Binance’s CZ Sparks Debate: Should AI Projects Be Built on Layer 1 or Layer 2 Blockchains?

Binance’s CZ Sparks Debate: Should AI Projects Be Built on Layer 1 or Layer 2 Blockchains?

The broader discussion aligns with industry trends, where AI and blockchain convergence is becoming a focal point for developers and investors alike.

Where Should AI Live? CZ Fuels L1 vs. L2 Discussion

In a recent post on X (Twitter), CZ highlighted that the core purpose of such projects is not to develop a superior blockchain. Instead, it is to use blockchain technology to support AI economics.

He noted that while L1 provides greater sovereignty and decentralization, it also demands more effort in maintaining nodes and validators. In contrast, L2 networks offer convenience by leveraging existing ecosystems like Ethereum’s decentralized exchanges (DEXs), perpetual contracts, and tools without significant value leakage to the base layer.

“L1 vs L2…Does it matter if a new AI project is an L1 or an L2?… Is L1 cooler than L2 or the reverse? Old topic, but wondering if sentiment has changed or not,” CZ posed, welcoming conversation.

Crypto analyst Hitesh Malviya argues that L1 blockchain is the superior choice. The analyst advocates this network for projects seeking to establish their own consensus mechanisms, optimize performance, and reduce validator costs.

However, he also warns that despite extensive fundraising and user acquisition efforts, many L1 projects still experience retention drops of 70-90% after token generation events (TGE).

“…even if you retain users, you would only see one category or niche capturing the maximum traction onchain. So if the destination is already known—retention drop, higher user acquisition costs, and niche-specific demand capture—then why not build an app chain using an L2 stack,” Hitesh suggested.

Given these challenges, he suggests that building an AI-focused blockchain as an L2 app chain is a more practical approach. This would allow for faster development, marketing, and scalability.

Meanwhile, Walter from the BNB Chain Business Development team supports L2. He emphasized its accessibility to existing tools and infrastructure. His comment also hints at speculation regarding CZ’s possible attendance at an upcoming Crypto Summit at the White House.

AI & Blockchain: The Layer 1, Layer 2, and Layer 3 Debate

Investor and blockchain advisor Anndy Lian adds another dimension to the debate. In a subsequent comment on X, he argued that AI is most effectively deployed at Layer-3 (L3). He explains that while implementing AI on L1 is theoretically possible, it is impractical due to security and resource constraints.

“AI can be implemented on blockchain Layers 1, 2, or 3… In practice, Layer 3 is where AI is most effectively and frequently utilized, leveraging the blockchain’s strengths while accommodating AI’s computational needs,” Lian explained.

On L2, the blockchain advisor noted that AI can optimize scalability. However, AI is most frequently utilized in L3, enabling a diverse range of AI-powered applications while leveraging blockchain’s strengths.

Meanwhile, CZ discusses AI’s placement in the blockchain ecosystem amid growing interest in AI-integrated L2 networks. In June 2024, Binance Labs (now YZI Labs) invested in Zircuit, an AI-enhanced L2 network that utilizes zero-knowledge rollups to improve security.

This investment signals Binance’s strategic focus on AI-blockchain integration, potentially influencing CZ’s latest inquiry.

Ethereum co-founder Vitalik Buterin has also been actively discussing L1 and L2 scaling solutions. Last month, Buterin outlined a roadmap for scaling Ethereum’s L1 and L2 protocols in 2025. However, he also recently cautioned that certain L2 networks will likely fail due to weak economic models and poor execution.

These statements further fuel the debate on whether AI projects should build their sovereign chains or integrate with existing ecosystems.

Nevertheless, CZ’s timing in raising this question may suggest he is gauging market sentiment for a new AI blockchain initiative. Given Binance’s investment in AI-driven L2 solutions and the increasing interest in modular blockchain architectures, he could be testing the waters for future ventures.

The trade-offs between sovereignty, scalability, and accessibility will shape the future of AI-blockchain integration. This could make it essential for developers and investors to weigh their options carefully.

 

 

Source: https://beincrypto.com/ai-layer1-vs-layer2-cz-debate/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Kaito AI airdrop sparks tokenomics, early selling concerns

Kaito AI airdrop sparks tokenomics, early selling concerns

Kaito AI, a crypto intelligence platform, has allocated nearly 20% of its token supply to future airdrops and incentives, fueling enthusiasm among early adopters while raising concerns over tokenomics.

The platform, which brands itself as the “ultimate Web3 information platform,” is preparing for its first airdrop, allocating 10% of its total token supply to its early community members and ecosystem participants.

“For the Initial Community and Ecosystem Claim – 10%. This allocation includes the initial Kaito Yapper community, Genesis NFT holders, and ecosystem yappers and partners,” Kaito AI wrote in a Feb. 20 X post.

According to the platform, 56.6% of the total supply will be distributed to the community and ecosystem, with 19.5% specifically designated for initial and long-term airdrops and incentives.

The platform is introducing new dynamics for the crypto marketing industry, according to Marcin Kazmierczak, co-founder and chief operating officer of RedStone, a blockchain oracle solution firm.

