Vitalik has finally admitted to Ethereum's major strategic mistake. Are you still holding your position?

Author: Gu Yu, ChainCatcher

After the price of ETH hit a new low since May of last year, Ethereum founder Vitalik Buterin published a lengthy article today reflecting on the long-standing core Layer 2 strategy of Ethereum, planning to increase investment in Layer 1, which is expected to have a sensational impact on the entire crypto industry.

The initially Rollup-centric roadmap defined Layer 2 as Ethereum-supported shards that provide trustless block space. In this article, Vitalik seems to have abandoned the "Rollup-centric" scaling model he previously advocated, pointing out that the decentralization speed of Layer 2 is "far slower than expected" while scaling at the Ethereum base layer, and many Layer 2 solutions are unable or unwilling to meet the trust guarantees required for true sharding.

"These two facts, for whatever reason, mean that the original vision of Layer 2 and its role in Ethereum are no longer meaningful, and we need a new path," Vitalik said. From an external perspective, these statements imply that Vitalik acknowledges the Layer 2 narrative is almost outdated, with more focus in the future shifting to scaling Layer 1 itself.

Since the proposal of Layer 2, it has become one of the most sought-after concepts in the crypto industry, with nearly a hundred Layer 2 solutions such as Polygon, Arbitrum, and Optimism emerging, raising over $3 billion in total funding, playing a key role in scaling Ethereum and reducing user transaction costs, with several tokens having a long-term FDV exceeding $10 billion.

However, under the strong competition from Solana's high-performance blockchain, the performance advantages of Layer 2 have not been fully realized, and the industry influence of its ecological projects has gradually declined. Currently, only the Base ecosystem remains active at the forefront of the crypto industry, representing Ethereum Layer 2.

Mainly published Layer 2 token market value and financing data Source: RootData

In addition, Layer 2 outages continue to occur frequently. On January 11 of this year, Starknet experienced another outage after years of operation, with post-incident reports indicating that a state conflict between the execution layer and the proof layer led to about 18 minutes of on-chain activity rollback. Last September, Linea was down for over half an hour. On December 24, the Taiko mainnet went down for 30 minutes due to an ABI issue, indicating that they are still in an unstable state on a technical level.

In fact, Vitalik previously proposed a framework for measuring the decentralization of Rollups, which is phased, from Phase 0 (centralized trust committees can veto transactions), Phase 1 (smart contracts begin to have limited governance rights) to Phase 2 (representing complete trustlessness).

Despite nearly a hundred Ethereum Layer 2 projects being born, only a very small number have developed to Phase 1. The Layer 2 project Base, incubated by Coinbase in 2023, only reached Phase 1 last year. Vitalik has criticized this point multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only one project has reached Phase 2, which is the decentralized privacy protocol Aztec's product zk.money, but this product is currently stalled in development. The other 12 projects belong to Phase 0, heavily relying on auxiliary functions and multi-signatures.

Vitalik pointed out that Layer 2 projects should at least upgrade to Phase 1; otherwise, these networks should be viewed as more competitive, vampire-like "Layer 1 networks with cross-chain bridges."

Source: L2beat

In addition to potential corporate interests that may delay the decentralization process of Layer 2, Vitalik pointed out that there are also technical challenges and regulatory concerns. "I have even seen at least one company explicitly state that they may never want to go beyond Phase 1, not only for technical reasons related to the security of ZK-EVM but also because their clients' regulatory requirements demand they have ultimate control," he said.

However, Vitalik has not completely abandoned the concept of Layer 2 but has further broadened his view on the goals Layer 2 should achieve.

"We should stop viewing Layer 2 as Ethereum's 'branded sharding' and the social status and responsibilities that come with it," he stated. "Instead, we can view Layer 2 as a complete spectrum, which includes chains fully trusted and supported by Ethereum with various unique properties (not just EVM), as well as various options with different degrees of connection to Ethereum, which everyone (or bots) can choose to pay attention to based on their own needs."

Regarding future development directions, Vitalik further suggested that Layer 2 projects should focus on added value in competition, not just scaling. Suggested development directions include: privacy-focused virtual machines, ultra-low latency serialization, non-financial applications (such as social or AI applications), application-specific execution environments, and surpassing the extreme throughput that the next generation of Layer 1 can support.

