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 unseen since last May, Ethereum co-founder Vitalik Buterin today published a long post reflecting on Ethereum’s Layer2 strategy and its long-standing role at the core of the network. He plans to ramp up investment in the Layer1 direction, an outlook that has sent shockwaves through the entire crypto industry.

The original roadmap centered on Rollups defined Layer2 as sharded execution supported by Ethereum, delivering 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 Ethereum’s base layer is being scaled, the decentralization speed of Layer2 is “far slower than expected,” and many Layer2 solutions cannot or are unwilling to meet the trust guarantees required for true sharding.

“Those two facts, for whatever reasons, mean that Layer2’s initial vision and its role within Ethereum are no longer meaningful. We need a new path.” Vitalik said. From the outside, these statements are widely interpreted as Vitalik acknowledging that the Layer2 narrative is close to becoming obsolete, and that in the future, more of the focus will be on scaling Layer1 itself.

Since Layer2 was proposed, it has become one of the most capital-hyped and widely watched concepts in the crypto industry. Nearly a hundred Layer2s have been launched, including Polygon, Arbitrum, Optimism, and more, with cumulative funding exceeding $3 billion. They have played a key role in scaling Ethereum and lowering users’ transaction costs, while multiple tokens’ FDV has 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. At present, only the Base ecosystem remains active in the first tier of the crypto industry—symbolizing that Ethereum Layer2 is still bearing the banner.

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

In addition, Layer2 outages and incidents are still happening frequently. On January 11 this year, after operating for years, Starknet experienced another outage. The post-incident report showed that an execution-layer and proving-layer state conflict caused approximately 18 minutes of on-chain activity rollbacks. In September last year, Linea had an outage lasting more than half an hour. In December 2024, Taiko’s mainnet went down for 30 minutes due to an ABI issue—meaning they are still in an unstable state at the technical level.

In fact, Vitalik previously proposed a framework for measuring Rollup decentralization. The framework progresses in stages: from Stage 0 (a centralized trust committee can veto transactions), to Stage 1 (smart contracts gain limited governance power), and finally to 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, the Layer2 project Coinbase began incubating in 2023, also only reached Stage 1 as recently as last year. Vitalik has raised this criticism multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only 1 project reaches Stage 2—that is, the product zk.money developed by the decentralized privacy protocol Aztec. But that product’s development is currently stalled. The other 12 projects are all in Stage 0, heavily relying on helper 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

Besides potentially delaying the decentralization process of Layer2, Vitalik also highlights there are technical challenges and regulatory concerns. “I even see at least one company explicitly saying they might never want to go beyond the first stage. This is not only for technical reasons related to ZK-EVM security, but also because their customers’ regulatory requirements demand that they retain final 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 ‘branded shards,’ along with the social status and responsibilities that come with it,” he said. “Instead, we can treat Layer2 as a full spectrum—one that includes chains supported entirely by Ethereum’s trust and credit, featuring various unique properties (for example, not just EVM), as well as different options with varying degrees of connectivity to Ethereum. Everyone (or bots) can decide whether to pay attention to these options based on their own needs.”

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

Also worth noting is that Vitalik once again mentioned ZK-EVM proofs, which can be used to scale Layer1. This is a precompilation layer: it is written into the base layer and “comes along with Ethereum’s automatic upgrades.”

And over the past year, through organizational structure adjustments at 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 progressively increase the gas limit through multiple iterations, enabling L1 to handle more native transactions, asset issuance, governance, and DeFi settlement—without overly relying on L2. 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 an important foundation for future scaling improvements.

Earlier, Vitalik said that 2026 will be a key year for Ethereum to regain ground in terms of self-sovereignty and decentralization. The plan includes simplifying node operation with ZK-EVM and BAL technologies, launching Helios verification RPC data, using ORAM and PIR technologies to protect user privacy, developing social recovery wallet and timelock functionality to enhance fund security, and improving on-chain UI and IPFS applications.

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

Appendix: Regarding Vitalik’s article and viewpoints, many industry participants also shared their own perspectives. Below are some key excerpts selected by ChainCatcher:

Wei Dai (1kx Research Partner):

I’m glad to see Vitalik discuss hindsight errors in the Rollup-centric roadmap. But asking “If I were on the L2 layer, what would I do today?” misses the point.

The key isn’t what Vitalik would do, but what these L2-layer and application teams would do. L2-layer solutions and their applications always put their own interests first, not Ethereum’s interests. To get L2-layer solutions to reach Stage 1, or to achieve the maximum interoperability with Ethereum, it must be ensured that doing so is valuable.

For a long time, this issue has been framed as a security problem (L2 needs L1 to support functionality and the CR). But in reality, the most important question is whether Ethereum L1 can provide L2-layer solutions and applications with more users and liquidity. (I don’t think there’s a simple solution, but the direction of the interoperability efforts 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 has not done enough. Now L1 can scale on its own without relying on L2 to achieve scalability. L2 either needs to stay aligned with L1 (native rollup) or become L1.

What does that imply? It’s bad news for general-purpose L2, but good news for L2 application chains—just as we’ve been agreeing. L2 application chains can do interesting things and feed value back to the ecosystem.

Jason Chen (well-known crypto researcher):

As Ethereum itself expands, the most obvious change is that gas fees become as low as—or nearly the same as—those of the L2s. And going forward, gas will continue to be low. After ZK is gradually rolled out, the speed will also be close to that of the L2s. So the position of the L2s is extremely awkward right now. Vitalik’s tweet is essentially an official declaration that the stage-by-stage historical mission of scaling Ethereum that the L2s have had from the beginning is already completed. If L2s still don’t find new narrative angles, they will become a product of the bygone era and be phased out.

For project teams, the biggest purpose of creating L2 is still to make their own fees. But for users, there’s no longer much meaning in L2, since gas and performance can’t be separated from the mainnet by much anyway.

Layer2 is born from Ethereum—and it also dies because of Ethereum. The conflicts between the Son of Heaven and the feudal lords are over.

Haotian (well-known crypto researcher):

In a previous article, I mentioned it more than 10 times: that a general-purpose Layer2 strategy doesn’t work. Each Layer2 should transition to a specialized Layer2—which, in a sense, is also a type of Layer1. I didn’t expect that, after Vitalik guided a long period of Stage2 alignment, many Layer2s would still end up as “discarded pieces.”

Layer2s, especially general-purpose Layer2s, carry a heavy development burden. At first, there’s the technical roadmap problem of aligning with Ethereum’s security. After issuing tokens, there are regulatory issues related to sequencer centralization. And finally, they encounter the “refuted” burden of ecosystem incubation failure. The root cause is that from the beginning, all Layer2s relied on the Ethereum Layer1 to survive. But when Ethereum realizes it’s hard to protect itself and starts to lead Layer1 performance evolution, Layer2s no longer have any imagination space for enabling Ethereum—they’re left only with baggage and trouble.