Momir Amidzic, partner of IOSG, a venture capital firm that has invested in multiple Ethereum Layer 2 projects, recently wrote a post on Twitter about the future of Ethereum and Layer 2. In fact, this post is a sequel to his previous article " Reinventing Ethereum: Restoring Control and Value of ETH ". IOSG's investment positions include Arbitrum, zkSync, Stacks, BOB, Taiko, StarkWare, Aztec Network, etc., covering Ethereum and Bitcoin's Layer 2.
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ToggleEthereum faces internal and external troubles
In the article "Reinventing Ethereum: Restoring Control and Value of ETH", he first mentioned that the original Web 3 vision of 2021 has gradually faded and Ethereum has also suffered a major setback. Not only does the community no longer agree with the Web 3 vision, Ethereum also faces fierce competition from platforms such as Solana for the remaining market share. In addition to external troubles, there are also internal worries. The fragmentation of L2, the erosion of value accumulation, the dilution of ecosystem control, and the lack of cohesion have further weakened Ethereum.
Momir Amidzic pointed out that these problems affect the economic value of ETH, and the rise of L2 also weakens the influence of Ethereum. These issues ultimately led to a sharp decline in the price of ETH. Momir Amidzic's solutions include strengthening L2 interoperability, prioritizing the development of ETH-centric infrastructure, and taking decisive and performance-oriented leadership. He pointed out that Ethereum has solid infrastructure and vibrant developers as its advantages, but must act quickly and strategically to restore ETH's position.
Ethereum’s proud values have been replaced by nihilism
At this stage, Ethereum is shifting from the craze of Web 3 to a more sober reality, leading to a reassessment of Ethereum’s core value proposition. The once idealistic vision of decentralization and user sovereignty has been replaced by a more cynical view of the crypto industry as little more than Bitcoin and digital casinos. This shift in sentiment has particularly affected Ethereum.
Another factor exacerbating this phenomenon is that Ethereum is no longer the only representative of the Web 3 vision. Solana is emerging as a hub for crypto consumer activity. Against this backdrop, this article aims to identify Ethereum’s most pressing strategic challenges and propose viable solutions to this evolving landscape. However, this article focuses on discussing L2-related issues.
L2 split is a lose-lose situation for Ethereum, users, and the protocol
Momir Amidzic pointed out that the fragmentation of Layer 2 destroys user experience and liquidity. This impacted the composability advantage of the Ethereum mainnet, which is still evident in today's competitors such as Solana. For users, inconsistent protocols, standards, and cross-chain hassles diminish the seamless interactive experience that Ethereum originally promised. Developers need to maintain protocols on multiple L2s, creating unnecessary burdens, while startups must face complex Go To Market strategies and are forced to disperse limited resources among users of each L2.
More importantly, Ethereum’s decision to set Layer 2 as the mainstream scaling solution may weaken its control over its own ecosystem, because Layer 2 is actually developed and operated by a third party, which is equivalent to Ethereum outsourcing the scaling solution. As Layer 2 builds its own ecosystem, a network effect will be formed, which will then evolve into a powerful moat.
Over time, these execution layers (Layer 2) outperform Ethereum's settlement layer, creating a leverage effect that causes the future Ethereum community to ignore the importance of the settlement layer. Assets may begin to exist natively in the execution layer (Layer 2), reducing Ethereum’s influence and value accumulation potential as a settlement layer, and the settlement layer is gradually commoditized.
The author adds: The blockchain is divided into data availability layer, execution layer, settlement layer, sorter layer, and aggregation layer. Layer 2 usually uses its own execution layer to execute transactions, and then sends the transaction data to the Ethereum main network for settlement. Depending on the consensus mechanism (Opmistic, zk), the transaction finality time will also be different.
The rise of L2 affects the value accumulation of ETH
The rise of L2 has affected the value accumulation of ETH, and the funds flowing back to the Ethereum mainnet have decreased. This shift transfers economic benefits from ETH holders to L2 token holders (author adds: most L2 token prices have fallen 80-90% from their highs), weakening the incentive to hold ETH for investment purposes. While this trend clearly reduces the value of ETH as a productive asset, it is an unavoidable challenge for any L1. It’s just that as the most mature public chain, Ethereum is the first to face this problem.
But Momir Amidzic also admitted that single chains such as Solana and even L2 itself may face similar challenges in the near future. Ethereum also faces significant leadership challenges, where realistic performance goals need to be balanced with idealism within the Ethereum community, which may slow progress. ETH holders lack a mechanism to directly influence strategically critical decisions, and their only option is to sell their tokens when they are unhappy.
However, Momir Amidzic also pointed out that in hindsight, these problems are easy to define, but to some extent, they may be the result of regulatory considerations and mitigation of state-targeted risks rather than a real lack of insight into governance and leadership.
