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 article reflecting on Ethereum’s Layer2 strategy and its long-standing core position. He plans to increase investment in the Layer1 direction, which is expected to create a major stir across the entire crypto industry.

The roadmap that initially centered on Rollups defined Layer2 as Ethereum-supported sharding, providing trustless block space. In this article, Vitalik appears to have abandoned the “Rollup-centered” scaling model he had previously advocated. He points out that while Ethereum’s base layer is scaling, the decentralization speed of Layer 2 is “far slower than expected,” and many Layer2s are unable or unwilling to meet the trust guarantees required for true sharding.

“Taken together, regardless of the reasons, these two facts mean that Layer2’s original vision and its role within Ethereum are no longer meaningful—we need a new path.” Vitalik said. From the outside, these statements are taken to mean that Vitalik is effectively acknowledging that the Layer2 narrative is nearly outdated, and that going forward, more focus will be placed on scaling Layer1 itself.

Since Layer2 was proposed, it has become one of the most capital-attractive and market-watched concepts in the crypto industry. Nearly 100 Layer2s have been launched, including Polygon, Arbitrum, Optimism, and more. Cumulatively, they have raised more than $3 billion, playing a key role in scaling Ethereum and reducing user transaction costs. 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 been gradually declining. At present, only the Base ecosystem remains actively in the front line of the crypto industry—signaling that Ethereum Layer2 is carrying the banner.

Published Layer2 token market cap and funding data Source: RootData

In addition, Layer2 downtime incidents continue to occur frequently. On January 11 this year, Starknet experienced another downtime after years of going live. The post-incident report showed that execution-layer and proof-layer state conflicts led to roughly an 18-minute rollback of on-chain activity. Last September, Linea had downtime 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 unstable at the technical level.

In fact, Vitalik previously proposed a framework for measuring Rollup decentralization, which is carried out 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 being fully trustless).

Even though nearly 100 Ethereum Layer2 projects have emerged, only a very small number have progressed to Stage 1. Base, a Layer2 project incubated by Coinbase starting in 2023, also did not reach Stage 1 until last year. Vitalik has raised criticism about this point multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only 1 has reached Stage 2: the zk.money product developed by the decentralized privacy protocol Aztec, but that product has already hit a development stall. The other 12 projects are all in Stage 0, heavily dependent on auxiliary functions and multi-signatures.

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

Source: L2beat

Besides potential corporate interests that may delay the Layer2 decentralization process, Vitalik also points out there are technical challenges and regulatory concerns. “I’ve even seen at least one company clearly state that they might never want to go beyond Stage 1. This is not only due to technical reasons related to ZK-EVM security—it’s also 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 of what Layer2 should aim to achieve.

“We should stop treating Layer2 as Ethereum’s ‘brand sharding,’ along with the social status and responsibilities brought by that,” he said. “Instead, we can see Layer2 as a full spectrum—one that includes chains with various unique properties (for example, not just EVM) that are fully backed by Ethereum’s trust and credit, as well as different options with varying degrees of connectivity to Ethereum—so that everyone (or even robots) can choose whether to pay attention to these options based on their own needs.”

For future directions, Vitalik also suggests that Layer2 projects in competition should focus on added value rather than simply scaling up. Suggested development 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 going beyond the extreme throughput that the next generation of Layer1 can support.

Also worth noting is that Vitalik again mentioned ZK-EVM proofs, which can be used to scale Layer1. This is a precompile layer: it is written into the base layer and “as Ethereum automatically upgrades.”

And through organizational structure changes at the Ethereum Foundation over the past year, as well as two network upgrades, Layer1 has already become one of the most core strategies. One of the goals is to gradually raise the gas limit through multiple iterations so that L1 can handle more native transactions, asset issuance, governance, and DeFi settlement, without being overly dependent on L2. In this year’s planned Glamsterdam upgrade, multiple technical improvements are designed to reduce manipulation and abuse related to MEV, stabilize gas fee rates, and lay important groundwork for future scaling improvements.

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

Vitalik emphasized that Ethereum will correct the compromises of the past decade regarding node operation, application decentralization, and data privacy. It will refocus 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 participants have also shared their own views. Below are selected highlights excerpted by ChainCatcher:

Wei Dai (1kx Research Partner):

Glad to see Vitalik discussing the hindsight mistakes of the Rollup-centered roadmap. But asking, “If I were in the L2 layer, what would I do today?” is a detour from the main point.

The key isn’t what Vitalik would do, but what these L2-layer and application teams would do. L2 layers and their application teams always prioritize their own interests—not Ethereum’s. To make L2 layers reach Stage 1 or achieve maximum interoperability with Ethereum, you must ensure that doing so is valuable.

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

Blue Fox (Well-known crypto researcher):

What Vitalik means is that L2 leverages L1, but in terms of value feedback or ecosystem feedback, L2 hasn’t done enough. Now L1 itself can scale without relying on L2 to achieve scalability. L2 either stays aligned with L1 (native rollup), or it becomes L1.

What does that imply? It’s bad news for generic L2, but good news for L2 application chains—just as we’ve been saying consistently. L2 application chains can do interesting things and feed value back into the ecosystem.

Jason Chen (Well-known crypto researcher):

With Ethereum itself scaling, the most obvious change is that gas fees are now nearly the same as those of the L2s—and going forward, gas will continue to be even lower. On top of that, once ZK gradually rolls out, the speed will also be comparable to the L2s. So the current position of the L2s is very awkward. Vitalik’s tweet is essentially a formal announcement that the phased historical task of scaling Ethereum that L2s originally set out to accomplish has been completed. If L2s don’t continue to find new narrative angles, they will become products of a bygone era and be eliminated.

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 aren’t meaningfully different from the mainnet.

L2 was born from Ethereum, and L2 will also die by Ethereum. The conflict between the Zhou Son of Heaven and the vassal lords has ended as well.

Haotian (Well-known crypto researcher):

In previous articles, I’ve mentioned at least 10 times that the generic Layer2 strategy won’t work. Each Layer2 should pivot to a specialized Layer2; in a sense, it’s also a kind of Layer1. I didn’t expect that after Vitalik Buterin guided a long Stage2 strategy alignment, many Layer2s would still end up becoming “discarded pieces.”

Layer2s—especially generic Layer2s—carry a heavy development burden. At the beginning, they faced technical-route issues around aligning with Ethereum security. After that, they faced regulatory problems arising from sequencer centralization after token issuance. And finally, they encountered the “disproven” burden from insufficient ecosystem incubation. The root cause is that from the very beginning, all Layer2s relied on the Ethereum Layer1 to survive. When Ethereum realized it was hard to protect itself and started to take the lead in evolving Layer1 performance, Layer2 lost all imagined space for enabling Ethereum. What remained was only dead weight and trouble