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 since May last year, Ethereum founder Vitalik Buterin published a lengthy article today reflecting on Ethereum’s long-standing core Layer2 strategy, planning to increase investment in Layer1, which will have a sensational impact on the entire cryptocurrency industry.

The originally Rollup-centric roadmap defined Layer2 as Ethereum-supported sharded chains that provide trustless block space. In this article, Vitalik seems to have abandoned his previous advocacy of a “Rollup-centric” scaling model; he points out that while Ethereum’s underlying scalability is progressing, the decentralization speed of Layer2 is “far slower than expected,” and many Layer2 projects cannot or are unwilling to meet the trust guarantees required for true sharding.

“These two facts, for whatever reason, mean that the initial vision of Layer2 and its role in 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 To outsiders, these statements imply that Vitalik admits the Layer2 narrative is nearly outdated, and future efforts will focus more on scaling Layer1 itself.

Since Layer2 was proposed, it has become one of the most capitalized and market-focused concepts in the crypto industry. Nearly a hundred Layer2 solutions such as Polygon, Arbitrum, and Optimism have emerged, raising over $3 billion in total funding, playing a key role in scaling Ethereum and reducing user transaction costs. Several tokens’ FDV has long exceeded $10 billion.

However, 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. Currently, only the Base ecosystem remains active at the forefront of the crypto industry, representing Ethereum Layer2.

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

Moreover, Layer2 outages still occur frequently. On January 11 of this year, Starknet experienced another outage after years of operation, with post-incident reports indicating that conflicts between the execution layer and proof layer caused about 18 minutes of on-chain activity rollback. In September last year, Linea was down for over half an hour. On December 24, the Taiko mainnet went offline for 30 minutes due to an ABI issue, indicating that they remain technically unstable.

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

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

Vitalik pointed 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

In addition to potential corporate interests that may delay Layer2 decentralization, Vitalik highlighted technical challenges and regulatory concerns. “I have even seen at least one company explicitly state that they may never want to go beyond Stage 1, not only due to technical security reasons related to ZK-EVM but also because their clients’ regulatory requirements demand they retain ultimate control,” he said.

However, Vitalik has not completely abandoned the concept of Layer2; instead, he has broadened his view of what Layer2 should achieve.

“We should stop viewing Layer2 as Ethereum’s ‘branded shards,’ along with the social status and responsibilities that come with it,” he stated. “Instead, we can see Layer2 as a full spectrum, including chains fully trusted and supported by Ethereum with various unique attributes (for example, not just EVM-compatible), as well as different levels 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 in competition, not just on scaling. 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 beyond the maximum throughput supported by next-generation Layer1.

Additionally, Vitalik again mentioned ZK-EVM proofs, which can be used to scale Layer1. These are pre-compiled layers embedded into the base layer that “upgrade automatically with Ethereum.”

Over the past year, with organizational restructuring at the Ethereum Foundation and two network upgrades, Layer1 has become one of the core strategic focuses. One goal is to gradually increase the gas limit through multiple iterations, enabling Layer1 to handle more native transactions, asset issuance, governance, and DeFi settlements without over-reliance on Layer2. In this year’s Glamsterdam upgrade plan, multiple technical improvements aim to reduce manipulation and abuse related to MEV, stabilize gas fees, and lay a solid foundation for future scalability enhancements.

In earlier statements, Vitalik said 2026 will be a critical year for Ethereum to regain ground in sovereignty and trustlessness. Plans include simplifying node operation via ZK-EVM and BAL technology, launching Helios to verify RPC data, implementing ORAM and PIR techniques to protect user privacy, developing social recovery wallets and time-lock features to enhance security, and improving on-chain UI and IPFS applications.

Vitalik emphasized 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 strengthen the Ethereum ecosystem.

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

Wei Dai (1kx Research Partner):

I’m glad to see Vitalik discussing the hindsight mistakes of the Rollup-centric roadmap. But asking “What would I do if I were at the L2 level today?” misses the 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 L2s to reach Stage 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 to support functionality and CR). But in reality, the most important question is whether Ethereum’s L1 can provide more users and liquidity to L2s and applications. (I don’t think there’s a simple solution, but efforts toward interoperability are correct.)

Lan Hu (Notable 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 independently without relying on L2 for scalability. L2 must either align with L1 (native rollup) or become L1 itself.

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

Jason Chen (Notable Crypto Researcher):

As Ethereum itself scales, the most noticeable change is that gas fees are now nearly as low as those of L2, and they will continue to decrease. With ZK rollups gradually coming online, speeds will be similar to L2s. So L2s are in a very awkward position now. Vitalik’s tweet effectively declares that the initial and ongoing mission of expanding Ethereum has been completed. If L2s don’t find new narratives, they risk becoming relics of history and being phased out.

For project teams, the main goal of L2 is still to earn fees, but for users, L2s no longer offer much advantage—gas and performance are close enough to the mainnet.

L2 was born from Ethereum and will die with Ethereum; the disputes among the sovereign and vassals have ended.

Haotian (Notable Crypto Researcher):

I’ve mentioned more than ten times in previous articles that general-purpose Layer2 strategies are no longer feasible. Each Layer2 should shift toward specialized Layer2, which is essentially a form of Layer1. I didn’t expect that after guiding the long Stage 2 strategic alignment, many Layer2s still became “sacrifices.”

Especially for general-purpose Layer2s, they carry a heavy development burden—initially facing technical challenges in aligning with Ethereum’s security, then regulatory issues due to Sequencer centralization after token issuance, and finally the burden of being “falsified” due to weak ecological development. The fundamental reason is that all Layer2s initially depended on Ethereum Layer1 for survival. When Ethereum began to dominate the evolution of Layer1 performance, Layer2 lost any imaginative space to empower Ethereum, leaving only burdens and troubles.