strategies. It also maximizes capital deployment across chains. Decentralized exchanges and applications can integrate the protocol. This grants users new privacy capabilities. Georgi Koreli, Hinkal's co-founder and CEO, stressed the importance of on-chain privacy. "It's critical for full crypto adoption in the institutional financial sector," he said. Koreli noted rapid adoption among institutional clients. He called the launch "a key milestone in unleashing community power and breaking privacy barriers." Hinkal claims institutional investors seek DeFi privacy comparable to traditional markets. However, achieving this requires substantial "Shielded TVL" on each blockchain, which is not an easy task. First of all, the crypto landscape's fragmentation poses challenges that need to be ovecome. Over 200 Layer-1 and Layer-2 blockchains exist. That translates into liquidity lacking incentives and privacy in DeFi is not scalable until now. Evgeny Gokhberg, founder of Re7 Capital and Hinkal investor, commented on the protocol. "It's the solution we've been searching for," he said. Gokhberg emphasized the need for compliant, discrete liquidations without disclosing transaction data.

Interoperability protocol ZKM has announced plans for a new Bitcoin Layer 2 solution named GOAT Network. It aims to be the first decentralized Bitcoin Layer 2 with shared network ownership. You've probably never heard of Layer 2 solutions of this kind, and yet it is set to launch in Q3 this year Kevin Liu, GOAT Network Core Contributor and ZKM co-founder, stated, "GOAT Network's launch of a Bitcoin L2 is a powerful first step in ZKM's quest to unite the fragmented Web3 universe." Liu emphasized their commitment to decentralization and shared ownership. GOAT Network will employ a decentralized sequencer model. This approach differs from other Bitcoin Layer 2s. Sequencer node operators will secure the network. They will earn yield on their bitcoin and fees for various activities. The project claims to be unique in its approach. "GOAT Network is the first Bitcoin L2 to share network ownership and fees, by decentralizing its sequencer," the team told The Block. They added that small holders can also participate in earning sustainable yield. ZKM's proving service will handle the ZK prover side. The team acknowledged that the decentralization of the Proof Network depends on ZKM's progress. GOAT Network boasts Ethereum Virtual Machine compatibility. This feature enables smart contract functionality. It sets the project apart from Bitcoin's existing Layer 2, the Lightning Network. The network has secured commitments of 5,000 BTC from five institutional node operators. It plans to launch with seven operators, expanding over time. The authors claim that yield will come from various sources, including gas fees and mining rewards. So it's going to be a kind of a mixed bag, if you will. The project will utilize ZKM's Entangled Rollup technology. This provides native security from Bitcoin's Layer 1. GOAT Network aims to become a "Universal Layer 2," integrating with multiple ecosystems. GOAT Network has outlined its tokenomics. 42% of the GOAT token supply is reserved for mining activities. 6% is allocated for airdrops and 1% for influencers. The total supply will be 1 billion tokens.

Pepe Unchained (PEPU) is developing a Layer-2 blockchain for meme coins. The project has raised over $2 million in its presale. PEPU aims to build on Ethereum. It promises faster transactions and lower fees. The team targets speeds 100 times faster than Ethereum. Two firms have audited PEPU's smart contracts. This shows a focus on security. The presale has attracted significant interest. It raised $2 million in 18 days, averaging $111,000 daily. Investors can buy PEPU tokens at $0.008226 each. A $1,000 investment yields 121,563 tokens. The presale has a limited window. Developers plan to list PEPU on exchanges after it ends. Ten percent of tokens are allocated for exchange liquidity. This should help with price stability. PEPU offers a "double staking" protocol. Early investors could see yields of 910% annually. Over 175 million PEPU tokens have been staked. This should be enough to indicate investor confidence in this meme coin. But the project is also gaining traction on social media. It has 4,700 Twitter followers and 2,600 Telegram members. Not so much, compared to some of the industry leaders, but impressive enough for a novice token. CoinSniper.net ranks PEPU as their number two project. YouTube influencer Austin Hilton called it "very cool". Layer-2 solutions are currently popular. The BLAST token recently reached a $489 million market cap. Pepe Unchained could capitalize on demand for scaling solutions. Its success will depend on balancing technical innovation with meme appeal.

Friend.tech has decided to remain on the Base Layer-2 network. This reversal comes just a month after announcing plans to launch its own chain. The decision has negatively impacted the FRIEND token price. It fell to a record low of $0.2973 on Thursday morning. FRIEND is now trading at $0.3557, down 25% from yesterday. This represents a more than 50% drop since June 10. Friend.tech launched in August 2023. It aimed to create a monetized social media network. The platform allows influencers to create "shares" of themselves. These were later renamed "keys" due to regulatory concerns. Interest in the project waned after its initial launch. It saw a resurgence in May 2024 with the announcement of an airdrop and version 2 launch. "$FRIEND was always meant to be a 100% community-controlled token," the team stated on Twitter. They emphasized that users can still access all features on Base. The project has also disabled protocol fees for BunnySwap, its native decentralized exchange. BunnySwap's total value locked has fallen from a peak of $53 million to $10.6 million. Crypto Quant analyst Bradley Park commented on the situation. "FT was originally one of the leading contributors to the Base boom," he told Decrypt. "However, overshadowed by growth of Farcaster, FT announced that it would move to another chain." Park noted that community sentiment has turned negative. Large wallet holders have been exiting their positions, contributing to the price drop.