Bankless

The Trillion Dollar L2 Opportunity | Part Two

10 snips
May 5, 2022
Discover the transformative potential of Layer 2 (L2) solutions in the crypto landscape. Learn how these innovations can fund public goods, revolutionizing support for essential resources. Explore the concept of Maximum Extractable Value (MEV) and its impact on revenue generation versus community investment. Dive into retroactive public goods funding and its implications for prioritizing societal projects. Hear about decentralized governance and how community engagement shapes decision-making, paving the way for new opportunities in L2 ecosystems.
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INSIGHT

L1 vs. L2 Public Goods Funding

  • Funding public goods with block rewards at Layer 1 risks corruption.
  • Layer 2s can experiment with public goods funding without corrupting the base layer.
INSIGHT

MEV as Public Goods Funding

  • Layer 2s can fund public goods via MEV (Maximal Extractable Value), a tax on arbitrage and liquidations.
  • Good MEV improves market efficiency; bad MEV can be exploitative.
INSIGHT

Blockchain Tax Types

  • Blockchains use three tax types: block rewards (issuance), excise taxes (gas fees), and MEV (tax on bots).
  • Layer 2s mainly rely on MEV for public goods funding, not block rewards or gas fees.
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