Ethereum’s Growing Capacity Puts Pressure on Layer 2 Platforms

Ethereum founder Vitalik Buterin predicts tough times ahead for Layer 2 solutions, as the ETH blockchain itself is increasingly providing more capacity. Buterin’s analysis sounds harsh for projects like Arbitrum, Polygon, or Optimism.

In recent years, the Ethereum ecosystem has become accustomed to so-called Layer 2 solutions. Dozens of projects connect to the ETH blockchain as subordinate entities and document their activities there. Ethereum was able to solve its capacity problems with these Layer 2 structures and has deeply integrated them with the Dencun and, most recently, Fusaka upgrades. But now, Ethereum mastermind Vitalik Buterin is calling on X to take a “new path.” The original role of Layer 2 in Ethereum “no longer makes sense,” according to Buterin.

Layer-2, such as Arbitrum, Polygon, or Optimism, by ETH inventors, are under threat

Offerings like Arbitrum , Polygon, or Optimism should now be setting off alarm bells. While Buterin doesn’t explicitly mention Layer 2, his argument is clear: Ethereum is constantly expanding capacity on its own network, Layer 1, and is therefore no longer dependent on Layer 2. Back in January, Buterin had already announced the solution to the “blockchain trilemma” and, based on this, predicted further capacity gains for Ethereum.

Buterin makes no secret of his distrust of some Layer 2 entities. In his view, these entities present themselves as belonging to the “Ethereum brand” but are unwilling or unable to uphold ETH’s fundamental principles.

As examples, Buterin cites advanced decentralization, which protects activities within the Ethereum ecosystem from censorship and other interference. He knows of at least one Layer 2 entity that refuses to pursue the goal of a ZK-EVM. The “Zero Knowledge” feature is intended to protect privacy and enhance the performance of the Ethereum Virtual Machine (EVM), the central hub of the ETH ecosystem.

In the Ethereum ecosystem, Layer-2 will have to tweak profiles

According to Buterin, Ethereum shouldn’t completely abandon Layer 2. These layers would need to offer unique features like high speed and anonymity to become indispensable.

However, Buterin writes that those who don’t adhere to fundamental ETH development plans will have little chance of success and expresses his desire for responsible handling of the Ethereum brand . The 32-year-old sits on the board of the Ethereum Foundation and typically oversees technological aspects of ETH’s development.

Conclusion: Is Layer-2 on Ethereum facing its demise?

Commercialized Layer 2 platforms are already going through a tricky phase. A trend is emerging where large corporations, the traditional financial industry, and cryptocurrency exchanges are no longer using existing Layer 2 platforms when building bridges to Ethereum.

Instead, companies like Google, Kraken, and others are favoring their own proprietary Layer 2 platforms. Now, established Layer 2 platforms like Arbitrum and Polygon are threatened with further decline in importance, driven by Ethereum itself. Vitalik Buterin’s statements will undoubtedly spark debate, but at their core, they represent a politely worded critique of the Layer 2 concept and a return to Ethereum as the core brand.

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(Featured image by Victor Forgacs via Unsplash)

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First published in BLOCK-BUILDERS.DE. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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