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

Author: Gu Yu, ChainCatcher

After ETH’s price hit a new low since last May, Ethereum founder Vitalik Buterin today published a long article reflecting on Ethereum’s long-standing Layer2 strategy at the heart of the network, and plans to increase investment toward Layer1—an approach expected to send shockwaves across the entire crypto industry.

The original roadmap centered on Rollups, defining Layer2 as sharding supported by Ethereum, providing trustless block space. In this article, Vitalik appears to have moved away from the “Rollup-centric” scaling model he previously advocated. He pointed out that, while Ethereum’s base-layer scaling progresses, Layer2’s pace of decentralization is “far slower than expected,” and many Layer2s cannot or will not satisfy the trust guarantees required for true sharding.

“Those two facts, regardless of the reasons, mean that the original vision of Layer2 and its role within Ethereum no longer make sense—we need a new road,” Vitalik said. To outsiders, these statements suggest that Vitalik acknowledges the Layer2 narrative is almost outdated, and that future emphasis will shift more toward scaling Layer1 itself.

Ever since Layer2 was proposed, it has become one of the most capital-attracting and market-attention-grabbing concepts in the crypto industry. Nearly 100 Layer2s have been launched, such as Polygon, Arbitrum, and Optimism. Total funding has exceeded $3 billion, and they have played a key role in scaling Ethereum and lowering users’ transaction costs, with multiple tokens’ FDV (fully diluted valuation) remaining above $10 billion for the long term.

But amid Solana’s strong competition as a high-performance blockchain, Layer2’s performance advantages have not been fully realized, and the industry impact of its ecosystem projects has been steadily declining. At present, only the Base ecosystem still remains active on the front lines of the crypto industry—effectively carrying the banner for Ethereum Layer2.

Mainly published Layer2 token market cap and funding data source: RootData

In addition, Layer2 downtime incidents are still occurring frequently. On January 11 this year, Starknet, after years of being live, experienced a downtime again. The post-incident report showed that a conflict between the execution layer and proof layer states caused an on-chain rollback of about 18 minutes. In September last year, Linea went down for more than half an hour. In December 2024, Taiko’s mainnet was offline for 30 minutes due to an ABI issue—meaning that at the technical level they are still unstable.

In fact, Vitalik previously proposed a framework for measuring Rollup decentralization, which proceeds in stages: from Stage 0 (a centralized trust committee can veto transactions), to Stage 1 (smart contracts begin to have limited governance power), to Stage 2 (representing a fully trustless model).

Although nearly 100 Ethereum Layer2 projects have been launched, only a very small number have progressed to Stage 1. Coinbase’s Layer2 project Base, which began incubating in 2023, also did not reach Stage 1 until last year. This point has been criticized by Vitalik multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only 1 project has reached Stage 2—that is zk.money, the product developed by the decentralized privacy protocol Aztec—but development of that product has currently stalled. The other 12 projects are all in Stage 0, heavily relying on auxiliary functionality and multi-signature setups.

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

Source: L2beat

Besides potentially delaying the decentralization process of Layer2 for corporate interests, Vitalik also points out concerns regarding technical challenges and regulation. “I even see at least one company that has explicitly said they might never want to go beyond Phase 1—not only for technical reasons related to ZK-EVM security, but also because their customers’ regulatory requirements require them to retain ultimate control,” he said.

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

“We should stop treating Layer2 as Ethereum’s ‘brand sharding,’ and the social status and responsibilities that come with it,” he said. “Instead, we can view Layer2 as a full spectrum, including chains backed by Ethereum with full trust and credit—featuring various unique attributes (for example, not just EVM)—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.”

For future development directions, Vitalik also further suggests that Layer2 projects in competition should focus on added value rather than merely expanding scale. The recommended directions include: privacy-focused virtual machines; ultra-low-latency serialization; non-financial applications (for example, social or artificial intelligence applications); application-specific execution environments; and going beyond the extreme throughput that next-generation Layer1 can support.

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

Meanwhile, over the past year, the Ethereum Foundation’s organizational structure adjustments and two network upgrades have all made Layer1 one of the most central strategic focuses. One of the goals is to gradually increase the gas limit through multiple iterations, enabling L1 to handle more native transactions, asset issuance, governance, and DeFi settlement without relying excessively on Layer2. In this year’s Glamsterdam upgrade plan, multiple technical improvements are intended to reduce manipulation and abuse related to MEV, stabilize gas fee rates, and lay an important foundation for future scaling improvements.

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

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

Appendix: In addition to Vitalik’s article and viewpoints, many people in the industry have also shared their own opinions. Below are some highlights excerpted by ChainCatcher:

Wei Dai (1kx research partner):

Glad to see Vitalik discussing the hindsight mistakes of a Rollup-centric roadmap. However, asking “if I were on the L2 layer, what would I do today?” misses the point.

The key is not what Vitalik would do, but what these L2 layer and application teams would do. L2 layers and their application teams always put their own interests first, not Ethereum’s. To get L2 layers to Stage 1 or achieve the highest level of interoperability with Ethereum, it must be valuable to do so.

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

Blue Fox (well-known crypto researcher):

Vitalik’s point is that L2 leverages L1, but it has not delivered properly in terms of value feedback or ecosystem feedback. Now that L1 can scale on its own without relying on L2 for scalability, L2 must either stay aligned with L1 (native rollup) or become L1.

What does that mean? Bad news for general-purpose L2s; good news for L2 application chains—exactly as we’ve been saying. L2 application chains can do things creatively, and feed value back into the ecosystem.

Jason Chen (well-known crypto researcher):

As Ethereum itself expands, the most noticeable change is that gas fees are now close to those of L2s, and next gas fees will continue to drop. Then, as ZK gradually rolls out, speeds will also be close to those of L2s. So L2s are in a very awkward position right now. Vitalik’s tweet is essentially a formal declaration that the phase-based historical task of expanding Ethereum via L2—from the beginning to now—has been completed. If L2s still don’t find a new narrative angle, they will become relics of the past and get phased out.

For project teams, the biggest purpose of doing L2 is still to earn their own transaction fees. But for users, L2s no longer have much meaning—after all, there is no real gap in both gas and performance compared with the mainnet.

L2 was born on Ethereum, and it will die on Ethereum—the disputes between the Zhou prince and the feudal lords have also ended.

Haotian (well-known crypto researcher):

In previous articles, I’ve mentioned more than 10 times that a universal Layer2 strategy won’t work. Each Layer2 should pivot to a specialized Layer2, which is essentially a kind of Layer1. I didn’t expect that after Vitalik Buterin guided a long Stage2 strategic alignment, many Layer2s would still end up as “abandoned children.”

Universal Layer2s carry a heavy development burden. At first, they face technical roadmap issues related to aligning with Ethereum’s security. Later, they face regulatory problems after token issuance, due to sequencer centralization. Then finally, they encounter the “refuted” burden from poor ecosystem incubation. The root cause is that from the beginning, all Layer2s relied on Ethereum Layer1 for survival. When Ethereum realizes it is difficult to secure itself and starts to lead the performance evolution of Layer1, Layer2 loses all room to imagine empowering Ethereum—leaving only dead weight and trouble.