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 not seen since last May, Ethereum co-founder Vitalik Buterin today published a long post reflecting on Ethereum’s Layer2 strategy—an effort that has kept Ethereum in a core position for years. He plans to increase investment in the Layer1 direction, which is expected to send shockwaves across the entire crypto industry.

The initial roadmap centered on Rollups defined Layer2 as Ethereum-supported sharding that provides block space without trust. In this article, Vitalik appears to have effectively abandoned the “Rollup-centric” scalability model he previously advocated. He points out that while Ethereum’s underlying layer scales, the decentralization speed of Layer2 is “far slower than expected,” and many Layer2 solutions are unable or unwilling to meet the trust guarantees truly required for real sharding.

“Regardless of the reasons, these two facts mean that the original vision for Layer2 and its role within Ethereum are no longer meaningful—we need a new path.” Vitalik said. To outsiders, these statements suggest Vitalik is acknowledging that the Layer2 narrative is becoming nearly outdated, and that more emphasis in the future will be placed on scaling Layer1 itself.

Since Layer2 was proposed, it has become one of the most capital-attractive and widely watched concepts in the crypto industry. Nearly a hundred Layer2s have been launched, such as Polygon, Arbitrum, and Optimism. Total funding has exceeded $3 billion, playing a key role in scaling Ethereum and reducing users’ transaction costs. Meanwhile, multiple token FDVs 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 continued to decline. At present, only the Base ecosystem remains actively in the top tier of the crypto industry, representing Ethereum Layer2 carrying the banner.

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

In addition, Layer2 outages and downtime incidents still occur frequently. On January 11 this year, after many years of being live, Starknet experienced another outage. The post-incident report indicated that a conflict between the execution layer and the proving layer’s state 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 down for 30 minutes due to an ABI issue. This means that at the technical level, they are still in an unstable state.

In fact, Vitalik previously proposed a framework for measuring Rollup decentralization, which proceeds in stages: Stage 0 (a centralized trusted committee can veto transactions), Stage 1 (smart contracts gain limited governance powers), and Stage 2 (representing full no-trust).

Although nearly a hundred Ethereum Layer2 projects have been created, only a tiny number have progressed to Stage 1. Base, the Layer2 project Coinbase started incubating in 2023, did not reach Stage 1 until last year. Vitalik has raised this point with criticism multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only 1 has reached Stage 2—zk.money, the product developed by the decentralized privacy protocol Aztec—but development of that product has since stalled. The other 12 projects belong to Stage 0, heavily relying on auxiliary functionality and multisignatures.

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

Source: L2beat

Besides potential business interests delaying the decentralization process of Layer2, Vitalik also points to 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 because their customers’ regulatory requirements demand that they have ultimate control.” he said.

However, Vitalik has not completely abandoned the concept of Layer2. Instead, he further broadened his view on what Layer2 should aim to 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 think of Layer2 as a full spectrum—one that includes chains supported and trusted by Ethereum with 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 suggested that Layer2 projects in competition should focus on added 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 pushing toward the extreme throughput beyond what the next generation of Layer1s can support.

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

And over the past year, with the Ethereum Foundation’s organizational restructuring and two network upgrades, Layer1 has already become one of the most core strategic priorities. One of the goals is to gradually raise 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, a number of technical improvements aim to reduce MEV-related manipulation and abuse, stabilize gas fee rates, and lay important groundwork for future scalability improvements.

In an earlier statement, Vitalik said that 2026 will be a key year for Ethereum to regain ground in self-sovereignty and de-trust. The plan includes simplifying node operation through ZK-EVM and BAL technology, launching Helios-verifying RPC data, using ORAM and PIR technologies to protect users’ 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 of the past decade in node operations, application decentralization, and data privacy. It will refocus on core value. 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 perspectives. Below are selected highlights excerpted by ChainCatcher:

Wei Dai (1kx Research Partner):

I’m glad to see Vitalik discuss the after-the-fact mistakes of the Rollup-centric roadmap. But asking “If I were an L2, what would I do today?” is missing the point.

The key isn’t what Vitalik would do; it’s what these L2 layers and application teams would do. L2 layers and their applications will always put their own interests first, not Ethereum’s interests. To get L2 layers to reach Stage 1 or achieve 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 layers need L1 layers to support functionality and CR). But in practice, 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 the interoperability efforts is correct.)

Blue Fox (well-known crypto researcher):

What Vitalik means is that L2 uses L1, but on the feedback of value or ecosystem impact, L2 hasn’t delivered. Now L1 can scale on its own without relying on L2 to achieve scalability. L2 either stays aligned with L1 (native rollup), or becomes L1.

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

Jason Chen (well-known crypto researcher):

With Ethereum scaling itself, the most noticeable change is that gas fees are now close to those of the L2s, and gas will continue to get lower. After ZK gradually goes live, the speed will also become comparable to the L2s. So L2s are in a very awkward position right now. Vitalik’s tweet is essentially a formal declaration that the staged history of Layer2’s role in scaling Ethereum from the start to today has been completed. If L2s don’t come up with a new narrative angle, they will become products of a bygone era and will be phased out.

For project teams, the biggest purpose of doing L2 is still to earn the transaction fees themselves. But for users, L2 no longer has much meaning, because gas and performance can’t really be meaningfully differentiated from the mainnet.

Layer2 was born from Ethereum, and dies by Ethereum. The disputes between the Zhou Tianzi and the feudal lords have also ended.

Haotian (well-known crypto researcher):

In previous articles, I’ve mentioned it at least 10 times: the generalized layer2 strategy won’t work. Every layer2 should transition into a specialized layer2; in reality, that is also a layer1. I didn’t expect that after Vitalik guided a long Stage2 alignment, many layer2s would still end up as “abandoned pieces.”

Layer2s, especially generic layer2s, carry a heavy development burden. At first, they faced technical roadmap issues related to aligning with Ethereum security. Later, they encountered the regulatory problem of sequencer centralization after token issuance. And finally, they were hit by the “disproved” burden from insufficient ecosystem incubation. The fundamental reason is that from the beginning, all layer2s relied on Ethereum layer1 to survive. But when Ethereum realizes it may not be able to secure itself and starts driving the performance evolution of layer1, layer2 loses any imagination space for empowering Ethereum—leaving only burdens and hassles.