Proposed Change Could Save Ethereum from L2 ‘Roadmap to Hell’
Ethereum’s Roadmap Faces Criticism
Ethereum has faced a wave of criticism regarding its current roadmap. Critics argue that the platform is losing ground to competitors like Bitcoin and Solana. Ethereum’s fee revenue has plummeted by 99% over the past six months, with Layer 2 (L2) solutions taking users, transactions, and revenue away from the main Ethereum network. This has caused Ethereum to become slightly inflationary again, affecting its market cap.
The Problem with L2 Solutions
Layer 2 solutions are designed to handle transactions faster and more cheaply than the base layer of Ethereum. However, these solutions are largely siloed from one another and have financial incentives that may not align with Ethereum’s goals. For example, Base, one of the L2 solutions, charged users $2.5 million in fees last month but only returned $11,100 to the Ethereum mainnet.
Ethereum’s Transaction Increase
Despite the issues, Ethereum has seen a significant increase in transactions due to L2 solutions. The number of transactions in the ecosystem peaked at around 16 million per day at a very low cost for users. Ed Felten, co-founder of Arbitrum, argues that the real benefit of L2s is that they enable transactions that couldn’t occur on the base layer due to capacity constraints.
Challenges in the Roadmap
Ethereum researcher Max Resnick believes the roadmap is too focused on L2s and suggests that some effort should be directed toward scaling the base layer for high-volume DeFi. Other blockchain networks like Solana are also recognizing that a modular design, similar to Ethereum’s, may be necessary for broader use cases.
The Fee Revenue Dilemma
The current drop in fee revenue has raised concerns. Some community members have proposed increasing fees charged to L2s to improve revenue. However, Rushi Manche, co-founder of Movement, argues that low fees are essential for the long-term growth of the Ethereum network. He suggests that in the long run, low barriers to entry will benefit the ecosystem.
Future of Ethereum’s Fee Revenue
Fee revenue is expected to rise as the current data availability space (known as blobs) fills up. When demand exceeds the target, blob data prices will increase significantly. This will help address the current issue of Ethereum becoming slightly inflationary.
Interoperability Challenges
One of the main criticisms of the roadmap is the lack of interoperability between different L2 solutions. Users currently rely on bridges or transferring via Ethereum, which can take a long time. Vitalik Buterin has identified this problem and is working on solutions to make the user experience more seamless.
Shared Sequencer as a Potential Solution
A shared sequencer run by Ethereum validators could enable synchronous transactions and composability between different rollups. Although not yet part of the official roadmap, this approach could help scale Ethereum globally while retaining its composability.
The Bull Case for Ethereum
Justin Drake from the Ethereum Foundation envisions a future where Ethereum can handle 10 million transactions per second (TPS). He believes this could lead to a multi-trillion dollar market cap for Ethereum. He argues that enabling such capacity would induce demand, similar to how faster internet speeds enabled platforms like Netflix to thrive.
In summary, while Ethereum’s roadmap has faced significant criticism, there are proposed changes and solutions that could address these issues. The future of Ethereum looks promising if these adjustments are made, potentially leading to a more scalable and interoperable ecosystem.
