Evaluating the Cosmos Chain vs L2 Decision for Investors and Builders

dYdX recently announced they are leaving the Ethereum Layer-2 (L2) ecosystem to launch their own Cosmos chain. This decision prompted many investors and builders to reconsider the tradeoffs between these two ecosystems. L2s inherit the massive security budget of Ethereum at almost no cost. The trade-offs are less flexibility for builders, along with a broad set of additional constraints, many of which will likely ease over time. Cosmos allows builders more flexibility in creating their chain while also allowing them the potential for value accrual for their own native token. The stark downsides are the cost and risks of maintaining a standalone set of validators and attracting users to the new ecosystem. The implications for how builders evaluate these two ecosystems have important investment implications for Ether, Atom, and the underlying protocols on each ecosystem.