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Nikita Zhavoronkov

Ethereum’s Ultrasound Money Fades Amidst L2 Controversy

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Nikita Zhavoronkov, the Lead Developer at Blockchair & 3xpl, has recently disclosed that Ethereum Layer 2 solutions (L2s) are detrimental to the Ethereum ecosystem. According to Zhavoronkov, there is a significant decrease in the network dominance while inflation revival labeled as a “coin printer” destroys its ultrasound money status.

The root cause of this issue is the custody mode of present corporate L2s, which deviates much from Ether’s foundational principles, such as decentralization and permissionlessness. These L2s have admin keys and can be used by anyone for fund theft at any time, nullifying the ethos of trustlessness.

High costs on Ethere­um’s main network drive users away to othe­r blockchains. This weakens Ethere­um’s leadership and reduce­s funds for security. Those using Layer 2 solutions also take­ fees away from the main ne­twork’s validators. So, Ethereum has to create­ new Ether tokens to boost se­curity, going against its aim of having a limited supply.

Constantly moving funds betwee­n networks and splitting liquidity also make mainstream adoption difficult. This shows that on-chain scaling is crucial for Ethe­r. However, some e­ntities profit from Layer 2 fee­s, so they have no incentive­ to improve Ethereum’s inte­grity.

Ethereum’s L2 Conundrum Sparks Community Discord

The crypto community has responded fervently to Zhavoronkov’s allegations. Some members question the validity of accusations, citing the lack of evidence and attributing malice to scaling choices. Zhavoronkov maintains his stance, likening custodial L2s to a futile attempt at scaling akin to donning wigs for hair growth. He points to the lucrative business model of L2s, which incentivizes collusion with developers, undermining progress on Ethereum’s Layer 1.

Some other community members asserted that certain L2 solutions do work we­ll. They don’t think these solutions will le­t people steal mone­y or cause problems with liquidity right away. Howeve­r, Zhavoronkov doesn’t agree. He­ says L2 security systems have we­aknesses and could still cause liquidity to be­ split up in bad ways. Nevertheless, Ether’s scaling puzzle remains unresolved as stakeholders grapple with basic questions of decentralization, security, and scalability.

Related Reading | XRP Faces Bearish Trends Amid Regulatory Uncertainty

Kraken Delists Monero After Defending Privacy

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In another blow to Monero, crypto exchange Kraken delisted XMR for users in Ireland and Belgium due to EU regulations against privacy-focused tokens. As per the official notice, trading and deposits will cease on May 10, with a complete delisting on June 10. At the moment, the remaining XMR will be auto-converted to Bitcoin. Ironically, this comes two months after Kraken tweeted, “Privacy is not a crime.”

Although the trading platform did not disclose the reason for the action, market observers expect that the delisting will be mandatory due to the MiCA regulation [Markets in Crypto Assets], leading Kraken to delist Monero in other EU countries soon thereafter.

Monero
Kraken Delists Monero After Defending Privacy 2

The series of delisting decisions made by major crypto exchanges has disappointed privacy advocates, who see these actions as giving in to regulatory pressures. Nikita Zhavoronkov, the head developer of Blockchair, remains defiant by describing Kraken’s announcement as a victory for crypto. Previously, he referred to Binance’s choice to delist XMR as “the best Monero ad imaginable.”

Monero Supporters Cheer ‘DEXclusivity’

The move has led Monero supporters to jokingly call XMR a “DEXclusive coin.” Some have quipped that XMR can’t even enter CEX-es with a visitor visa. Others praised the decision, saying that the more Monero is delisted from CEXs, the less speculation it will face and the less it will rely on the traditional system. It’s a challenging but necessary step towards separating money from the state.

The more Monero gets delisted from CEXs, the less speculation it gets, and the less and less it will depend on the legacy system. It’s a hard path but inevitable for the separation of money from the State.

As earlier reported by TronWeekly, Binance in January opted to remove the token after months of deliberation. This decision follows a broader trend of regulatory scrutiny and concerns over the potential misuse of privacy coins, which are specifically designed to enhance anonymity by concealing transaction details, including involved parties and amounts.

Before that, OKX, another significant player in the cryptocurrency exchange arena, declared its intention to delist 20 spot trading pairs in the upcoming year. Notably, this delisting encompasses three of the largest privacy-focused cryptocurrencies: Monero’s XMR, Zcash [ZEC], and Dash [DASH].