- CZ says that L2 can be a more practical choice if the core focus is to leverage blockchain for AI economics
- AI projects don’t necessarily need the full sovereignty of an L1
- L1 gives full control and ownership, but is expensive and time-consuming
Changpeng Zhao (CZ), former CEO and co-founder of Binance, shared his thoughts on the debate in the blockchain world—should new AI projects build their own Layer 1 (L1) or use an existing Layer 2 (L2) solution?
He notes that if an AI project’s core focus is to leverage blockchain for AI economics rather than to innovate on the blockchain protocol itself, then building on an L2 can be a more practical choice.
CZ: Layer 2s Offer Practicality for AI Crypto
This means they can benefit from the reliability and security of an established L1 without having to deal with keeping it running. By using what’s already there, these projects can get their solutions out faster and connect with the active ecosystem already on platforms like Ethereum.
While the debate isn’t new, it’s still interesting to hear the thoughts of one of the most influential people in the crypto world. What’s more, it looks like the recent market trends have highlighted a shift that might provide additional insights.
For instance, many new projects, especially in sectors like AI, are finding that they do not need the full sovereignty of an L1. Instead, leveraging an L2 can provide the necessary scalability and security with significantly lower costs.
Layer 1 vs. Layer 2: Key Differences Explained
An L1 is the base blockchain, such as Bitcoin, Ethereum, and Solana. Building it gives a project full control over its protocol, consensus mechanism, and network settings. This can be appealing because it represents true decentralization and complete ownership of the blockchain’s design.
On the other hand, L2 solutions (like rollups or sidechains) operate on top of an established L1. They provide additional scalability and functionality while depending on the security and ecosystem of the L1 they are built on.
One of the main differences is that creating and maintaining an L1 is a massive undertaking—one that requires setting up and securing a network of nodes and validators. On the other hand, using an L2 means a project can skip the large amount of work of building a new blockchain. As a result, L2 projects can tap into existing decentralized exchanges (DEXs), perpetual markets (perps), developer tools, and a broader community that is already active on the L1.
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