Additionally, it is worth noting that Vitalik mentioned ZK-EVM proofs again, which can be used to scale Layer 1, a pre-compiled layer that is written into the base layer and "upgrades automatically with Ethereum."

In the past year, with the organizational restructuring of the Ethereum Foundation and two network upgrades, Layer 1 has become one of the core strategies, one of the goals being to gradually increase the gas limit through multiple iterations, allowing L1 to handle more native transactions, asset issuance, governance, and DeFi settlements without overly relying on L2. In this year's Glamsterdam upgrade plan, several technical improvements aim to reduce manipulation and abuse related to MEV, stabilize gas rates, and lay an important foundation for future scaling improvements.

In earlier statements, Vitalik indicated that 2026 will be a key year for Ethereum to regain lost ground in self-sovereignty and trustlessness. Plans include simplifying node operation through ZK-EVM and BAL technology, launching Helios verification RPC data, implementing ORAM and PIR technology to protect user privacy, developing social recovery wallets and time-lock features to enhance fund security, and improving on-chain UI and IPFS applications.

Vitalik emphasized that Ethereum will correct the compromises made in node operation, application decentralization, and data privacy over the past decade, refocusing on core values. Although this will be a long process, it will make the Ethereum ecosystem stronger.

Appendix: In response to Vitalik's article and views, many industry professionals have also expressed their opinions. Here are some highlights excerpted by ChainCatcher:

Wei Dai (1kx Research Partner):

I am glad to see Vitalik discuss the hindsight errors of the Rollup-centric roadmap. However, asking "What would I do if I were at the L2 level today?" misses the point.

The key is not what Vitalik would do, but what these L2 levels and application teams will do. L2 levels and their applications will always prioritize their own interests over Ethereum's interests. To get L2 levels to reach Phase 1 or achieve maximum interoperability with Ethereum, it must be ensured that doing so is valuable.

For a long time, this issue has been defined as a security problem (L2 levels need L1 levels to support functionality and CR). But in reality, the most important thing is whether the Ethereum L1 level can provide more users and liquidity for L2 levels and applications. (I don't think there is a simple solution, but the direction of efforts in interoperability is correct.)

Lan Hu (Well-known Crypto Researcher):

What Vitalik means is that L2 has leveraged L1, but in terms of value feedback or ecological feedback, L2 has not done well. Now L1 can scale on its own without relying on L2 for scalability. L2 must either align with L1 (native rollup) or become L1.

What does this mean? It's bad news for general-purpose L2, but good news for L2 application chains, as we have consistently said before. L2 application chains can play creatively and feedback value to the ecosystem.

Jason Chen (Well-known Crypto Researcher):

With Ethereum itself scaling, the most significant change is that gas fees are now almost indistinguishable from those of L2, and gas fees are expected to continue to decrease. As ZK gradually comes online, the speed will also be comparable to L2, so L2s are now in a very awkward position. Vitalik's tweet essentially announces that the initial historical mission of L2 to scale Ethereum has been completed. If new narrative angles for L2 are not found soon, L2 will become a relic of history and be eliminated.

For project parties, the main goal of developing L2 is still to earn transaction fees themselves, but L2 has lost its significance for users, as gas fees and performance are no longer significantly different from the mainnet.

L2 was born from Ethereum and will die with Ethereum; the disputes between the sovereign and the vassals have also come to an end.

Haotian (Well-known Crypto Researcher):

I have mentioned more than ten times in previous articles that the general-purpose Layer 2 strategy is no longer viable, and each Layer 2 should transform into a specialized Layer 2, which is essentially a kind of Layer 1. I didn't expect that after guiding the long Stage 2 strategic alignment, many Layer 2s still became "sacrificial pieces."

Layer 2, especially general-purpose Layer 2, carries a heavy development burden. Initially, it faced technical alignment issues with Ethereum's security, then there were regulatory issues related to the centralization of Sequencers after token issuance, and finally, it encountered the burden of "being falsified" due to weak ecological nurturing. The fundamental reason is that all Layer 2s initially depended on Ethereum Layer 1 for survival, and when Ethereum realized it could no longer protect itself and began to dominate Layer 1 performance evolution, Layer 2 lost any imaginative space to empower Ethereum, leaving only burdens and troubles.