“Currently, I do not know a single serious marketer that wouldn’t use Kaito stack,” he told Cointelegraph, adding:

“Kaito has changed the way crypto marketing operates. Previously, it was mainly about views and impressions, however, Kaito introduced a new metric, Smart Followers. It allows one to measure how many respected or active crypto accounts interacted with or followed a specific account.”

Despite the platform’s innovation, some analysts have expressed concerns over its tokenomics, particularly regarding the allocation to insiders, which could create selling pressure after the airdrop.

Kaito tokenomics spark allocation, selling concerns

Similar events are often riddled with airdrop squatters, or professional airdrop hunters, who farm protocols with an incoming airdrop in hopes of financial gain. In 2023, the Arbitrum (ARB) airdrop saw airdrop hunters consolidate $3.3 million worth of tokens.

Kazmierczak said Kaito’s airdrop structure is designed to prevent farming.

“Today’s airdrop allocation will be defined by the number of Yaps collected, which were very hard to bot, and Kaito genesis NFTs held at the snapshot.”

Still, onchain analysts have pointed out that a significant portion of the token supply is allocated to insiders. According to onchain investigator RunnerXBT, 43.3% of Kaito’s total supply is designated for insiders, including 35% for the team and 8.3% for early investors.

Cointelegraph has reached out to Kaito for comment but did not receive a reply by the time of publication.

Some analysts have also warned of a potential sell-off following the airdrop, particularly given the current market downturn.

Anndy Lian, an intergovernmental blockchain expert and author, suggested that Kaito’s token could follow a familiar pattern of hype-driven spikes followed by sharp declines:

“As for Kaito itself, I see a classic pattern: big hype, big spike, then a massive sell-off. Even if [the initial supply] is vested (which seems likely with allocations for liquidity and early backers), a lot of folks — especially those who farmed points just before with hyped airdrops: starts high, ends low.”

Crypto investor interest in airdrops saw an uptick on Jan. 15, after the total value of the Hyperliquid (HYPE) token airdrop soared to $7.5 billion, Cointelegraph reported.

 

 

Source: https://www.tradingview.com/news/cointelegraph:358b8509b094b:0-kaito-ai-airdrop-sparks-tokenomics-early-selling-concerns/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j

Kaito AI airdrop sparks tokenomics, early selling concerns

Kaito AI airdrop sparks tokenomics, early selling concerns

Kaito AI, a crypto intelligence platform, has allocated nearly 20% of its token supply to future airdrops and incentives, fueling enthusiasm among early adopters while raising concerns over tokenomics.

The platform, which brands itself as the “ultimate Web3 information platform,” is preparing for its first airdrop, allocating 10% of its total token supply to its early community members and ecosystem participants.

“For the Initial Community and Ecosystem Claim – 10%. This allocation includes the initial Kaito Yapper community, Genesis NFT holders, and ecosystem yappers and partners,” Kaito AI wrote in a Feb. 20 X post.

According to the platform, 56.6% of the total supply will be distributed to the community and ecosystem, with 19.5% specifically designated for initial and long-term airdrops and incentives.

The platform is introducing new dynamics for the crypto marketing industry, according to Marcin Kazmierczak, co-founder and chief operating officer of RedStone, a blockchain oracle solution firm.

“Currently, I do not know a single serious marketer that wouldn’t use Kaito stack,” he told Cointelegraph, adding:

“Kaito has changed the way crypto marketing operates. Previously, it was mainly about views and impressions, however, Kaito introduced a new metric, Smart Followers. It allows one to measure how many respected or active crypto accounts interacted with or followed a specific account.”

Despite the platform’s innovation, some analysts have expressed concerns over its tokenomics, particularly regarding the allocation to insiders, which could create selling pressure after the airdrop.

Kaito tokenomics spark allocation, selling concerns

Similar events are often riddled with airdrop squatters, or professional airdrop hunters, who farm protocols with an incoming airdrop in hopes of financial gain. In 2023, the Arbitrum airdrop saw airdrop hunters consolidate $3.3 million worth of tokens.

Kazmierczak said Kaito’s airdrop structure is designed to prevent farming.

“Today’s airdrop allocation will be defined by the number of Yaps collected, which were very hard to bot, and Kaito genesis NFTs held at the snapshot.”

Still, onchain analysts have pointed out that a significant portion of the token supply is allocated to insiders. According to onchain investigator RunnerXBT, 43.3% of Kaito’s total supply is designated for insiders, including 35% for the team and 8.3% for early investors.

Cointelegraph has reached out to Kaito for comment but did not receive a reply by the time of publication.

Some analysts have also warned of a potential sell-off following the airdrop, particularly given the current market downturn.

Anndy Lian, an intergovernmental blockchain expert and author, suggested that Kaito’s token could follow a familiar pattern of hype-driven spikes followed by sharp declines:

“As for Kaito itself, I see a classic pattern: big hype, big spike, then a massive sell-off. Even if [the initial supply] is vested (which seems likely with allocations for liquidity and early backers), a lot of folks — especially those who farmed points just before with hyped airdrops: starts high, ends low.”

Crypto investor interest in airdrops saw an uptick on Jan. 15, after the total value of the Hyperliquid (HYPE) token airdrop soared to $7.5 billion, Cointelegraph reported.

 

Source: https://cointelegraph.com/news/kaito-ai-airdrop-tokenomics-concerns

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j