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

Author: Gu Yu, ChainCatcher

After ETH price hit a new low since last May, Ethereum founder Vitalik Buterin released a lengthy article today reflecting on the long-standing Layer2 strategy that has been at the core of Ethereum, planning to increase investment in Layer1, aiming to create a sensational impact across the entire crypto industry.

The original roadmap centered around Rollups defined Layer2 as sharded support provided by Ethereum, offering trustless block space. In this article, Vitalik seems to have abandoned his previous advocacy for a “Rollup-centric” scaling model, noting that while Ethereum’s base layer scaling progresses, the decentralization speed of Layer 2 is “far slower than expected,” and many Layer2 solutions cannot or are unwilling to meet the trust guarantees required for true sharding.

“Both of these facts, for whatever reason, mean that the original vision of Layer2 and its role within Ethereum no longer make sense, and we need a new path,” Vitalik said. To outsiders, these statements imply that Vitalik admits the Layer2 narrative is nearly outdated, and future focus will shift more toward scaling the Layer1 itself.

Since its inception, Layer2 has become one of the most capital-enthusiast and market-focused concepts in the crypto industry, with nearly a hundred Layer2 projects such as Polygon, Arbitrum, and Optimism emerging, raising over $3 billion in total funding. It has played a key role in scaling Ethereum and reducing user transaction costs, with multiple tokens’ FDV exceeding $10 billion long-term.

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

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

Moreover, Layer2 outages still occur frequently. On January 11 this year, Starknet experienced a downtime again after many years of operation. Post-incident reports indicated that a conflict between execution layer and proof layer states caused an on-chain rollback of about 18 minutes. In September last year, Linea was down for over half an hour. In December 2024, Taiko’s mainnet was offline for 30 minutes due to an ABI issue, indicating ongoing technical instability.

In fact, Vitalik previously proposed a phased framework to measure Layer2 decentralization, starting from Phase 0 (centralized trust committee can veto transactions), Phase 1 (smart contracts begin to have limited governance rights), to Phase 2 (completely trustless).

Despite nearly a hundred Ethereum Layer2 projects having been launched, only a very few have reached Phase 1. Coinbase’s Layer2 project Base, started in 2023, only reached Phase 1 last year. Vitalik has criticized this multiple times before. According to L2beat statistics, among the top 20 Rollup projects, only one—Aztec’s privacy protocol zk.money—has reached Phase 2, but development has stalled. Additionally, 12 projects are still at Phase 0, heavily reliant on auxiliary functions and multi-signature setups.

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

Source: L2beat

Besides potentially delaying Layer2 decentralization due to corporate interests, Vitalik highlights technical challenges and regulatory concerns. “I’ve even seen at least one company explicitly state they may never want to surpass Phase 1, not only for technical reasons related to ZK-EVM security but also because their clients’ regulatory requirements demand ultimate control,” he said.

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

“We should stop viewing Layer2 as Ethereum’s ‘brand sharding’ with associated social status and responsibilities,” he stated. “Instead, we can see Layer2 as a full spectrum, including chains fully trusted and credit-supported by Ethereum with various unique attributes (not just EVM), as well as options with different degrees of connection to Ethereum, allowing everyone (or bots) to choose whether to focus on these options based on their needs.”

Regarding future development directions, Vitalik further suggests that Layer2 projects should focus on added value rather than just scaling. Proposed directions include: privacy-focused virtual machines, ultra-low latency serialization, non-financial applications (such as social or AI applications), application-specific execution environments, and pushing beyond the throughput limits of next-generation Layer1.

Additionally, Vitalik again mentioned ZK-EVM proofs, which can be used to extend Layer1. This is a pre-compiled layer embedded into the base layer that “automatically upgrades with Ethereum.”

Over the past year, Ethereum Foundation’s organizational restructuring and two network upgrades have made Layer1 a core strategic focus. One goal is to iteratively increase the gas limit, enabling L1 to handle more native transactions, asset issuance, governance, and DeFi settlements without overly relying on L2. The Glamsterdam upgrade plan this year includes multiple technical improvements aimed at reducing MEV-related manipulation and abuse, stabilizing gas fees, and laying a solid foundation for future scaling.

In earlier statements, Vitalik indicated that 2026 would be a critical year for Ethereum to regain ground in sovereignty and trustlessness. Plans include simplifying node operation via ZK-EVM and BAL tech, launching Helios verification RPC data, implementing ORAM and PIR privacy protections, developing social recovery wallets and time-lock features for enhanced security, and improving on-chain UI and IPFS applications.

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

Appendix: Regarding Vitalik’s article and views, many industry figures have also shared their opinions. Below are some highlights summarized by ChainCatcher:

Wei Dai (1kx research partner):

Glad to see Vitalik discussing the hindsight errors of the Rollup-centric roadmap. But asking “What would I do if I were an L2 layer today?” diverges from the main point.

The key isn’t what Vitalik would do, but what these L2 layers and application teams will do. L2 layers and their applications will always prioritize their own interests over Ethereum’s. To get L2 layers to reach Phase 1 or achieve maximum interoperability with Ethereum, it must be valuable to do so.

For a long time, this issue has been framed as a security problem (L2 needs L1 support for functionality and CR). But in reality, the most important thing is whether Ethereum’s L1 can provide more users and liquidity to L2 layers and applications. (I think there’s no simple solution, but efforts toward interoperability are correct.)

Lan Hu (well-known crypto researcher):

Vitalik’s point is that L2 leverages L1, but in terms of value feedback or ecosystem feedback, L2 has not done enough. Now that L1 can expand itself, there’s no need to rely on L2 for scalability. L2 should either align with L1 (native rollup) or become L1 itself.

What does this mean? It’s bad news for general-purpose L2s but good for L2 application chains, as we’ve always said. L2 application chains can innovate and feed value back into the ecosystem.

Jason Chen (well-known crypto researcher):

As Ethereum itself scales, the most noticeable change is that gas fees are now comparable to L2s, and as gas continues to decrease, plus the gradual adoption of ZK, speeds will be similar to L2s. So, L2s are in a very awkward position now. Vitalik’s tweet essentially announces that the initial phase of L2’s role in expanding Ethereum has been completed. If L2s don’t find new narratives, they risk becoming relics of a bygone era.

For project teams, the main goal of L2 is to earn transaction fees themselves, but for users, L2s no longer hold much significance—gas and performance are indistinguishable from mainnet.

L2 was born on Ethereum and will die on Ethereum; the disputes among the princes and vassals have also ended.

Haotian (well-known crypto researcher):

I’ve mentioned more than ten times in previous articles that the general-purpose Layer2 strategy is no longer feasible. Each Layer2 should pivot to a specialized Layer2, which is essentially a form of Layer1. I didn’t expect that, after guiding the long Stage2 strategic alignment, many Layer2s still became “abandoned children.”

General-purpose Layer2s carry a huge development burden: initially facing technical issues aligning with Ethereum’s security, then regulatory issues due to centralized sequencers after token issuance, and finally the burden of failed ecosystem development. The fundamental reason is that all Layer2s depend on Ethereum Layer1 for survival. When Ethereum finds itself unable to sustain and begins to lead the performance evolution of Layer1, Layer2 loses all imagination of empowering Ethereum, leaving only burdens and troubles.