Bitcoin Layer 2 Foundations: Why Holding Bitcoin in Treasuries Makes Sense
Bitcoin Layer 2 foundations are at a pivotal moment in their development. With the rise of Layer 2 solutions bringing new functionalities to the Bitcoin network, it’s time for these foundations to rethink their treasury management strategies. One key idea that has been gaining traction is the notion that Bitcoin Layer 2 foundations should start holding bitcoin in their treasuries. This concept has been championed by industry experts and thought leaders, and for good reason.
Historically, bitcoin has been viewed as a “digital rock”—a reliable store of value but lacking in utility beyond that. However, with the emergence of Layer 2 solutions, bitcoin is evolving into a “programmable rock,” with added functionalities like smart contracts and scaling solutions. This increased versatility opens up a world of possibilities for the Bitcoin ecosystem.
One major issue that many Bitcoin Layer 2 foundations face is the management of their treasury funds. Traditionally, these foundations raise funds from venture capitalists and investors, with much of that capital being held in fiat currencies like USD. However, holding fiat comes with its own set of challenges, namely the erosion of value due to inflation. On the other hand, bitcoin has shown impressive growth rates, with a Compound Annual Growth Rate (CAGR) of around 70%. By holding bitcoin in their treasuries, these foundations could see their resources grow significantly over time, providing them with a competitive edge in the market.
Of course, the volatility of bitcoin is a concern for many, which is why it’s important for these foundations to strike a balance between stability and growth. One proposed strategy is to keep a portion of the treasury in fiat to cover short-term needs, while allocating the rest to bitcoin for long-term growth. This approach has the potential to double or even triple the runway of these foundations, giving them the time and resources they need to thrive.
There are precedents for this strategy, with projects like EOS allocating a significant portion of their funds to bitcoin in the past. Despite the volatility of the cryptocurrency market, holding bitcoin has proven to be a wise investment for many projects. By following suit, Bitcoin Layer 2 foundations can position themselves for long-term success and sustainability.
In conclusion, holding bitcoin in their treasuries is not just a smart move for Bitcoin Layer 2 foundations—it’s the move. With the potential for significant growth and increased resources, embracing bitcoin as a store of value can help these foundations achieve their goals and build a thriving ecosystem. As the industry continues to evolve, it’s essential for foundations to adapt their strategies to ensure long-term success.
Disclaimer: This article reflects the author’s opinions and does not necessarily represent the views of BTC Inc or Bitcoin Magazine.