Bankless Why We're Bullish L2s
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Jan 17, 2024 Dive into the intriguing world of Layer 2 (L2) tokens and their potential value beyond mere governance. The discussion highlights the metrics and growth of L2 solutions like Arbitrum and ZK Sync, and explores user engagement trends, including airdrop hunting. Topics like token valuations, market narratives, and economic prospects paint a bullish picture for L2s. The conversation also examines unique strategies across various projects, emphasizing how they can leverage existing infrastructure for future success. Buckle up for a deep analysis of what's driving the crypto landscape!
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L2 Profitability Model
- L2s operate as value-added resellers, buying block space from Ethereum and reselling it to users.
- This model makes them inherently profitable, even before considering sequencer costs or development expenses.
L2 Token Advantage
- L2 tokens have a significant advantage: they don't pay for security through token issuance, unlike L1s.
- This allows them to be more profitable, but their success depends on attracting users and capital.
L2 Token Governance
- L2 tokens govern cash flows accrued by sequencers, similar to how equities represent governance over cash flows.
- This model distinguishes them from governance tokens without inherent value accrual mechanisms.