Venture Capital companies remain critical to the development of infrastructure in the Bitcoin ecosystem, despite pushing from some of the community, according to builders speaking at the token2049 conference in Dubai.
Charlie Yechuan Hu, CEO of the Bitcoin Layer-2 Protocol Bitlayer, shared his views with venture capital (VC) companies with Bitcoin (Btc) ecosystem.
Hu told Cointelegraph that he looked at many VC companies in the space positive, as they offered support to early adventures that needed capital to generate infrastructure.
“You need developers, you need to open the entire ecosystem foundation, all,” Hu said. “You have to pay for the cloud, like AWS or RPC, all that, servers (…) so, we have to have VC.”
Hu argued against the usual Bitcoiner ethos arguing against the outsider of the capital, saying, “It’s hard to say, okay, let’s make a fair mint, and then have a very successful, healthy wealth, and you have to pay for everything.”
“It didn’t work that way,” he said.
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Lightning-Only Stance Sparks Debate
Not everyone agrees. Mike Jarmuz, a partner in Bitcoin Venture Capital Firm Lightning Ventures partner, told Cointelegraph that Lightning was the only L2 invested in his company and interested.
He said, “anything with a ‘token’ that gives ‘staking’ and earns some absurd apy interest in your bitcoin should be avoided.”
Jarmuz said that Lightning NetworkOn the other hand, Bitcoin transactions grow quickly and make instant, almost free and measured. Bitcoins visuals Data It is shown that the Lightning Network has a combined capacity on all channels equal to about $ 452 million at the time of writing. He added:
“There is no ‘token’ when using Lightning Network. It’s Bitcoin. That’s me the only real L2, at least for now.”
Jarmuz said projects that do not meet his criteria are “masquerading as useful” while doing nothing for Bitcoin. He claimed that Sidechain Like liquid networks and newer protocols such as e-cash and federations or ark “are not widely used” but “is at least interesting.”
He acknowledged that those “not involved in a staked token, promising harvest,” along with projects with those features, “just waiting for the pulling and rug issues.”
“We didn’t invest in that place,” he added.
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VCs seen as Bitcoin’s enabled enablers
According to the HU, VCs carry liquidity, resources and experiences at new startups while opening “all institutional ideas and connections.” He said the important additions to Bitlayer’s resources were as well, to note that “we would not have been if those people were not invested in us.”
He also argued that the VCs tend to restore long-term infrastructure efforts instead of imaginary projects such as memecoins or unimaginable tokens.
That experience was pronounced by Walter Maffione, lead engineer on the Lightning Network-based decentralized exchange (Dex) Kaleidoswap, who told the cointelegraph that Protocol began as an open-source project and raised a pre-seed investment from Fulgur ventures and Bitfinex ventures.
“Those funds were used to pay open sources of developers and accelerate protocol development, not to develop a token or obtain management rights,” he said.
The HU has admitted that the VCS has contributed significantly to the development of layer-2 scalability solutions, purses, bitcoin lending and staking protocols. He added:
“All of these are supported by VC, including us. And some of them are listed in the top exchanges.”
Vikash Singh, principal at the Bitcoin VC firm Stillmark, told the cointelegraph that when selecting Bitcoin Layer-2 protocols to invest, they considering the displayed security and stability, proliferation and adoption of cases that are not defining and the growth of the application. Like Jarmuz, he said Stillmark believes that proof-of-work is the better agreement model.
However, unlike Jarmuz, Singh said the proof-of-stake or byzantine fault-tolerant consensus “may be suitable for bitcoin sidechain and rollups.”
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