4 February, 2026: Ethereum co-founder Vitalik Buterin has reignited debate by saying Ethereum’s old Layer 2 scaling model no longer fits today’s network. With lower gas fees and better performance on the mainnet, he believes L2s must evolve beyond simple scaling and focus on unique features like privacy or ultra-fast execution. His comments could reshape Ethereum’s roadmap and push L2 projects to innovate or risk losing relevance.
High Signal Summary For A Quick Glance
- The legacy narrative of L2s existing mainly to scale Ethereum is weakening as Ethereum’s base layer matures.
- Ethereum Layer 1 throughput and fee improvements strengthen mainnet competitiveness, shifting attention back to L1 scalability progress.
- To remain relevant, L2s must evolve beyond scaling and provide differentiated value (privacy, specialized VMs, faster execution, unique app ecosystems).
- Retail traders: Higher volatility in L2 governance tokens like OP and ARB as narratives shift and positioning unwinds.
- Long-term holders: ETH and L2 investors may reassess theses, valuations, and portfolio allocations given changing scaling dynamics.
- Institutions: Funds may rebalance exposure away from L2-heavy strategies or rotate toward L1-centric Ethereum bets.
- Builders: L2 ecosystems face pressure to pivot with clearer differentiation or risk fading relevance amid stronger L1 capability.
Why Vitalik Buterin Is Rethinking Ethereum’s L2 Plan
Vitalik Buterin says Ethereum’s old idea for Layer 2 networks no longer fits today’s reality. This comes as Ethereum’s main network (Layer 1) has improved faster than expected, with lower gas fees and plans to raise gas limits in 2026. Because Layer 1 can now handle more activity on its own, Vitalik Buterin believes L2s shouldn’t exist just to reduce congestion. Instead, they should focus on adding unique features, like better privacy, faster transactions, or custom virtual machines.
This isn’t the first time Vitalik Buterin has changed Ethereum’s direction. In 2020, he pushed a “rollup-centric” plan that made L2s the main scaling solution, moving away from sharding. That shift helped drive a strong ETH rally and boosted L2 projects. This time, reactions are mixed. While the long-term vision is still evolving, some L2 tokens like OP and ARB have seen short-term drops as the community debates what role L2s should play going forward.
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Reasons Behind the Shift Made by Vitalik Buterin
Vitalik Buterin’s critique of Layer 2 networks arises from Ethereum’s Layer 1 achieving unexpectedly low gas fees and plans for a 100x gas limit increase in 2026, rendering L2s less critical for basic scaling as the mainnet handles over 1 million TPS-equivalent throughput. Additionally, the slow progress toward full decentralization (Stage 2), with only a few L2s reaching Stage 1, has led to concerns over centralization risks and the original “branded shards” model becoming obsolete.
This reevaluation pushes L2s to evolve beyond scaling, focusing on unique differentiators such as specialized execution environments, privacy protocols, or ultra-low latency for applications like gaming or DeFi. For instance, integrating ZK-EVM precompiles or supporting non-financial use cases could revitalize L2s, preventing ecosystem fragmentation while enhancing Ethereum’s overall modularity and competitiveness against monolithic chains like Solana.
What to Watch Next
- Vitalik’s next comments: Watch for more posts or a blog explaining the new L2 direction.
- L2 project moves: See how Optimism, Arbitrum, and others plan to adapt.
- Market reaction: Keep an eye on ETH, OP, and ARB for volatility.
- Dev updates: Follow Ethereum developer calls for clues on L1 upgrades and L2 changes.
