Recently, Ethereum has encountered significant FUD due to its weak price performance. Despite the introduction of the EIP-1559 burn mechanism, the decline in on-chain activity and usage has slowed the burn rate, failing to offset the increased supply of ETH, leading to continued inflation.

On-chain activity has also declined, with daily active addresses and transaction volumes decreasing. Previously, DeFi and NFTs brought a surge of users and transactions to Ethereum, but as these applications lose steam, they can no longer sustain high on-chain activity, causing network revenue from transaction fees to drop. This has raised concerns about Ethereum’s future, further fueling FUD.
Although Layer 2 development and the introduction of blob structures have successfully lowered gas fees, on-chain demand is fundamentally driven by profit opportunities. When there are no clear alpha opportunities, it’s difficult to attract users to engage in on-chain activities. While Layer 2 has alleviated the load on the main chain, it has also fragmented liquidity, as various Layer 2 solutions isolate funds, further impacting Ethereum’s overall on-chain activity and economic performance. This fragmentation has diluted Ethereum’s pricing power, weakening its competitive edge in the broader blockchain ecosystem.

The Empty Cities Created by Layer 2
Since the beginning of 2024, the narrative of on-chain performance and technical superiority has lost its power. Layer 2 was once seen as the key to Ethereum’s scalability, with technical advantages at the forefront of market discussions. However, as the market cooled, this narrative failed to sustain user engagement. After the airdrop expectations were shattered, many Layer 2 networks became “empty cities,” with zkSync being a prime example. Users flocked in hopes of lucrative airdrops from early participation, but once these expectations were met, user activity plummeted, leading to a sharp drop in on-chain activity.

The core issue behind these “empty cities” is the lack of sustained, large-scale applications, despite the improvements in performance. High throughput and low transaction costs alone aren’t enough to maintain long-term user activity. Without groundbreaking applications to keep users engaged, these networks struggle to retain their user base.
Furthermore, Layer 2 and data availability (DA) solutions have diverted significant economic activity from Ethereum’s main chain. While these solutions have reduced the load on the mainnet, they have also fragmented liquidity and diluted Ethereum’s value aggregation. Economic activity that once belonged to Ethereum has dispersed across various Layer 2 networks, gradually weakening Ethereum’s pricing power and diminishing its network effects and market advantages.

VC Investment Preferences
VCs have always favored infrastructure projects because they offer higher certainty, larger profit margins, and the capacity to accommodate more capital. Compared to application-layer projects, infrastructure projects can absorb more investment and offer more predictable returns. Over time, VCs have developed a path dependency in their investment strategies.

For example, early VC investments in Ethereum, Cosmos, and Polkadot have yielded substantial returns as these projects have become central to the blockchain industry. These investments have thrived across multiple bull and bear markets, ensuring long-term profitability.
Moreover, with the rise of modular blockchain solutions, more projects are creating their own Layer 2 solutions to boost valuations and raise growth ceilings. This trend has become the “crypto political correctness,” where building infrastructure has become the default strategy for Ethereum ecosystem projects.

Conclusion
Ethereum’s dilemma is clear: while its infrastructure has improved, offering better performance and scalability, the lack of a breakthrough, large-scale application remains a key challenge. VC funding has fueled the rise of Layer 2 and infrastructure projects, but despite their technical advancements, they have failed to deliver user-driven applications, leading to a decline in on-chain activity and value fragmentation. Ethereum’s progress in infrastructure is undeniable, but the challenge lies in transforming this strong foundation into real user demand and a thriving application ecosystem, which remains the biggest hurdle for its future.

