Ethereum co-founder Vitalik announced the latest expansion proposal , attempting to improve the scalability of Layer-1 through "partial stateless nodes" and a series of short-term measures while maintaining the decentralization and trustworthiness of node operation.
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ToggleThe Dilemma of L1 Scaling: Increasing Gas Limit Without Sacrificing Node Operation
The Ethereum mainnet (Layer-1) can only process a limited number of transactions per second, which becomes a major bottleneck for expanding applications. To improve processing power, a common approach is to increase the L1 gas limit (i.e. the maximum amount of computation that can be accommodated in a block). However, Vitalik noted that the community has concerns about this approach, with the most common criticism being that it would make running a full node more difficult, thereby reducing the decentralization and security of the overall network.
Vitalik said: “The reason why running a full node is important is that it provides users with a trustless, censorship-resistant and private way to access the blockchain.”
Short-term strategy: three proposals to make nodes lighter
In order to increase the gas limit without sacrificing node operation capacity, Vitalik proposed three short-term priority solutions:
Implementing EIP-4444: This proposal stipulates that nodes only need to retain a maximum of 36 days of historical data, which can significantly reduce storage requirements. Currently, a full node needs to store approximately 1TB of status data and 500GB of historical data. EIP-4444 will significantly reduce this burden.
Establish a decentralized historical data storage system: save old data through an external distributed data network so that nodes do not have to store it themselves.
Adjust the gas price structure: increase the "storage" cost and reduce the "execution" cost, encourage developers to optimize smart contract design and reduce storage pressure.
Mid-term strategy: "Stateless verification" further reduces node data requirements
Vitalik listed "stateless verification" as a mid-term technical route. This technology allows nodes to perform block verification without saving the complete Merkle branch (a structure used for data verification), which is estimated to reduce storage requirements by about 50% and further lower the node threshold.
This verification method also lays the foundation for the future combination of zkEVM (zero-knowledge virtual machine) and modular blockchain.
Innovative concept debuts: “Partially stateless nodes” may increase gas limit by 100 times
In this blueprint, Vitalik first proposed the concept called "Partially Stateless Nodes". He said that this type of node combines stateless verification and technologies such as zkEVM. It does not need to save the complete on-chain state data, but only stores part of the selected data and provides verification and query functions based on this.
This means that even if a node does not store all data, it still has the ability to process transactions and query block data. If such nodes are widely deployed, it is possible to increase the L1 gas limit by 10 to 100 times.
Paving the way for future Ethereum upgrades
Vitalik Vitalik proposed a new technology blueprint that aims to balance the contradiction between blockchain expansion and node operability. He emphasized that if the threshold for complete nodes can be lowered through technological innovation, it will further consolidate Ethereum's balance between decentralization, security and scalability, paving the way for large-scale applications in the future.
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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 entire 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.
