Changpeng Zhao, the founder of Binance, has recently offered some valuable thoughts for AI projects considering the move into the blockchain space. In a post on X (formerly Twitter) this week, CZ delved into how AI projects can utilize Layer 1 (L1) and Layer 2 (L2) blockchain solutions in distinct ways. He pointed out the key difference: L1 offers more control, while L2 prioritizes efficiency—a long-standing discussion point in the crypto world.

Binance’s CZ Highlights How L1 and L2 Can Shape AI Projects

In his X post from March 6th, CZ posed a thought-provoking question: “Does it actually matter if a new AI project chooses to build on an L1 or L2 blockchain?” The Binance head honcho clarified that for AI ventures, the real aim is to use blockchain to improve AI economics, not necessarily to overhaul blockchain tech itself.

L1 vs L2 Breakdown: Key Takeaways

“Going with your own L1 gives you a stronger sense of control and more decentralization,” CZ explained. However, he also noted that this route demands significantly more work on things like nodes and validators, translating to greater computing power and financial investment.

On the flip side, CZ pointed out that using an L2 effectively “eliminates all that work.” This implies L2s help sidestep the heavy computational and financial burdens associated with L1s. Furthermore, he highlighted the user benefits of L2s, like access to decentralized exchanges (DEXs), perpetual futures trading, and other established DeFi tools.

CZ wrapped up his thoughts with a playful question: “Is L1 still considered ‘cooler’ than L2, or has the tide turned? It’s an old debate, but I’m curious if opinions have shifted.” This sparked a fresh wave of discussions across the crypto community.

CZ’s Advice for Navigating Market Dips

Switching gears, Changpeng Zhao also shared some investment advice in light of recent market volatility.

Interestingly, instead of just offering reassurance, CZ advised investors to scale back their investment amounts if the market downturns were causing them anxiety. He reminded everyone that “dips are a normal part of free markets,” and put the recent volatility into perspective.

To give some background, February saw a significant downturn in the crypto market, largely due to wider economic pressures and liquidity challenges. However, as March began, Bitcoin and altcoin prices began to bounce back, coinciding with news around Donald Trump’s crypto stances and potential crypto summits in the US. Traders and investors are closely watching these developments, and CZ’s commentary continues to generate significant buzz throughout the crypto sphere.