Binance Founder CZ Sparks Debate on AI Blockchain Layer Choices as Stocks Fluctuate
1min read Binance founder Changpeng Zhao, also known as cz, has sparked a significant debate within the crypto community regarding the optimal structural frameworks for AI-driven blockchain projects. The discussion centers around whether AI projects should be developed on Layer 1 (L1) or Layer 2 (L2) blockchain solutions, with industry analysts weighing in on the pros and cons of each approach.
CZ's recent post on X (Twitter) questioned the necessity of developing new AI projects on a sovereign Layer 1 chain or opting for a Layer 2 solution. He highlighted that the primary objective should be to utilize blockchain technology to facilitate AI-based economics rather than focusing solely on blockchain superiority. CZ argued that while L1 networks offer greater decentralization and control, they come with the operational burden of maintaining validators and full nodes. In contrast, L2 solutions, such as those based on Ethereum, provide a more streamlined approach by leveraging existing infrastructure while preserving much of the value at the base layer.
Hitesh Malviya, a recognized crypto analyst, underscored the potential benefits of L1 chains but emphasized the challenges of user retention associated with them. He suggested that L1 solutions are best suited for projects requiring unique consensus mechanisms to enhance performance and lower validator costs. However, he noted that many L1 solutions face significant user retention declines post-launch, with drops between 70% and 90% following Token Generation Events (TGE). Malviya posed the question of why not adopt an L2 stack for new AI-based applications, suggesting that L2 frameworks might offer a more pragmatic approach to growth and scalability.
Blockchain advisor Anndy Lian brought another dimension to the discussion by advocating for deployment at Layer 3 (L3). He explained that while deploying AI on L1 is theoretically possible, applying it more practically necessitates a shift towards L3 to circumvent security vulnerabilities while accommodating the extensive computational requirements of AI technologies. Lian articulated that AI application on blockchain can span L1, L2, or L3, but L3 frequently supports AI’s demands best by leveraging blockchain advantages.
CZ's discussions coincide with Binance's strategic investment in Zircuit, an innovative L2 network utilizing zero-knowledge rollups tailored for enhanced security in AI applications. This investment highlights Binance's commitment to integrating AI and blockchain technologies and may inform CZ's inquiries regarding the future developments in AI-driven chains. 