Optimism Co-Founders: What Happened to the L2s? Ben Jones & Karl Floersch

**Jason Yanowitz** (0:00)
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All right, gents, I'm excited about this. We have Karl, Ben, two of the three co-families of optimism. What am I supposed to say?

**Karl Floersch** (0:35)
A little bit of both.

**Jason Yanowitz** (0:36)
A little bit of both. How are we doing?

**Karl Floersch** (0:39)
Great. We're doing great.

**Jason Yanowitz** (0:40)
Very excited to be here. I was going to say, you're in the office, your vibes are surprisingly high.

**Ben Jones** (0:45)
We named our company for good reason. You know what I'm saying?

**Jason Yanowitz** (0:48)
I'm always the optimist. Actually, someone messaged me the other day on Telegram. They said, do you really not understand what's going on in the market? Why your tweet is so optimistic? It's very annoying.

**Karl Floersch** (1:01)
Sorry, unapologetic.

**Jason Yanowitz** (1:02)
Calm it down, guys.
We're at a 10 We got to bring it way down. I actually thought we could start on maybe a more depressing note and then we can bring it up, which is, there's been this like, I don't know if this is, I mean, I mean, this is the most respectful way. There's been a reckoning of the L2s, I guess I would call it. I'd love to hear you guys maybe just walk through like what happened here, right? Like, I feel like if you go back to maybe 22, maybe 21, 22, like L2s were like the hottest thing in all of crypto, you know, 5 billion, $10 billion valuations. And now things have been, you know, then, you know, Solana got hot, now it's hyperliquid. Now it's maybe like back to the ETHL1. So I'd love to just maybe hear like, and then we'll take the audience out of it. We'll do the rebirth, obviously, but walk me through the last couple of years and like how you guys think about what happened to the L2s.

**Karl Floersch** (1:57)
Yeah, I mean, I think in short, it's hype meets reality, or crypto goes from being speculative, blue sky, we're gonna conquer it all to actually trying to deliver on its value to end users. And it turns out that delivering on value to end users requires real product development, actually knowing what value you're going to give and generate for your users, and actually providing a good and cohesive product. And let me tell you, if you've been in the crypto space, you know that that is a serious shortcoming of many of those chains or hype projects that really have not weathered the storm because they don't have those fundamentals. And when you don't have fundamentals, the floor can fall out from under you.

**Jason Yanowitz** (2:46)
Yeah. What do you think, Ben?

**Ben Jones** (2:47)
Yeah, I think like, yeah, I super agree. I think like one way to frame this in many ways is like, crypto has lost the ability to not hold itself accountable to the crazy shit that it does, you know what I mean? And like, there's one framing of this that's very like, what the heck were you doing? And the other hand, it's like, we finally reached a point where people outside of our little bubble were taking us seriously.
And it's like, not surprised that you would have a little bit of deflating as you entered the real world of like, not just like meme coin farms, circular dependency, virality, and actually have real businesses that are considering using real products. So at the end of the day, we came a long way with our industry with some of those vibes, and it got us to where we were, but to take it to the next level, you need a little bit of a reset and professionalize.

**Jason Yanowitz** (3:39)
Yeah, button up that last button.

**Ben Jones** (3:40)
Yeah, look at this guy.

**Jason Yanowitz** (3:42)
Zip it up, Karl.
What do you think, and we'll talk generally about L2s, and then we'll take it into optimism. What do you think that L2s got right, and what do you think that L2s got wrong?

**Karl Floersch** (3:53)
Yeah, great question. I think fundamentally L2s got the delivery vehicle to providing a good product correct. When you are building an L2, you are extending the capabilities of the L1, and then being able to differentiate your block space to actually deliver a good product to your users. You are focusing on the correct thing, because the correct thing is differentiated products that your users want, and not reinventing the wheel of yet another validator set, hype cycle, you know, buy my token, because that is ultimately unsustainable, even if it is wildly successful in the short term. What I think L2s got wrong is, it turns out that you need to differentiate your block space. You can't just launch a chain, launch a token, and then throw up your hands when nothing happens. Because it turns out to deliver a good chain, you need to deliver a good product. And ultimately, a lot of the hype cycle wasn't doing that.