Opinions on Investing in the Ethereum "Layer 2 Scaling" Project

In a recent Q&A, many readers asked about investing in Layer 2 scaling. I wrote about the investment in the expansion of the second layer in the article in March. This time I will share this experience with you in more detail.

First of all, let me explain to you that the "second-layer extension" I am talking about here is in a broad sense. It includes what the industry calls second-layer extensions, side chains, and public chains that support the Ethereum Virtual Machine. Square load items.

My first interest in second-tier expansion projects was in 2019.

At that time, the overall environment of the market was still a big bear market. However, in the bear market, Binance has successfully launched a wave of IEO boom. In this wave of IEO boom, many coins have increased by 5 times or even 10 times as soon as they are listed on Binance. I also wrote many articles about these coins that had such an increase as soon as they went online. I thought their increase bubble was too big. Even if the project itself is good, the risk is too high to buy at that price, so I don’t recommend you to rush into it. , but suggest that everyone observe first, and wait until their prices are low before buying the coins you like.

Two of these coins caught my attention, one is Celer, and the other is Matic (that is, Polygon today), because these two projects were rare among the many projects that were launched at that time. Workshop specific problem items. What problem do they solve for Ethereum? It is the problem of expanding performance and reducing transaction fees.

But at that time, the public in the circle had the following doubts about the performance and transaction fees of Ethereum:

1. The price of Ethereum back then was less than US$300, so the handling fee was negligible, and everyone felt no pain.

2. At that time, Ethereum did not have such a huge ecological DeFi application as it does today. At that time, there was almost only one thing that everyone used Ethereum: transfer. Even if such a simple application has performance problems and handling fee problems, it should be acceptable to bear it, because this is not a high-frequency application.

3. At that time, people were still full of expectations for the killer of Ethereum, especially EOS, and believed that even if Ethereum had performance and transaction fee problems in the future, EOS could solve them.

4. Even if it is necessary to solve the problems of Ethereum performance and transaction fees, V God also proposed Ethereum 2.0 at that time, which is the ultimate solution to these problems.

So combining the above reasons, many people can hardly see why projects like Celer and Matic are needed to solve the problem of Ethereum transaction fees and performance. Think the demand for such projects is just hype.

So how did I look at these issues at the time?

First of all, I am not optimistic about EOS at all, the reason I have repeatedly written in the article, I think this kind of centralized blockchain public chain has no future, let alone other so-called Ethereum killers. This thought made me rule out point 3.

Then, I firmly believe that Ethereum must be the king of the public chain in the future, and it will definitely give birth to an application ecology that we could not imagine in that era, so its future will definitely be congested again, and there will be unattainable handling fees and The performance will be so low that the public can't bear it. This thought made me rule out point 2.

Furthermore, I firmly believe that after the bear market, the price of Ethereum will definitely not exceed $300, and will rise to an unimaginable high. Therefore, when the price of Ethereum rises, the problem of handling fees will definitely become prominent (but frankly speaking, I At that time, it was completely unexpected that it would rise to today's price two years later). This thought made me rule out point 1.

The above three ideas were actually not supported by obvious data at that time, but why did I have such an idea? I have to say, this comes from faith.

Some people say that "the currency circle has no faith", I believe there are still people who have faith, and at critical moments, whether there is faith will play a decisive role, it allows people to see through the fog and see the future.

Among the four questions, only the fourth point was irrefutable to me at the time. But I have a vague feeling that there will be such a situation: before the launch of Ethereum 2.0, the ecology of Ethereum will explode? But the idea seemed absurd and unbelievable at the time. In a bear market, when everyone is hopeless, if you talk about a bright future, most people will think you are either crazy or stupid.

In addition, I am not sure: I am not sure when the bull market will come, I am not sure when Ethereum will develop a huge application ecology, and I am not sure whether such projects will come in handy before Ethereum 2.0 goes online. More importantly, I am not sure whether such projects can survive the difficult bear market.

All these uncertainties made me not vote for these two projects immediately, but I remembered them deeply.