In the wake of the crypto industry’s recent turmoil, Ava Labs founder Emin Gün Sirer has issued a stark warning about the emergence of subpar Layer 2 solutions (L2s) attempting to fill the void left by the disgraced former FTX CEO, Sam Bankman-Fried (SBF).
Sirer’s cautionary message comes in the form of a tweet, where he reflects on the community’s initial oversight of red flags due to SBF’s perceived intelligence and wealth. He criticizes the ease with which “trash L2s” can be launched, highlighting several concerning practices that could indicate potential fraud or mismanagement within these projects.
Key points from Sirer’s tweet include:
Mismatched Narratives: Projects whose narratives don’t align with their technology, particularly centralized sequencers without fraud proofs, are considered incompatible with the ethos of cryptocurrency.
Premature Token Sales: Selling tokens to fund future technology development may fall under security offerings, raising legal and ethical questions.
Founder Token Dumping: Founders selling tokens before a project’s launch suggests a lack of commitment and parallels with SBF’s alleged misdeeds.
Low Float Tokens: Manipulation of low-float token valuations, a tactic associated with SBF, is a red flag for potential market manipulation.
Questionable Founder Behavior: Sirer also alludes to founders’ personal conduct as a potential indicator of a project’s integrity.
Sirer proposes a litmus test for evaluating new crypto projects: assessing whether they bring innovative solutions to current industry challenges and if their leaders can convincingly articulate their vision to a non-expert audience.
As the crypto landscape continues to evolve, Sirer’s insights serve as a reminder for investors and enthusiasts to remain vigilant and discerning, especially when new players emerge to fill the gaps left by fallen giants.
Source: https://azcoinnews.com/ava-labs-emin-gun-sirer-alerts-crypto-community-to-l2-pitfalls-post-sbf-era.html