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 Layer2 strategy, which has long occupied 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, 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 points out that, while scaling efforts proceed on Ethereum’s base layer, the pace of decentralization for Layer2 has been “far slower than expected,” and many Layer2 solutions cannot or do not want to satisfy the trust guarantees required for true sharding.

“These two facts, for whatever reason, mean that Layer2’s original vision and its role within Ethereum no longer make sense—we need a new path,” Vitalik said. To outside observers, these remarks suggest that Vitalik acknowledges the Layer2 narrative is nearly outdated, and that future emphasis will shift even more toward scaling Layer1 itself.

Since Layer2 was proposed, it has become one of the most capital-seeking and market-attention-grabbing concepts in the crypto industry. Nearly a hundred Layer2 projects such as Polygon, Arbitrum, and Optimism have emerged, with cumulative funding exceeding $3 billion. They have played a key role in scaling Ethereum and lowering users’ transaction costs, and multiple tokens’ FDV have remained above $10 billion for the long term.

However, under strong competition from Solana’s high-performance blockchain, Layer2’s performance advantages have not been fully realized, and the industry influence of its ecosystem projects has gradually declined. Currently, only the Base ecosystem remains active in the front line of the crypto industry, representing Ethereum Layer2 as the flag-bearer.

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

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

In fact, Vitalik previously proposed a framework for measuring Rollup decentralization, carried out in stages: from Stage 0 (a centralized trust committee can veto transactions), to Stage 1 (smart contracts begin to have limited governance rights), and then to Stage 2 (fully trustless).

Although nearly a hundred Ethereum Layer2 projects have been launched, only a very small number have progressed to Stage 1. Base, a Layer2 project incubated by Coinbase starting in 2023, did not reach Stage 1 until last year. Vitalik has criticized this multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only 1 reached Stage 2—zk.money, a privacy protocol product developed by Aztec—but development for it has already stalled. The other 12 projects are in Stage 0, heavily relying on auxiliary functions and multi-signature setups.

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

Source: L2beat

Besides potential corporate interests that may delay the decentralization process of Layer2, Vitalik also highlights technical challenges and regulatory concerns. “I even see at least one company explicitly stating that they may never want to go beyond Stage 1. It’s not only for technical reasons related to ZK-EVM security, but also because their clients’ regulatory requirements demand that they retain ultimate control,” he said.

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

“We should stop treating Layer2 as Ethereum’s ‘brand sharding,’ along with the social status and responsibilities that come with it,” he said. “Instead, we can view Layer2 as a complete spectrum—it includes chains backed by Ethereum’s complete trust and credit, with various unique properties (for example, not just EVM), and it also includes different options with varying degrees of connection to Ethereum. Everyone (or bots) can then choose whether to pay attention to these options according to their own needs.”

For future development directions, Vitalik also recommends that Layer2 projects focus on added value in competition, not merely expanding scale. The suggested directions include: privacy-focused virtual machines, ultra-low-latency serialization, non-financial applications (such as social or artificial intelligence applications), application-specific execution environments, and pushing 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.”

And over the past year, amid organizational structure adjustments of the Ethereum Foundation, as well as 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, enabling L1 to handle more native transactions, asset issuance, governance, and DeFi settlement without overly relying on Layer2. In this year’s Glamsterdam upgrade plan, multiple technical improvements are intended to reduce MEV-related manipulation and abuse, stabilize gas fee rates, and lay an important foundation for future scaling improvements.

In an earlier set of remarks, Vitalik said that 2026 will be a key year for Ethereum to reclaim ground in self-sovereignty and decentralization (de-trusting). The plan includes simplifying node operation via 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 functionality to enhance fund security, and improving on-chain UI and IPFS applications.

Vitalik emphasized that Ethereum will correct the compromises made over the past decade in terms of node operation, application decentralization, and data privacy, and re-focus 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 own opinions. The following are some key points excerpted by ChainCatcher:

Wei Dai (1kx research partner):

Glad to see Vitalik discuss the hindsight mistakes of the Rollup-centric roadmap. But asking “If I were in 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 will always prioritize their own interests rather than Ethereum’s interests. To enable L2 layers to reach Stage 1 or achieve the highest interoperability with Ethereum, it must be valuable to do so.

For a long time, this problem has been defined as a security issue (L2 needs L1 to support functionality and CR). But in reality, the most important question is whether Ethereum’s 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.)

Lan Hu (well-known crypto researcher):

What Vitalik means is that L2 uses L1, but in terms of value feedback or ecosystem feedback, L2 has not delivered adequately. Now that L1 can scale on its own, there’s no need to rely on L2 to achieve scalability. L2 should either stay aligned with L1 (native rollup), or become L1.

What does this imply? It’s bad news for general-purpose L2s, but good news for L2 application chains, as we’ve agreed previously. 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 noticeable change is that Gas fees have dropped to levels nearly indistinguishable from L2s; next, Gas fees will continue to be low, and once ZK is gradually rolled out, speeds will be similar to L2s as well. So L2s are in a very awkward position right now. Vitalik’s tweet is essentially an official declaration that the phased historical task of scaling Ethereum via L2—from the beginning until now—has been completed. If L2s do not continue to find new narrative angles, they will become relics of the past and be eliminated.

For project teams, the biggest purpose of doing L2 is still to earn all the fees for themselves. But for users, L2 no longer has much meaning, because Gas and performance can no longer be separated from the mainnet.

L2 is born from Ethereum and dies by Ethereum—the conflicts between the rulers of Heaven and princes have also ended.

Haotian (well-known crypto researcher):

In previous articles, I’ve mentioned more than 10 times that a universal layer2 strategy doesn’t work. Each layer2 should transition into a specialized layer2—which is essentially a form of Layer1. I didn’t expect that, after Vitalik Buterin led a long Stage2 strategy alignment, many layer2 would still end up as “discarded pieces.”

Layer2—especially universal layer2—carries a heavy development burden. At the start, it faced technical route issues aligning with Ethereum’s security; later, it also faced regulatory issues caused by the centralization of the Sequencer after token issuance; and in the end, it encountered the “refuted” burden from a poorly cultivated ecosystem. The root cause is that from the beginning, all layer2 relied on Ethereum layer1 to survive. When Ethereum realized it was hard to secure itself and began to lead Layer1 performance evolution, Layer2 lost all imaginative space to empower Ethereum—leaving only burdens and problems.