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

Author: Gu Yu, ChainCatcher

After the ETH price hit a new low since last May, Ethereum co-founder Vitalik Buterin today published a long post reflecting on Ethereum’s long-standing Layer2 strategy aimed at maintaining a core position. He plans to increase investment in the Layer1 direction, which is expected to create a sensational impact across the entire crypto industry.

The original roadmap centered on Rollups defined Layer2 as Ethereum-supported sharding that provides non-custodial block space. In this article, Vitalik seems to have abandoned the “rollup-centric” scaling model he previously advocated. He points out that while scaling Ethereum’s base layer, the decentralization speed of Layer2 is “far slower than expected,” and many Layer2 solutions cannot or are unwilling to meet the trust guarantees truly required for real sharding.

“These two facts, regardless of the reasons, mean that Layer2’s original vision and its role in Ethereum are no longer meaningful; we need a new path,” Vitalik said. To outside observers, these statements imply that Vitalik is conceding that the Layer2 narrative is now almost outdated, and that the future will place more emphasis on scaling Layer1 itself.

Since Layer2 was proposed, it has become one of the most capital-hungry and widely watched concepts in the crypto industry. Nearly a hundred Layer2s have been launched, including Polygon, Arbitrum, Optimism, and more. Cumulative funding has exceeded $3 billion, playing a key role in scaling Ethereum and lowering users’ transaction costs, while multiple tokens’ FDV has remained above $10 billion for the long term.

But in the face of strong competition from Solana’s high-performance blockchain, Layer2’s performance advantage has not been fully realized, and the industry influence of its ecosystem projects has gradually declined. Currently, only the Base ecosystem is still active on the front line of the crypto industry, representing Ethereum’s Layer2 still carrying the banner.

Source: RootData — Published Layer2 token market caps and funding data

In addition, Layer2 downtime incidents still occur frequently. On January 11 this year, after years on mainnet, Starknet suffered another downtime incident. The post-incident report showed that a conflict between the execution layer and the proving layer states caused about 18 minutes of on-chain activity to roll back. In September last year, Linea experienced downtime lasting more than half an hour. In December 2024, Taiko’s mainnet went down for 30 minutes due to an ABI issue. This means that at the technical level, they still remain unstable.

In fact, Vitalik previously proposed a framework for measuring Rollup decentralization. This framework is carried out in stages: Stage 0 (a centralized trust committee can veto transactions), Stage 1 (smart contracts start to have limited governance power), and Stage 2 (representing complete trustlessness).

Although nearly a hundred Ethereum Layer2 projects have been created, only a very small number have progressed to Stage 1. Base, a Layer2 project that Coinbase started incubating in 2023, didn’t reach Stage 1 until last year. Vitalik has criticized this point multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only 1 project reached Stage 2—that is, zk.money, a product developed by the decentralized privacy protocol Aztec—but development for this product has already stalled. The other 12 projects are all in Stage 0, relying heavily on auxiliary functions and multisignatures.

Vitalik points out that Layer2 projects should at least upgrade to Stage 1; otherwise, these networks should be viewed as more competitive, “vampire-like” Layer1 networks with cross-chain bridges.

Source: L2beat

Apart from the potential to delay the decentralization process of Layer2 from the perspective of corporate interests, Vitalik also points out there are technical challenges and regulatory concerns. “I’ve even seen at least one company explicitly say that they might never want to go beyond Stage 1—not only for technical reasons related to ZK-EVM security, but also because their customers’ regulatory requirements force them to have final control,” he said.

However, Vitalik did not completely abandon the concept of Layer2, and instead broadened his view of what Layer2 should aim to achieve.

“We should stop treating Layer2 as Ethereum’s ‘branded sharding,’ along with the social status and responsibilities that come with it,” he said. “Instead, we can think of Layer2 as a full spectrum. This spectrum includes chains with various unique attributes (for example, not just EVM) that are fully trusted and backed by Ethereum’s trust and credit, as well as different options with varying degrees of connection to Ethereum—everyone (or robots) can choose whether to focus on these options based on their own needs.”

