Vitalik finally admits to a major strategic mistake by Ethereum. Are you still holding your position?

Author: Gu Yu, ChainCatcher

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

The initially Rollup-centric roadmap defined Layer 2 as Ethereum-supported sharding that provides 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 Ethereum’s underlying scaling is progressing, 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 is no longer meaningful, and we need a new path,” Vitalik said. To the outside world, these statements suggest that Vitalik acknowledges the Layer 2 narrative is almost outdated, and future focus will shift more towards scaling Layer 1 itself.

Since the proposal of Layer 2, it has become one of the most sought-after concepts by capital and attention in the crypto industry, with nearly a hundred Layer 2 projects such as Polygon, Arbitrum, and Optimism emerging, raising over $3 billion in total, playing a key role in scaling Ethereum and reducing user transaction costs, with multiple tokens’ FDV long 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 also been declining. Currently, only the Base ecosystem remains active at the forefront of the crypto industry, representing Ethereum Layer 2 in carrying the banner.

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

Moreover, Layer 2 outages continue to occur frequently. On January 11 this year, Starknet experienced another outage after being online for many years, with post-incident reports indicating that state conflicts between the execution layer and the proof layer led to approximately 18 minutes of on-chain activity rollback. In September last year, Linea was down for over half an hour. On December 24, the Taiko mainnet experienced a 30-minute outage due to ABI issues, indicating that they remain 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 committee can veto transactions), Phase 1 (smart contracts begin to have limited governance rights), to Phase 2 (representing complete trustlessness).

Although nearly a hundred Ethereum Layer 2 projects have emerged, only a very small number have progressed to Phase 1. The Layer 2 project Base, incubated by Coinbase in 2023, only reached Phase 1 last year. Vitalik has previously criticized this multiple times. 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 that product has currently stagnated in development. The other 12 projects belong to Phase 0, heavily relying on auxiliary features and multi-signature.

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

However, Vitalik has not completely abandoned the concept of Layer 2 but has further broadened his view on the goals that 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 credit-supported by Ethereum, with various unique properties (e.g., not just EVM), as well as various options with different levels of connection to Ethereum, which everyone (or robots) 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 directions for development 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 supported by the next generation of Layer 1.

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

In the past year, the Ethereum Foundation’s organizational restructuring and two network upgrades have made Layer 1 one of the core strategies, one of which aims to gradually increase the gas limit through multiple iterations, allowing L1 to handle more native transactions, asset issuances, governance, and DeFi settlements without excessive reliance on L2. In this year’s Glamsterdam upgrade plan, multiple improved technologies aim to reduce manipulation and abuse related to MEV, stabilize gas rates, and lay an important foundation for future scaling improvements.

In earlier remarks, Vitalik stated that 2026 will be a crucial 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 functions to enhance fund security, and improving on-chain UI and IPFS applications.

Vitalik emphasized that Ethereum will correct past compromises 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 strengthen the Ethereum ecosystem.

Appendix: Many industry professionals have also expressed their views on Vitalik’s article and opinions, and here are some highlights excerpted by ChainCatcher:

Wei Dai (1kx Research Partner):

I’m glad to see Vitalik discussing the hindsight errors of the Rollup-centric roadmap. However, asking “What would I do today if I were at the L2 level?” misses the point.

The key is not what Vitalik would do, but what these L2s and application teams will do. L2s and their applications will always prioritize their own interests over those of Ethereum. To get L2s to reach Phase 1 or achieve maximum interoperability with Ethereum, it must be ensured that it is valuable to do so.

For a long time, this issue has been defined as a security issue (L2s need L1 to support functionality and CR). But in reality, the most important thing is whether Ethereum’s L1 can provide more users and liquidity for L2s and applications. (I think there is no simple solution, but the direction of efforts in interoperability is correct.)

Lan Hu (Famous Crypto Researcher):

Vitalik means that L2s have leveraged L1, but on value feedback or ecological feedback, L2s have not done well. Now L1 can scale itself without relying on L2 for scalability. L2s either need to align with L1 (native rollup) or become L1.

What does this mean? Bad news for general-purpose L2s, good news for L2 application chains, as we have consistently said before. L2 application chains can play tricks and feedback value to the ecosystem.

Jason Chen (Famous Crypto Researcher):

With Ethereum itself scaling, the most notable change is that gas fees are now almost indistinguishable from those of L2s, and next, gas fees will continue to decrease, plus with ZK gradually going live, the speed will also be nearly the same as L2s, so L2s are now in a very awkward position. Vitalik’s tweet essentially formally declares that the initial phase of L2’s mission to scale Ethereum has been completed, and if we don’t find new narrative angles for L2s soon, they will become a historical product that is eliminated.

For project teams, the main purpose of creating L2 is still to earn the transaction fees themselves, but L2 has already lost its meaning for users, as gas and performance don’t differ much from the mainnet.

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

Haotian (Famous Crypto Researcher):

I have mentioned no less than ten times in previous articles that the general Layer 2 strategy is no longer viable, and every Layer 2 should transform into a specialized Layer 2, which is essentially a type of Layer 1. I didn’t expect that after guiding the lengthy Stage 2 strategic alignment, numerous Layer 2s still ended up as “sacrificial pieces.”

Layer 2, especially general-purpose Layer 2, carries a heavy developmental burden, initially facing alignment with Ethereum’s security technical route, followed by regulatory issues with Sequencer centralization after token issuance, and ultimately encountering the burden of ecological nurturing failure. The root cause 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 empowering imagination for Ethereum, leaving only a burden and trouble.