There are many L1+L2 solutions on the market, and most of them originally developed their own L1 for this type of infrastructure. Later, as the market narrative changed, they found that L2 seemed to be a correct industry narrative, so they turned around and developed an L2.
This is not a bad thing. On the contrary, it is easier to attract market attention and embrace the practices of more mainstream developer groups.
➠But few L2s turn around to become L1s
Plume Network @plumenetwork is such a case. Under the premise that the strategic direction of RWA remains unchanged, what motivation drives Plume to make such a move?
1. Compare the advantages and disadvantages of L1 and L2 solutions
When I reviewed the publicly available information about Plume, the overwhelming introduction to its architecture can be summarized in one word - Layer2.
If further summarized, it is - modular Layer2.
However, in its latest strategic direction, it seems to be aggressively developing towards Layer1. This L2 project, engaged in RWA business, has made a choice between two completely different architectures, contrary to the market mainstream.
So: what are the advantages of Layer1 compared to Layer2?
Conversely, if we were to say, the advantage of Layer2 compared to Layer1 is its higher scalability. In the current market, due to Ethereum's implementation and main strategic choices, it is often used by L1 as a 'bridge for compatible ecosystems' to expand developers on other chains.
In addition, L2 does not have any significant advantages over L1 in other aspects.
Moreover, the transaction confirmation and security of L1 are undoubtedly more advantageous than L2. If L2 does not adopt shared ordering stages, then for the community, L2 is somewhat more centralized than L1.
2. What has driven Plume's transformation?
Plume has completely positioned itself on RWA, where the security requirements are arguably the highest in the industry. Since the security of L2 itself relies on L1, I believe this is also a main reason driving Plume's transition from originally being L2 to L1.
Although it is said that the existing L1, especially Ethereum itself, has rarely experienced security incidents in recent years, Plume chooses to involve more institutional partners in the selection of L1 nodes to jointly maintain the security of the chain. This makes it easier to control some situations that would originally be uncontrollable in other L1s in extreme circumstances.
However, what remains unchanged is that this L1 still adopts a modular construction approach, rather than building from scratch.
In the latest market trends of Plume, I saw that it launched a $100 million RWA special program in October: through cooperation with Projective Finance, it offers users solar assets worth $100 million, allowing users to earn returns on solar assets by depositing crypto assets (such as stablecoins).
I think this is a major driving event for Plume's shift towards Layer1. After future token issuance events occur, because it adopts Layer1, Plume does not need to consider some token value capture issues, which Layer2 needs to.
Through the native RWA ecosystem, more RWAFi can be built around Plume's native assets. This is the key to linking the development of the RWA ecosystem with its own value capture.
After the RWA ecosystem of Plume unfolds, accessing Plume = accessing RWA. I see in the publicly available market information that Plume plans to tokenize about $1.25 billion in physical assets this quarter, which includes not only the aforementioned solar assets but also physical assets in fields such as minerals and healthcare.
These large RWA plans will affect future value capture on the chain, and these events are driving Plume's transition from the original Layer2 to Layer1 before the TGE.
3. Adoption of Arc and wallet solutions
This is a framework provided for building RWA applications on Plume's L1, which allows RWA ecosystem developers to directly construct compliant RWA applications.
More importantly, based on this foundation, users can access ecological interactions on the Plume chain in a convenient manner. I saw in its official documentation that this solution also has shadows of account abstraction and even chain abstraction, ultimately achieving a smooth experience for fiat currency entry into the ecosystem.
With the natively built-in Plume smart wallet, users can enter the chain with fiat currency without gas fees. Imagine a scenario like this:
(1) If a novice user finally accesses Plume through an account at XX Bank, if he is then required to prepare a certain token for GAS, there is a 90% chance he will not understand why.
(2) Just this step alone will hinder his continued interest in accessing the RWA ecosystem.
I believe that the adoption of such solutions is the mainstream of this cycle. My past discussions on various solutions and perspectives of chain abstraction should give a glimpse into this.
4. The macro loose environment promotes RWA development
When Trump won the election and the U.S. policy direction shifted, the market began to pursue the concept of 'compliance' to the maximum extent. RWA may become the main path for traditional capital institutions to enter crypto.
This year, RWA has been growing rapidly at a stable trend, especially at the beginning of the year when the Bitcoin spot ETF was approved. Issuers led by BlackRock have long entered the RWA space.
From the chart below, it can be seen that the influx of new entrants has not slowed down, but is even gradually expanding:
U.S. debt assets remain mainstream, but various physical asset categories such as green energy, precious metals, and mineral resources are starting to emerge in the RWA space.