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🚀 TNA Protocol: Enhancing Bitcoin’s Usability 🌐
🚀 Let's dive into key features and potential of $BN in this captivating thread! 🧵👇
1️⃣ Introduction: TNA Protocol ($BN) is a decentralized naming system built on Bitcoin, offering human-readable names linked to Bitcoin addresses. It integrates seamlessly with Bitcoin layer 2 solutions, expanding asset functionalities and usability.
2️⃣ Technology: TNA leverages a Sparse-Merkle Tree (SMT) structure and a Data Availability (DA) framework called TNA Core, enabling cross-chain interactions. It supports subname issuance, token-gated functionalities, and multiple asset types.
3️⃣ Whitepaper Analysis: The whitepaper highlights TNA’s decentralized naming system, cross-chain interactions, and governance through the $BN token. It also outlines a roadmap for wallet integration, multi-asset support, and a name marketplace.
4️⃣ Use Case: The $BN token enables governance, transaction fees, and rewards within the TNA ecosystem. Users can create and trade unique names, interact with cross-chain assets, and participate in protocol governance.
5️⃣ Team and Leadership: Led by a team of experienced blockchain developers and cryptography experts, TNA Protocol’s leadership ensures continuous innovation and success in decentralized systems. Specific information about team is not available.
6️⃣ Partnerships: TNA partners with key industry players like Merlin Chain, Nubit, Bitlayer, Bouncebit, layer 2 solution providers and wallet developers, enhancing ecosystem integration and interoperability across blockchain networks.
7️⃣ Security and Audits: TNA is built on the Lightning Network and follows the standards of the Taproot Assets protocol. It leverages Taproot's Asset ID, Universes, and Asset Transfer mechanisms. It also utilizes its key data structure, the Sparse Merkle Tree (SMT), and further expands it to better suit domain name use cases.
8️⃣ Tokenomics: TNA Protocol’s $BN token has a supply of 2.1 billion, with allocations for the community, team, treasury, and strategic initiatives. The tokenomics ensure long-term ecosystem growth and sustainability.
9️⃣ Exchanges: $BN tokens are available on major exchanges like KuCoin, Gate.io and Bounce Launchpad, providing liquidity and accessibility for users to participate in the TNA ecosystem.
🔟 Recent Developments: TNA recently launched TNA Core v1, supporting data inscription and node consensus. Multi-asset functionality and wallet integration are now live, with a name marketplace launch on the horizon.
1️⃣1️⃣ Conclusion: TNA Protocol ($BN) is set to revolutionize the Bitcoin ecosystem with its decentralized naming service, robust technology, and strong partnerships. $BN token drives governance, rewards, and ecosystem utility.
🌟 If You find this thread useful Repost it, Share it with friends & Follow us for More Latest Crypto Analysis, News, Updates & Crypto Insights @Crypto Simbha 🦁🙏🏻

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Introduction
In the fast-paced world of cryptocurrency, few tokens have captured the attention of investors and enthusiasts quite like Cartesi (CTSI). Over the past 24 hours, CTSI has experienced an impressive 70% price surge, leaving traders and analysts buzzing with excitement. But what exactly is Cartesi, and why is it making waves in the crypto market? Let’s dive in.
Unleashing the Power of Layer-2 Infrastructure
Cartesi is not your typical blockchain project. Unlike many other tokens, it focuses on bridging the gap between decentralized applications (dApps) and real-world computation. At its core, Cartesi aims to provide a scalable and efficient layer-2 infrastructure that allows developers to build complex applications without sacrificing security or decentralization. By combining off-chain computation with on-chain consensus, Cartesi opens up new possibilities for dApps, gaming, and more.

The Road Ahead

As Cartesi continues to gain momentum, investors are eyeing its potential for long-term growth. The team behind Cartesi has been actively collaborating with other projects, exploring partnerships, and expanding its ecosystem. With a strong focus on developer-friendly tools and a commitment to innovation, Cartesi is positioning itself as a force to be reckoned with in the crypto space.

Hashtags: #Cartesi #CTSI #CryptocurrencyAlert #BlockchainLifeAwards2024 #Layer2Coin #InnovationInMotion
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Layer 1s Transitioning to Layer 2
From 2021 to 2022, Layer 1 blockchain platforms like Ethereum experienced significant congestion and high transaction costs, largely due to their Proof of Work (PoW) mechanisms. This led to slow transaction speeds and operational inefficiencies. In response, several new Layer 1 projects emerged, aiming to outperform and replace Ethereum by offering better performance and scalability.
However, the launch of Ethereum 2.0, which transitioned Ethereum from PoW to Proof of Stake (PoS), significantly altered the competitive landscape. Post-upgrade, it became evident that few, if any, Layer 1 platforms could rival Ethereum’s enhanced capabilities. By 2023, a notable shift occurred: many projects began transforming their models from Layer 1 to Layer 2 to leverage Ethereum’s robust ecosystem rather than compete against it directly.

