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 Layer2’s long-standing strategy at the core of Ethereum. He plans to increase investment toward Layer1, an approach expected to create a major stir across the entire crypto industry.

The early roadmap centered on Rollups defined Layer2 as Ethereum-supported sharding, providing trustless block space. In this article, Vitalik appears to have walked back the “Rollup-centric” scaling model he previously advocated. He notes that while Ethereum’s base-layer scaling is progressing, the decentralization speed of Layer2 is “far slower than expected,” and many Layer2s cannot or are unwilling to meet the trust guarantees required for true sharding.

“Whatever the reasons for these two facts, it means Layer2’s original vision and its role within Ethereum no longer make sense—we need a new path,” Vitalik said. To outside observers, these remarks suggest that Vitalik is acknowledging that the Layer2 narrative is nearly obsolete, and that future emphasis will shift further toward scaling Layer1 itself.

Since Layer2 was proposed, it has become one of the most capital-attracting and market-watched concepts in the crypto industry. Nearly a hundred Layer2s have been launched, including Polygon, Arbitrum, and Optimism. Cumulative funding has exceeded $3 billion, and they have played a key role in scaling Ethereum and reducing users’ transaction costs, with multiple tokens’ FDV remaining above $10 billion for the long term.

However, amid strong competition from Solana’s high-performance blockchain, Layer2’s performance advantages have not been fully realized, and the industry influence of projects within its ecosystem has continued to decline. At present, only the Base ecosystem remains actively in the frontline of the crypto industry—representing the banner that Ethereum Layer2 still carries.

Mainly published Layer2 token market cap and funding data. Source: RootData

In addition, Layer2 outages continue to occur frequently. On January 11 this year, Starknet experienced another outage after years of operation. Post-incident reports showed that a conflict between the execution layer and the proving layer states led to roughly an 18-minute rollback of on-chain activity. Last September, Linea was down for more than half an hour. In December 2024, Taiko’s mainnet went offline for 30 minutes due to an ABI issue, indicating they are still technically unstable.

In fact, Vitalik previously proposed a framework for measuring Rollup decentralization, progressing in stages: from Phase 0 (a centralized trust committee can veto transactions), to Phase 1 (smart contracts begin to have limited governance power), and finally to Phase 2 (fully trustless).

Despite the emergence of nearly a hundred Ethereum Layer2 projects, only a very small number have advanced to Phase 1. Base, the Layer2 project incubated by Coinbase starting in 2023, also did not reach Phase 1 until last year. Vitalik has criticized this multiple times in the past. According to L2beat statistics, among the top 20 Rollup projects, only one—Aztec’s privacy protocol product zk.money—has reached Phase 2, but development has stalled for now. The other 12 projects are still in Phase 0, heavily dependent on auxiliary functions and multisignatures.

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

Source: L2beat

Besides potentially delaying Layer2’s decentralization process due to corporate interests, Vitalik also highlights technical challenges and regulatory concerns. “I even see at least one company explicitly stating that they may never want to surpass Phase 1. This is not only for technical reasons related to ZK-EVM security, but also because their customers’ regulatory requirements require them to hold ultimate control,” he said.

However, Vitalik has not completely abandoned the concept of Layer2. Instead, he has further broadened his view of what Layer2 should aim to achieve.

“We should stop viewing Layer2 as Ethereum’s ‘brand sharding,’ and the social status and responsibilities that come with it,” he said. “Instead, we can treat Layer2 as a complete spectrum, one that includes chains supported by Ethereum with full trust and credibility, with various unique properties (for example, not just EVM), as well as different options with varying degrees of connectivity to Ethereum, so everyone (or bots) can choose whether to focus on those options according to their own needs.”

For future development directions, Vitalik also suggests that in competition, Layer2 projects should focus on added value rather than merely expanding scale. Suggested directions include: privacy-oriented virtual machines, ultra-low-latency serialization, non-financial applications (such as social or AI applications), application-specific execution environments, and going 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 precompiled layer written into the base layer, and it “automatically upgrades with Ethereum.”

Meanwhile, in the past year, the Ethereum Foundation’s organizational structure adjustments and two network upgrades have all made Layer1 one of the most central strategic focuses. 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. Under this year’s Glamsterdam upgrade plan, multiple technical improvements aim to reduce MEV-related manipulation and abuse, stabilize gas fee rates, and lay an important foundation for future scaling enhancements.

In earlier remarks, Vitalik said that 2026 will be a key year for Ethereum to regain lost ground in self-sovereignty and de-trust. The plan includes simplifying node operation through ZK-EVM and BAL technology, launching Helios verification RPC data, using ORAM and PIR technologies to protect user privacy, developing social recovery wallets and time-lock 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 in node operation, application decentralization, and data privacy—re-centering 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 industry figures have also shared their own views. Below are excerpts of some highlights selected by ChainCatcher:

Wei Dai (1kx research partner):

I’m glad to see Vitalik discussing the hindsight mistakes of a Rollup-centric roadmap. But asking, “If I were on the L2 layer, what would I do today?” misses the 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 put their own interests first, not Ethereum’s. To get L2 layers to reach Phase 1 or achieve the maximum interoperability with Ethereum, it has to be valuable to do so.

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

Lan Hu (well-known crypto researcher):

Vitalik’s point is that L2 leverages L1. However, in terms of value feedback or ecosystem feedback, L2 has not done enough. Now that L1 can scale itself without relying on L2 for scalability, L2 either needs to stay aligned with L1 (native rollup) or become L1.

What does this mean? It’s bad news for general-purpose L2s, but good news for L2 application chains—just as we’ve been saying. L2 application chains can innovate and feed value back to the ecosystem.

Jason chen (well-known crypto researcher):

As Ethereum itself expands, the most obvious change is that gas fees drop to nearly the same level as L2s. Next, gas will continue to get even lower. And once ZK is gradually deployed, performance will become comparable to that of L2s as well. So L2s are in a very awkward position right now. Vitalik’s tweet is essentially an official declaration that the phased historical task of scaling Ethereum via L2—from the initial stage to now—has been completed. If L2 still can’t find new narrative angles, it will become a relic of history and be eliminated.

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

L2 was born from Ethereum, and L2 will also die on Ethereum. The conflicts between the Zhou king and the feudal lords have ended as well.

Haotian (well-known crypto researcher):

In previous articles, I’ve mentioned more than 10 times that the general-purpose Layer2 strategy doesn’t work. Each Layer2 should transform into a specialized Layer2, which is essentially a kind of Layer1. I didn’t expect that after Vitalik Buterin guided the long Stage2 strategic alignment, many Layer2s would still fall into being “abandoned children.”

General-purpose Layer2s carry a huge development burden. At the beginning, they face technical route alignment issues with Ethereum’s security. Then there are regulatory issues arising from centralized sequencers after token issuance. Finally, they encounter the “disproven” burden stemming from insufficient ecosystem incubation. The root cause is that at the start, all Layer2s depended on the Ethereum Layer1 to survive. When Ethereum realizes it can’t protect itself and starts to lead the performance evolution of Layer1, Layer2 loses any room to imagine empowering Ethereum—leaving only burdens and troubles.