Ethereum should promote L2 interoperability standards
One of the solutions proposed by Momir Amidzic is to let Layer 2 survive the law of the jungle, leaving 2 to 3 active mainstream L2s, while the others will gradually disappear or turn to application rollups that serve specific usage scenarios. The other is to establish robust interoperability standards that reduce friction across the rollup ecosystem and make it less likely that any single rollup will establish a dominant moat.
He believes that Ethereum should take the initiative to promote the latter and enforce interoperability standards while it still has influence on L2. He noted that this influence is waning, and the longer Ethereum delays, the less effective the strategy will be. By proposing a unified L2 ecosystem, Ethereum can improve user experience and strengthen its competitiveness against single blockchains.
But relying solely on market-driven integration is extremely risky for ETH. Each Layer 2 will likely prioritize the accrual of value for its own token, pushing ETH aside and weakening Ethereum’s economic model. To avoid this outcome, Ethereum must act decisively to shape its L2 ecosystem to ensure that value and control remain tied to the mainnet and ETH.
ETH is positioned as currency and pure on-chain collateral
The productive asset narrative is not a sustainable long-term strategy for L1 tokens (including Ethereum). The window for L1 to capture most MEV is likely to be only the next five years as value accumulation continues to shift to the upper levels. Meanwhile, the store of value narrative has been firmly established by BTC, leaving little room for a second asset. If ETH tries to compete here, the market may view it as "poor man's $BTC". Similar to silver's historical positioning as a secondary substitute for gold.
While ETH may eventually demonstrate a clear advantage over BTC as a store of value, this transition may take at least a decade, and ETH cannot afford to wait that long. During this time, Ethereum must carve out a unique narrative to maintain its relevance.
Momir Amidzic believes that positioning ETH as a "currency" and pure on-chain collateral provides the most promising path for the next decade. While stablecoins dominate on-chain finance as a medium of payment, they still rely on off-chain ledgers. The role of blockchain-native, unstoppable money has yet to be established, and ETH is uniquely positioned to seize this opportunity. However, this would require Ethereum to regain control of the general purpose layer of its ecosystem and prioritize ETH adoption over the proliferation of wrapped ETH standards.
Ethereum has two ways to establish ecosystem ownership
There are two ways to re-establish ownership of the Ethereum ecosystem:
- Expanding Ethereum’s L1 layer to bring performance to par with those of more centralized but better performing competitors, ensuring latency-free experiences for consumer applications and decentralized finance (DeFi).
- Launch an Ethereum-native Layer 2 and focus all business development and adoption efforts on this Layer 2. By focusing activity on ETH-owned infrastructure, Ethereum can strengthen ETH’s central position in the ecosystem. Ethereum must shift from the outdated ETH-aligned paradigm to an ETH-owned ecosystem model that prioritizes direct control and maximizes ETH’s value accrual.
However, regaining control of the ecosystem and strengthening ETH adoption are delicate decisions that have the potential to alienate key contributors such as rollups and liquidity providers. Ethereum must navigate this carefully, balancing the need for control with the risk of community fragmentation to ensure that ETH can successfully establish its new narrative as the cornerstone of the ecosystem.
IOSG partners write prescriptions for Ethereum: turn to performance orientation
Finally, Momir Amidzic made it clear that Ethereum’s leadership must evolve to address its governance and strategy challenges. Ethereum leaders should be performance-oriented, have a stronger sense of urgency, and take a pragmatic approach to ecosystem development. This evolution requires abandoning past commitments to trusted neutrality that have hindered decision-making, particularly in developing the Ethereum product line and positioning ETH as a competitive asset.
Additionally, the market has expressed dissatisfaction with Ethereum’s outsourcing of key infrastructure, from rollups to staking, to decentralized entities. To address this, Ethereum must move from the outdated paradigm of being aligned with ETH to a model owned by ETH, ensuring that critical infrastructure is unified under a single codename: $ETH. This shift will strengthen ETH's core position and restore market confidence in Ethereum's strategic direction.
What is the best approach for L2 and Ethereum? Venture capital partners give advice
In his article on May 9, Momir Amidzic further pointed out what he thinks is the best approach from the perspective of Ethereum and L2.
The best playbook for Ethereum:
Owning critical infrastructure: Regarding L2, acquiring existing or developing new general-purpose solutions (Ethereum R1), committing value to ETH. While specialized rollups can scale, innovate, and attract institutions, Ethereum must control general purpose L2 activity.
Enforce interoperability standards to address liquidity fragmentation before market forces can resolve it on their own. Market settlement will result in 2-3 dominant L2s with leverage over the base layer, controlling the ecosystem and asset issuance. Interoperability ensures the long-term value of L1.
