Vitalik finally admits to a major strategic mistake by Ethereum. Are you still holding your position?

Author: Gu Yu, ChainCatcher

After ETH price hit a new low since last May, Ethereum founder Vitalik Buterin published a lengthy article today reflecting on the long-standing Layer2 strategy that has been at the core of Ethereum. He plans to increase investment in Layer1, which is expected to cause a stir across the entire crypto industry.

Originally, the roadmap centered around Rollups defined Layer2 as sharded support provided by Ethereum, offering trustless block space. In this article, Vitalik seems to have abandoned his previous advocacy for a “Rollup-centric” scaling model. He points out that while Ethereum’s base layer is scaling, the decentralization speed of Layer2 is “much slower than expected,” and many Layer2 solutions cannot or do not want to meet the trust guarantees required for true sharding.

“These two facts, for whatever reason, mean that the original vision of Layer2 and its role within Ethereum no longer make sense. We need a new path,” Vitalik said. To outsiders, these statements imply that Vitalik admits the Layer2 narrative is nearly outdated, and future focus will shift more toward scaling the Layer1 itself.

Since its inception, Layer2 has been one of the most capital-enthusiastic and market-focused concepts in crypto, with nearly a hundred Layer2 projects like Polygon, Arbitrum, and Optimism emerging, raising over $3 billion in total funding. They have played a key role in scaling Ethereum and reducing user transaction costs, with multiple tokens’ FDV exceeding $10 billion long-term.

However, under strong competition from high-performance blockchains like Solana, Layer2’s performance advantages have not been fully realized, and its ecosystem influence has waned. Currently, only the Base ecosystem remains active at the forefront of crypto, representing Ethereum Layer2.

Mainly Published Layer2 Token Market Cap and Funding Data Source: RootData

Additionally, Layer2 outages still occur frequently. On January 11 this year, Starknet experienced a outage again after many years of operation. Post-incident reports showed a conflict between execution and proof layers caused about 18 minutes of on-chain activity rollback. In September last year, Linea was down for over half an hour. In December 2024, Taiko’s mainnet went down for 30 minutes due to an ABI issue, indicating ongoing technical instability.

In fact, Vitalik previously proposed a phased framework to measure Layer2 decentralization, progressing from Phase 0 (centralized trust committee can veto transactions), Phase 1 (smart contracts begin to have limited governance), to Phase 2 (completely trustless).

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

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

Beyond potential corporate interests delaying Layer2 decentralization, Vitalik highlights technical challenges and regulatory concerns. “I’ve even seen at least one company explicitly say they might never want to surpass Phase 1. This is not only due to ZK-EVM security reasons but also because their clients’ regulatory requirements demand ultimate control,” he said.

However, Vitalik has not completely abandoned the Layer2 concept. Instead, he broadens his view on what Layer2 should achieve.

“We should stop viewing Layer2 as Ethereum’s ‘brand sharding’ with associated social status and responsibilities,” he stated. “Instead, we can see Layer2 as a full spectrum, including chains fully trusted and supported by Ethereum with various unique attributes (not just EVM), as well as options with different degrees of connection to Ethereum. Everyone (or bots) can choose whether to focus on these options based on their needs.”

For future development, Vitalik suggests Layer2 projects should focus on added value rather than just scaling. His recommended directions include: privacy-focused virtual machines, ultra-low latency serialization, non-financial applications (like social or AI), application-specific execution environments, and pushing beyond the throughput limits of next-generation Layer1.

He also revisited ZK-EVM proofs, which can be used to extend Layer1. This is a pre-compiled layer embedded into the base layer that “automatically upgrades with Ethereum.”

Over the past year, Ethereum Foundation’s organizational restructuring and two network upgrades have made Layer1 a core strategic focus. One goal is to iteratively increase the gas limit, enabling Layer1 to handle more native transactions, asset issuance, governance, and DeFi settlements without over-relying on Layer2. The Glamsterdam upgrade plan this year includes several improvements aimed at reducing MEV manipulation and abuse, stabilizing gas fees, and laying a foundation for future scaling.

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

Vitalik emphasizes 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: Many industry figures have shared their views on Vitalik’s article and ideas. Here are some highlights from ChainCatcher:

Wei Dai (1kx Research Partner):

Glad to see Vitalik discussing the hindsight errors of a Rollup-centric roadmap. But asking “What would I do if I were an L2?” misses the point.

The key isn’t what Vitalik would do, but what L2 layers and application teams will do. L2s and their applications will always prioritize their own interests over Ethereum’s. To get L2s to reach Phase 1 or achieve maximum interoperability with Ethereum, it must be valuable for them to do so.

For a long time, this has been framed as a security issue (L2s need L1 support for functionality and CR). But in reality, the most important factor is whether Ethereum’s L1 can provide more users and liquidity to L2s and applications. (I think there’s no simple solution, but efforts toward interoperability are correct.)

Lan Hu (Well-known Crypto Researcher):

Vitalik means that L2s leverage L1, but in terms of value feedback or ecosystem benefits, L2s haven’t delivered. Now that L1 can scale itself, there’s no need to rely on L2 for scalability. L2s should either align with L1 (native rollups) or become L1.

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

Jason Chen (Well-known Crypto Researcher):

As Ethereum itself scales, the most noticeable change is gas fees dropping to near L2 levels. With further reductions and the rise of ZK proofs, speeds will be comparable to L2s. So, L2s are in a very awkward position now. Vitalik’s tweet essentially declares that the initial and ongoing task of expanding Ethereum via L2 is complete. If no new narrative is found, L2s risk becoming relics of history.

For projects, the main goal of L2 was to profit from transaction fees, but for users, L2s no longer hold much significance—gas and performance are close to mainnet.

L2 was born on Ethereum and will die on Ethereum. The disputes among the aristocrats and vassals have ended.

Haotian (Well-known Crypto Researcher):

I’ve mentioned over ten times before that the universal Layer2 strategy is no longer viable. Each Layer2 should pivot to a specialized Layer2, which is essentially a form of Layer1. I didn’t expect that after guiding the long Stage2 strategy alignment, many Layer2s still became “abandoned children.”

Universal Layer2s carry a heavy development burden—initially facing technical alignment issues with Ethereum’s security, then regulatory concerns over centralized sequencers post-token issuance, and finally the burden of ecosystem underdevelopment, which proved to be “disproof.” The fundamental reason is that all Layer2s depend on Ethereum Layer1 for survival. When Ethereum itself struggles and begins to lead the performance evolution of Layer1, Layer2 loses all potential to empower Ethereum, leaving only burdens and troubles.