Venture capital firms remain critical to infrastructure development in the Bitcoin ecosystem, despite pushback from some in the community, according to builders speaking at the Token2049 conference in Dubai.<\/p>\n
Charlie Yechuan Hu, CEO of Bitcoin layer-2 protocol Bitlayer, shared his insights on venture capital (VC) firms in the Bitcoin (BTC<\/a>) ecosystem.<\/p>\n Hu told Cointelegraph that he views many VC firms in the space positively, as they offer support to early ventures that need capital to build infrastructure.<\/p>\n \u201cYou need developers, you need to open up the whole ecosystem foundation, everything,\u201d Hu said. \u201cYou need to pay for the cloud, like AWS or RPCs, all that, servers [\u2026] So, we have to have VC on that.\u201c<\/p>\n Hu argued against the usual Bitcoiner ethos that argues against outsider capital, saying, \u201cIt\u2019s difficult to say, okay, let\u2019s do a fair mint, and then have a very successful, healthy treasury, and you have to pay all this stuff.\u201d<\/p>\n \u201cIt doesn\u2019t work that way,\u201d he said.<\/p>\n Related: <\/strong><\/em>StarkWare researchers propose smart contracts for Bitcoin with ColliderVM<\/strong><\/em><\/a><\/p>\n Not everyone agrees. Mike Jarmuz, a managing partner at Bitcoin venture capital firm Lightning Ventures, told Cointelegraph that Lightning is the only L2 his company has invested in and is interested in. <\/p>\n He said, \u201cAnything with a \u2018token\u2019 that allows for \u2018staking\u2019 and earning some absurd APY interest on your Bitcoin should be avoided.\u201d<\/p>\n Jarmuz said that Lightning Network<\/a>, on the other hand, is growing very quickly and makes Bitcoin transactions instant, nearly free and scalable. Bitcoin Visuals data<\/a> shows that the Lightning Network has a cumulative capacity across all channels equivalent to almost $452 million at the time of writing. He added:<\/p>\n \u201cThere is no \u2018token\u2019 when using the Lightning network. It\u2019s Bitcoin. That to me is the only real L2, at least as of right now.\u201cLightning Network capacity chart. Source: <\/em>Bitcoin Visuals<\/em><\/a><\/p>\n Jarmuz said that projects not meeting his criteria are \u201cmasquerading as useful\u201d while doing nothing for Bitcoin. He claimed that sidechains<\/a> like the Liquid Network and newer protocols such as e-cash and federations or Ark \u201care not widely used\u201d but \u201care at least interesting.\u201d <\/p>\n He recognized that those \u201cdo not involve a staked token, promising yield,\u201d with projects that have those features, \u201cjust waiting for rug pulls and issues.\u201d<\/p>\n \u201cWe don\u2019t invest in that area,\u201c he added.<\/p>\nLightning-only stance sparks debate<\/h2>\n