L2's Best Playbook:
Main L2 (Base, Arbitrum):
- L1 imports liquidity into L2 to achieve network effects and ecosystem dominance, competing with Solana’s integration approach.
- Ignore broader interoperability standards and focus on standards within their ecosystem.
- Actively bring institutions into its L2 (regardless of Ethereum strategy, which is limited to the current L2)
Less dominant L2:
- Support broader interoperability standards to weaken the moat that dominates L2.
- Actively introduce specialized L2 for institutional use.
Risk Warning
Cryptocurrency investments carry a high degree of risk, their prices may fluctuate dramatically, and you may lose all your investment. Please assess the risks carefully.
On May 14, 2025, the Ethereum Foundation announced a major project: the "Trillion Dollar Security" (1TS) initiative, which aims to significantly enhance the security of the Ethereum blockchain. The ultimate goal of this project is to make Ethereum a reliable infrastructure for the global economy, carrying trillions of dollars in on-chain assets. The plan was announced through the social platform X, emphasizing that the entire ecosystem will participate together to promote a comprehensive upgrade of the security architecture.
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ToggleEthereum Foundation: “We are ready to bring the world to blockchain”
The Ethereum Foundation issued a statement through its official X account: "We announce the Terabyte Security (1TS) project: an ecosystem-wide effort to upgrade the security of Ethereum and help the world go online." This post opened a series of detailed explanations of the project's vision, strategy and leadership team.
The Foundation pointed out that although Ethereum is currently the world's most trusted smart contract platform, future challenges require a higher level of security. “Ethereum must surpass the security and trust standards of traditional systems in order to support civilization-level digital infrastructure.”
Defining "Trillion Dollar Security": Let everyone chain thousands of dollars and institutions deposit trillions of dollars
The core idea of the 1TS project is to create a future where billions of people are willing to safely hold $1,000 on the chain, and institutions are willing to deposit $1 trillion in a single smart contract or application. This is not only a strengthening of the technical aspects of blockchain, but also a commitment to the future development of the global digital economy.
This vision means that Ethereum must be able to support core application scenarios such as personal savings, corporate operating funds, and even global financial infrastructure.
Three core strategies: from vulnerability scanning to security communication
To achieve this ambitious goal, the 1TS plan will take three major action lines:
1. Comprehensive inventory of security pros and cons
The Foundation will conduct a detailed analysis of the entire Ethereum technology stack to identify existing strengths and potential weaknesses. This inventory will cover aspects such as wallet user experience (UX), smart contract library, consensus mechanism, cloud infrastructure, etc., and will eventually be compiled into a comprehensive security report.
2. Prioritize fixing critical vulnerabilities
Based on the results of the security analysis, the Foundation will fix the most urgent and riskiest issues. It not only focuses on short-term emergency response, but also includes systemic upgrades to ensure that Ethereum can resist new types of attacks that may arise in the future.
3. Establish transparent security awareness
Finally, the plan will focus on "making the world understand the security of Ethereum." Through easy-to-understand information disclosure and comparative indicators, it helps users, developers and institutions understand Ethereum’s security architecture and make clear comparisons with other chains or traditional financial systems.
Leadership and community engagement: Bringing together experts and developers
This Foundation-led project will be led by two core members: Fredrik Svantes (@fredriksvantes) and Stark (@0xstark). They will have three ecosystem leaders as advisors:
Samczsun (@samczsun): Founder of SEAL organization
Zach Obront (@zachobront): Co-founder of Etherealize
Ethzed (@ethzed): Co-founder of Sigma Prime
The Foundation particularly emphasized that this project relies on the participation of the entire community. They invite all Ethereum developers and relevant organizations to provide suggestions. Feedback can be obtained via email ( trilliondollarsecurity@ethereum.org ) or the official questionnaire link.
The trillion-dollar security plan is clearly a response to past security incidents, including the infamous 2016 DAO hack (which lost more than $60 million). According to a 2020 ACM research report, Ethereum is exposed to unique security risks due to its support for decentralized applications (DApps).
The 1TS project is clearly intended to solve various vulnerabilities from wallet firmware, contract logic to infrastructure in one fell swoop, and establish new standards for the entire blockchain world.
Ethereum looks to the future: building a new cornerstone of the global economy
Mainstream media and opinion leaders have also forwarded and analyzed this plan, predicting that it will become a turning point in the development of Ethereum.
Currently, the Foundation has opened further information links for interested developers and organizations to learn more.
As the on-chain economy accelerates, Ethereum is moving towards a new era: not only a decentralized application platform, but also the digital lifeline supporting trillions of dollars in assets.
Risk Warning
Cryptocurrency investments carry a high degree of risk, their prices may fluctuate dramatically, and you may lose all your investment. Please assess the risks carefully.
