Andre Cronje pointed out that application chains (Layer 2) have underestimated the costs of infrastructure and compliance, having already spent 14 million USD by 2024, a significant portion of which are recurring costs.
Original author: James, BlockTempo. Since pioneers like Arbitrum and Optimism began building Layer 2 networks on Ethereum a few years ago to support faster and cheaper transaction experiences, Layer 2 networks have been emerging rapidly. According to L2Beat data, there are currently 73 operational Layer 2s, 20 Layer 3s, along with 81 upcoming projects and 12 archived projects. However, Andre Cronje, the director of the Fantom Foundation and CTO of Sonic Labs, today tweeted against L2s, stating that L2s as application chains are illogical for developers and listed several reasons: there is almost no infrastructure (stablecoins, oracles, institutional custody, etc.) during deployment, no foundation or lab providing support, centralized architecture is vulnerable, liquidity is dispersed and forced through cross-chain bridges, there are no user and developer communities spending time addressing these issues instead of focusing on applications and users, network effects are diminished, transaction confirmation times are still long (some providers are reluctant to cooperate), and development is done in isolation (without collaborative teams). Andre Cronje also stated that application chains severely underestimate the costs of infrastructure and compliance (including browsers, hosts, trading platforms, oracles, bridges, toolkits, integrated development environments, deposits and withdrawals, native issuance and integration, regulation, and compliance). Just in 2024, application chains have already incurred expenditures of 14 million USD, a large part of which is recurring costs. In response to Andre Cronje's comments, developers have expressed varied opinions. Some developers agreed, stating "100% agree, it's meaningless to build products on an application chain without support and assistance from a foundation," and "given such high expenses, I'm curious why there are more L2s being launched, it requires a large volume of transactions to be profitable." However, some developers disagreed, with one stating that while the available infrastructure for standardized L2s is limited, stronger composability between L2s (and even L1s) completely eliminates the need for local stablecoins, oracles, and institutional custody, and few understand the framework shift. This developer also disagreed with many of Andre Cronje's arguments, emphasizing that L2 application chains are indeed decentralized and secure. He acknowledged that the infrastructure costs of application chains may be higher than those of simple applications but firmly believes that as competition for service demand intensifies, many infrastructure costs will trend toward zero. Andre Cronje advocates for Sonic. In Andre Cronje's view, Layer 1 should focus on enhancing its scalability through technology rather than continuously creating Layer 2s that generate problems. He is currently leading the design and development of the Layer 1 blockchain Sonic (formerly Fantom) with full effort. The Fantom Foundation first disclosed last October that it would launch Sonic, aiming to improve scalability and efficiency. In early September this year, the Sonic testnet officially went live, and Andre Cronje announced on September 25 that the Sonic mainnet would officially launch this December, inviting developers to build applications within its ecosystem. He also mentioned that Sonic introduces a credit scoring mechanism, which has the potential to unlock an 11.3 trillion USD market (the global unsecured loan market size). Andre Cronje had previously heavily promoted the performance of his Sonic network, including that up to 90% of transaction fees would be returned to developers, transaction throughput (TPS) exceeding 10,000 per second, transaction finality (TTF) of about 1 second, supporting native stablecoins, and, in bridging with Ethereum, is committed to developing new native bridging technology for Sonic Gateway to significantly enhance the security and convenience of transferring assets from other chains.