Ethereum Scaling Highlights L2 Challenges and L1 Potential

Ethereum co-founder Vitalik Buterin is rethinking the network’s long-term scaling strategy. He noted that Layer 2 (L2) solutions have decentralized slower than expected, prompting a potential shift toward direct Layer 1 (L1) scaling. This change may reshape the role of L2s in Ethereum’s ecosystem.

Buterin highlighted that only two of over 50 major L2s reached Stage 2 of decentralization by early 2026. Layer 2s like Optimism and Arbitrum were built to handle transactions off-chain and reduce fees. Despite progress, they have not yet achieved the level of decentralization that Ethereum developers expected.

Ethereum’s Layer 1 now handles 20–30 transactions per second with fees below 2 gwei. This improvement comes from recent upgrades and a planned gas limit increase to 50 million. These changes show that direct L1 scaling can handle more load than previously thought.

Buterin suggested that L2s now must focus on features beyond basic scaling. He emphasized innovations such as privacy enhancements, low-latency sequencing, or non-EVM virtual machines. These advancements could differentiate L2s from L1 in the future.

Ethereum also plans to implement native rollup precompiles. These would allow trustless interoperability between rollups and create a hybrid ecosystem. In this model, L1 would anchor security while L2s offer advanced functionality. This approach could unify liquidity and improve user experience.

Why the Move Happened

Vitalik Buterin has stated that early L2 designs were built to replicate Ethereum at lower cost. That approach no longer matches the demands of today’s users, developers, or the base layer. He argued that L2s must evolve beyond being cheaper copies of Ethereum and instead develop architectures tailored to specific use cases.

Buterin outlined a hybrid model that combines fast sequencing with direct Ethereum integration. Under this model, L2s would produce rapid sequenced blocks most of the time. Special slot-ending blocks would allow Ethereum builders to include L2 activity directly on Layer 1. This structure aims to preserve low latency while enabling deeper composability.

How Markets Responded

The market has shown mixed reactions to the potential shift in Ethereum’s scaling strategy. Some investors remain bullish on L2s, believing that the ecosystem still needs off-chain solutions for scalability. Others have shifted focus to Ethereum’s Layer 1 upgrades, particularly as EIP-7825 and gas limit increases are expected to boost performance.

Analysts have also noted that this shift could reduce the reliance on rollups and encourage a more unified Ethereum network. This could improve security and user experience, while reducing fragmentation across multiple L2 chains.

What Analysts Are Watching

Industry experts are closely monitoring how L2s will adapt to this new direction. Some are optimistic about hybrid rollups that combine speed with Ethereum’s security. Others worry that the shift might slow innovation in the L2 space and limit the variety of use cases.

Developers and investors are also watching for updates on Ethereum’s native rollup precompiles. These features could enable trustless interoperability and support a hybrid L1-L2 ecosystem. If successful, this could redefine the role of L2s in Ethereum’s future.

Market participants are also assessing the long-term impact on Ethereum’s overall throughput. By balancing L1 and L2 capabilities, Ethereum could deliver higher throughput, better user experiences, and stronger security while reducing over-reliance on rollups.