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 founder Vitalik Buterin today published a long article reflecting on Ethereum’s Layer2 strategy and its long-standing role as a core position. He plans to increase investment in the Layer1 direction, which is expected to have a blockbuster impact across the entire crypto industry.

The original roadmap centered on Rollups defined Layer2 as sharding supported by Ethereum, providing block space without trust. In this article, Vitalik appears to have abandoned the “Rollup-centric” scaling model he previously advocated. He points out that while Ethereum is scaling at the base layer, the pace of decentralization for Layer2 is “far slower than expected,” and that many Layer2 solutions cannot or are unwilling to meet the trust assurances required for true sharding.

“Those two facts, regardless of the reasons, mean that Layer2’s original vision and its role in Ethereum are no longer meaningful—we need a new path.” Vitalik said. To outside observers, these statements suggest that Vitalik is acknowledging that the Layer2 narrative is close to being obsolete, and that future focus will be placed more heavily on scaling Layer1 itself.

Since Layer2 was proposed, it has become one of the most capital-searched and most market-attended concepts in the crypto industry. Nearly a hundred Layer2s have emerged, including Polygon, Arbitrum, Optimism, and others. Total funding has exceeded $3 billion. They have played a key role in scaling Ethereum and lowering users’ transaction costs, and multiple tokens’ FDV has long remained above $10 billion.

But under the 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 still remains active on the front line of the crypto industry, representing Ethereum’s Layer2 flagship.

Primary released Layer2 token market cap and financing data Source: RootData

In addition, Layer2 downtime incidents continue to occur frequently. On January 11 of this year, Starknet suffered another downtime incident after being live for years. The post-incident report showed that a conflict between the execution layer and the proving 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 down for 30 minutes due to an ABI issue. This means 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), and then to Stage 2 (representing complete trustlessness).

Although nearly a hundred Ethereum Layer2 projects have emerged, only a very small number have progressed to Stage 1. The Base Layer2 project, incubated by Coinbase starting in 2023, also did not reach Stage 1 until last year. Vitalik has criticized this point multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only 1 reaches Stage 2—that is, the product zk.money developed by the decentralized privacy protocol Aztec. However, that product is currently in development limbo. The other 12 projects are all at Stage 0, heavily relying on auxiliary functions and multi-signatures.

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 potentially delaying the decentralization process of Layer2 for the benefit of enterprises, Vitalik also points out there are technical challenges and regulatory concerns. “I even see at least one company that has clearly said they may never want to go beyond the first stage. This is not only for technical reasons related to the security of ZK-EVM, but also because their customers’ regulatory requirements require them to 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 aim to achieve.

“We should stop treating Layer2 as Ethereum’s ‘branded 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 with full trust and credit, with various unique properties (for example, not just EVM), as well as different options with varying degrees of connection to Ethereum—everyone (or robots) can choose whether to pay attention to these options based on their own needs.”

Regarding future directions, Vitalik also further suggested that Layer2 projects should focus on additional value in competition, not just expanding scale. The directions he suggests 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 the next generation of Layer1 can support.

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

And over the past year, following the Ethereum Foundation’s organizational structure adjustments, as well as across two network upgrades, Layer1 has become one of the most core strategic directions. 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 over-relying on L2. In this year’s Glamsterdam upgrade plan, multiple technical improvements are intended to reduce manipulation and abuse related to MEV, stabilize gas fee rates, and lay important groundwork for future scaling improvements.

In earlier remarks, Vitalik said that 2026 will be a key year for Ethereum to reclaim ground in terms of self-sovereignty and decentralization. The plan includes simplifying node operation through ZK-EVM and BAL technology, launching Helios validation RPC data, using ORAM and PIR technologies to protect user privacy, developing social recovery wallets and time-lock functions to enhance fund security, and improving the on-chain UI and IPFS applications.

Vitalik emphasized that Ethereum will correct the compromises made over the past decade in node operation, application decentralization, and data privacy. It will refocus 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 people in the industry have also shared their own perspectives. Below are some of the key excerpts compiled by ChainCatcher:

Wei Dai (Research Partner at 1kx):

It’s great to see Vitalik discuss the hindsight mistakes of the Rollup-centric roadmap. But asking “If I were at the L2 level, what would I do today?” misses the point.

The key isn’t what Vitalik would do, but what these L2 layers and application teams would do. L2 layers and their applications will always prioritize their own interests, not Ethereum’s. To enable L2 layers to reach Stage 1 or to achieve maximal interoperability with Ethereum, it must be ensured 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 reality, the most important factor is whether Ethereum L1 can provide L2 layers and applications with more users and liquidity. (I don’t think there’s a simple solution, but the direction of efforts toward interoperability 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 hasn’t delivered. Now L1 can scale itself and doesn’t need to rely on L2 to achieve scalability. Layer2 must either stay aligned with L1 (native rollups), or become L1.

What does that mean? It’s bad news for general-purpose L2, and good news for L2 application chains, as we’ve been saying consistently. L2 application chains can get creative and feed value back to the ecosystem.

Jason Chen (Well-known crypto researcher):

With Ethereum itself expanding, the most obvious change is that Gas fees are already as low as L2s, and next they will continue to be low as well. After ZK gradually gets rolled out, the speed will also be close to L2s. So L2s are in a very awkward position right now. Vitalik’s tweet is essentially a formal declaration that the phased historical task of scaling Ethereum that L2 was supposed to handle—from the beginning until now—has been completed. If L2s don’t keep finding new narrative angles, they will become products of a bygone era and be phased out.

For project teams, the biggest purpose of doing L2 is still to earn all the fees themselves. But for users, L2 no longer has much meaningful existence, since both Gas and performance don’t create much of a gap versus the mainnet.

L2 was born out of Ethereum, and it will also die out of Ethereum. The disputes between the Zhou Tianzi and the feudal lords also end.

Haotian (Well-known crypto researcher):

In a previous article, I’ve mentioned it at least 10 times: a general-purpose Layer2 strategy won’t work. Each Layer2 should pivot to a specialized Layer2, which is also essentially Layer1. I didn’t expect that after Vitalik guided a long Stage2 strategy alignment, many Layer2s still ended up as “discarded pieces.”

Layer2s—especially general-purpose Layer2s—carry a heavy development burden. At the beginning, they face alignment issues with Ethereum’s security technical roadmap. After that, there are regulatory problems stemming from sequencer centralization after issuing tokens. And finally, they encounter the burden of being “disproved” due to insufficient ecosystem nurturing. The root cause is that from the start, all these Layer2s depended on Ethereum Layer1 to survive. When Ethereum discovers that it is hard to protect itself and starts to lead the performance evolution of Layer1, Layer2 no longer has any enabling imagination space for Ethereum—it only leaves behind dead weight and trouble.