Today, Ethereum retains a dominant position in the market. Transitioning to becoming Layer 2 solutions for Ethereum seems to be a more strategic move than directly competing with the Ethereum platform.

#layer1layer2 #Layer2Coin

As blockchain technology continues to evolve, one of the most pressing challenges it faces is scalability. Layer 2 solutions have emerged as a crucial innovation to address this issue, enabling faster transactions and reduced costs without compromising the security and decentralization of the underlying Layer 1 blockchain. This article delves into the concept of Layer 2 solutions, their importance, and the various approaches being implemented.
What are Layer 2 Solutions?
Layer 2 solutions are secondary frameworks or protocols built on top of existing blockchain networks (Layer 1) to enhance their scalability and efficiency. They aim to alleviate the transaction load on the main blockchain, thereby increasing throughput and reducing transaction fees.
The Need for Layer 2 Solutions
Blockchain networks like Bitcoin and Ethereum have faced significant scalability issues. Bitcoin, for instance, can handle about 7 transactions per second (TPS), while Ethereum manages around 15 TPS. In comparison, traditional payment systems like Visa process thousands of TPS. This limitation leads to high transaction fees and slower confirmation times during periods of high demand.
Key Approaches to Layer 2 Solutions
State Channels:Description: State channels enable off-chain transactions between parties. Transactions are conducted off the main blockchain and only the final state is recorded on-chain, reducing the number of transactions that need to be processed by the main chain.Example: The Lightning Network for Bitcoin and Raiden Network for Ethereum.Advantages: Significant reduction in transaction fees and latency.Plasma:Description: Plasma is a framework for building scalable decentralized applications by creating smaller chains (child chains) that are attached to the main Ethereum blockchain. These child chains can handle a large number of transactions independently.Example: OmiseGO and Matic Network.Advantages: Enhanced scalability and the ability to conduct complex smart contracts off-chain.Rollups:Description: Rollups bundle multiple transactions into a single transaction that is submitted to the main chain. There are two types of rollups: Optimistic Rollups and Zero-Knowledge (ZK) Rollups.Optimistic Rollups: Assume transactions are valid and only check them if there's a challenge.ZK Rollups: Use cryptographic proofs to ensure the validity of transactions.Example: Arbitrum and Optimism for Optimistic Rollups; zkSync and Loopring for ZK Rollups.Advantages: Increased transaction throughput and reduced costs with the security of the main chain.Sidechains:Description: Sidechains are separate blockchains that run parallel to the main chain and can interact with it via a two-way peg. Assets can be transferred between the main chain and sidechains.Example: Polygon (formerly Matic) and xDai.Advantages: Flexibility in design and functionality, tailored to specific use cases.
Benefits of Layer 2 Solutions
Scalability: By offloading transactions from the main chain, Layer 2 solutions significantly increase the number of transactions that can be processed.Cost Efficiency: Reduced transaction fees make microtransactions viable, enabling broader adoption of blockchain technology.Speed: Faster transaction processing times improve user experience, making blockchain applications more practical for everyday use.Security: Layer 2 solutions maintain the security and decentralization properties of the underlying Layer 1 blockchain.
Challenges and Future Outlook
While Layer 2 solutions offer numerous benefits, they also face challenges such as user adoption, interoperability between different Layer 2 solutions, and ensuring robust security. However, continuous advancements and innovations in this space are promising. The integration of Layer 2 solutions is expected to play a pivotal role in the mass adoption of blockchain technology by making it scalable and efficient enough for widespread use.
Conclusion
Layer 2 solutions are critical in the journey towards a scalable and efficient blockchain ecosystem. By addressing the inherent limitations of Layer 1 blockchains, these solutions pave the way for broader adoption and more innovative applications. As the technology matures, we can expect to see even more sophisticated Layer 2 implementations that will further revolutionize the blockchain space.
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