Regarding future development directions, Vitalik also further suggested that Layer2 projects, in competition, should focus on adding value rather than merely expanding scale. The suggested directions include: privacy-focused virtual machines, ultra-low-latency serialization, non-financial applications (such as social or AI applications), application-specific execution environments, and going beyond the extreme throughput that the next generation of Layer1 can support.

It’s also worth noting that Vitalik again mentioned ZK-EVM proofs, which can be used to scale Layer1. This is a precompilation layer that is written into the base layer and “automatically upgrades with Ethereum.”

And in the past year, amid the Ethereum Foundation’s organizational structure adjustments, as well as across two network upgrades, Layer1 has already become one of the most core strategic priorities. One of the goals is to gradually increase the gas limit through multiple iterations so that L1 can handle more native transactions, asset issuance, governance, and DeFi settlement without over-relying on Layer2. In this year’s planned Glamsterdam upgrade, multiple technical improvements aim to reduce manipulation and abuse related to MEV, stabilize gas fee rates, and lay important groundwork for future scaling improvements.

In an earlier statement, Vitalik said that 2026 will be a key year for Ethereum to regain ground in terms of self-sovereignty and de-trust. The plan includes simplifying node operations through ZK-EVM and BAL technology, launching Helios verification RPC data, using ORAM and PIR technology to protect users’ privacy, developing social recovery wallets and time-lock features to enhance fund security, and improving the on-chain UI and IPFS application experience.

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

Appendix: Regarding Vitalik’s article and viewpoints, many industry figures have also shared their views. The following are selected highlights excerpted by ChainCatcher:

Wei Dai (1kx Research Partner):

I’m glad to see Vitalik discuss retrospectively the mistakes in the rollup-centric roadmap. However, asking “If I were in the L2 layer, what would I do today?” misses the point.

The key isn’t what Vitalik would do, but what these L2 layers and application teams would do. L2 layers and their application teams will always put their own interests first, not Ethereum’s interests. To make L2 layers reach Stage 1 or achieve maximum interoperability with Ethereum, you must ensure that doing so is valuable.

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

Blue Fox (well-known crypto researcher):

What Vitalik means is that L2 leverages L1, but in terms of value feedback or ecosystem feedback, L2 hasn’t delivered. Now L1 can scale on its own without needing to rely on L2 to achieve scalability. Layer2 either stays aligned with L1 (native rollup), or becomes L1.

What does that mean? It’s bad news for general-purpose L2, but good news for L2 application chains—just as we’ve been saying consistently. L2 application chains can do all kinds of things and feed value back into the ecosystem.

Jason Chen (well-known crypto researcher):

As Ethereum itself expands, the most obvious change is that Gas fees will be as low as the L2s, and then Gas will continue to be low. After ZK is gradually onboarded, transaction speed will also be close to that of the L2s. So the position of L2s is very awkward right now. Vitalik’s tweet is, in effect, officially announcing that the phased historical task of scaling Ethereum that L2s have fulfilled so far has already been completed. If L2s don’t continue to find new narrative angles, they will become artifacts of a past era and be eliminated.

For project teams, the biggest purpose of doing L2 is still to earn all the fees themselves. But for users, L2 no longer has much meaning, since both Gas and performance can’t be pulled far apart from the mainnet.

L2 was born with Ethereum, and dies with Ethereum—the conflict between the Son of Heaven and the feudal lords has also come to an end.

Haotian (well-known crypto researcher):

In previous articles, I’ve said at least 10 times that the general-purpose Layer2 strategy doesn’t work; each Layer2 should transition into a specialized Layer2, which is essentially also a Layer1. I didn’t expect that after Vitalik guided a long Stage2 strategy alignment, many Layer2s would still end up as “abandoned pieces.”

Layer2—especially general-purpose Layer2—carried a heavy development burden. At first, there were technical roadmap problems related to aligning with Ethereum’s security. Later came regulatory issues after issuing tokens and the centralization of sequencers. And in the end, they were hit with the “disproof” burden caused by insufficient ecosystem incubation. The root cause is that from the beginning, all Layer2s depended on Ethereum Layer1 to survive. When Ethereum realized it was hard to protect itself and started to lead the performance evolution of Layer1, Layer2 lost all imagination about enabling Ethereum. What remains is just dead weight and trouble.