Ethereum's Layer 1s Urged to Rebuild EVM for Scalability

In 2017, the Ethereum network faced a significant challenge when CryptoKitties caused a crash, highlighting the critical issue of blockchain scalability. Today, with over $100 billion locked in decentralized finance (DeFi) and millions of non-fungible tokens (NFTs) being traded, the Ethereum Virtual Machine (EVM) — the engine powering this activity — is reaching its limits. The crypto community has largely turned to layer 2 solutions as a means to address these performance challenges, but these solutions have proven to be more of a temporary fix rather than a permanent solution.

Layer 2 blockchains, which process transactions on a secondary chain and report back to Ethereum, have been touted as the solution to the EVM’s performance issues. However, they come with their own set of challenges, including centralization and interoperability. Many layer 2 blockchains operate with centralized sequencers, which can expose the network to transaction censorship and reordering. Additionally, interoperability issues have been highlighted by Vitalik Buterin, who noted that layer 2s are struggling to maintain seamless interaction between different chains. This has led to liquidity fragmentation and a complex user experience.

Advanced rollup designs, such as native rollups, have attempted to address these issues. However, native rollups take value away from projects, which could significantly deter adoption. Given the challenges faced by layer 2 solutions, it is worth considering whether there is a better solution. According to L2BEAT, it costs around $95.53 million annually to run all the major layer 2s. Instead of investing more in building and running additional layer 2s and interoperability solutions, the industry should focus on refining the existing foundational layer.

To create the most performant layer 1s, the industry must reevaluate its approach to tracking blockchain performance. Most blockchains focus on throughput, using transactions per second (TPS) to compare chain performance. However, TPS does not allow for apples-to-apples comparisons since different types of transactions require different amounts of compute. For example, an Ether (ETH) transfer requires 21,000 units of gas, whereas an ERC-20 transfer needs 65,000. This discrepancy confirms that TPS conveys zero value when tracking mass transactions and network throughput.

A new standardized performance metric that better reflects network computing capability must be developed. This is where an alternative performance metric called “gas per second” emerges — a measure that evaluates the gas fees required to process transactions, better reflecting different transaction types. While TPS is best served to assess simple ETH transfers, gas per second shows the bigger picture by considering all computational efforts, even for complex transactions. Measuring gas per second across all chains will be a long process but a crucial step in blockchain’s evolution.

The capability of layer 1s has historically been overlooked, as many Ethereum researchers focused on a rollup-centric roadmap. As the backbone of the entire crypto ecosystem, layer 1s are the key to scaling the EVM. To solve the EVM’s scalability challenge, layer 1s must start rebuilding the EVM from scratch with performance in mind above anything else. The EVM faces severe network congestion and high gas prices as volume increases. It’s time for layer 1s to scale to onboard the next generation of users. Approaches such as parallelization will help improve throughput and, combined with transforming the EVM’s consensus mechanism and storage solutions, will set a new performance standard for the industry and establish a more developer-friendly environment for projects.

For the past few years, layer 2s have been presented as the answer to providing the cheapest and fastest way to execute transactions. However, layer 2s are not what the EVM truly needs. From day one, layer 1s have always been the true solution to the EVM’s scalability problem. It is time to be open to adopting more accurate performance metrics and divert attention to improving network performance. These changes will pave the way for the EVM to achieve its highest potential, introducing levels of scalability and efficiency never seen before. The EVM is here to stay, but its future depends on the industry to build.