The market is full of L1+L2 solutions, and these types of infrastructures mostly started by developing their own L1, only to find that L2 seems to be the correct industry narrative amidst market narrative changes, and then turned to develop an L2.
This isn't necessarily a bad thing; on the contrary, it makes it easier to attract market attention and embrace a more mainstream developer community.
➠ But few L2s turn around to do L1.
Plume Network @plumenetwork is such a case, under the premise that the strategic direction of RWA remains unchanged, what motivation drove Plume to take such actions.
1. Comparing the pros and cons of L1 and L2 solutions
When I reviewed Plume's market announcements, the overwhelming introduction to its architecture was nothing but one word - Layer2.
If further summarization is needed, it is - modular Layer2.
But in its latest strategic direction, it seems to be boldly 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 advantages does Layer1 have over Layer2?
Conversely, if we were to talk about it, the advantage of Layer2 over Layer1 is its higher scalability. In the current market, due to Ethereum's implementation and major strategic choices, L1 is often used as a 'bridge for compatible ecosystems' to expand developers on other chains.
Besides that, L2 does not have significant advantages over L1 in other aspects.
The transaction confirmation and security of L1 undoubtedly have advantages over L2. Additionally, if L2 does not adopt a shared ordering phase, it may be more centralized than L1 for the community.
2. What drove Plume's transition
Plume has completely positioned itself on RWA, which has one of the highest security requirements in the industry, while L2's security relies on L1. I think this is also a major reason driving Plume's shift from being originally an L2 to transitioning to L1.
Although it is said that existing L1, especially Ethereum itself, has rarely experienced security incidents in recent years, Plume has chosen to involve more institutional partners in maintaining the security of the chain when selecting L1 nodes. This makes it easier to control certain uncontrollable situations that might occur in other L1s under extreme circumstances.
However, what remains unchanged is that this L1 still adopts a modular construction method, not built from the ground up.
In the latest market movements of Plume, I saw that it launched a $100 million RWA special program in October: by collaborating with Projective Finance, it provides users with $100 million worth of solar assets, which users can earn by depositing crypto assets (such as stablecoins).
I think this is a major driving event pushing Plume towards Layer1. After the token issuance event that will occur in the future, Plume will not need to consider some token value capture issues due to adopting Layer1, while Layer2 does.
Through the native RWA ecosystem, more RWAFi can be built around Plume's native assets, which is key to linking the development of the RWA ecosystem with its own value capture.
After expanding Plume's RWA ecosystem, accessing Plume equals accessing RWA. I saw public information from the market that Plume plans to tokenize approximately $1.25 billion worth of physical assets this quarter, which, besides the aforementioned solar assets, also includes physical assets in fields such as minerals and healthcare.
These large RWA plans will influence further value capture on the chain in the future. These events are driving Plume's transition from the original Layer2 to Layer1 before the TGE.
3. The adoption of Arc and wallet solutions
This is a framework provided for building RWA applications on Plume's L1, allowing RWA ecosystem developers to directly construct compliant RWA applications.
More importantly, leveraging this foundation, users can directly 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 of fiat entry into the ecosystem on the chain.
With the natively integrated Plume smart wallet, users can enter the chain initially using fiat without gas fees, envisioning such a scenario:
(1) If a novice user has finally managed to access Plume through an account at XX bank, at this point, if asked to prepare a certain token GAS, there is a 90% chance they will not understand why.
This step alone will hinder his continued interest in accessing the RWA ecosystem.
I believe that the adoption of this solution is the mainstream of this cycle. From my past discussions on various solutions and perspectives regarding chain abstraction, one should be able to glimpse the bigger picture.
4. The macro loose environment promotes RWA development
After Trump won the election and the U.S. policy direction shifted, the market began to pursue the 'compliance' concept to the greatest extent. RWA may become the main avenue 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. Publishers led by BlackRock had already entered the RWA track.
From the chart below, it can be seen that the increment brought by new entrants has not slowed down but is gradually expanding:
U.S. Treasury assets are still mainstream, but various green energy, precious metals, and mineral resource categories of physical assets are also beginning to emerge in the RWA track.