- Ethereum’s Layer 2 solutions improve scalability and reduce transaction costs
- Blob transactions are essential to scaling Ethereum and supporting millions of users
In his last blog postVitalik Buterin has revived the conversation around Ethereum [ETH] scalability and provides new insights into how the network can evolve to maintain its dominance in the blockchain ecosystem.
With Ethereum’s growth having hit a bit of a plateau lately, Buterin emphasized the urgency to more fully embrace Ethereum’s Layer 2 solutions. Both to increase the market value of ETH and to strengthen its crucial role in the broader blockchain economy.
Here it is worth pointing out that his proposal came just days after Buterin announced major changes to the Ethereum Foundation. So this could be a pivotal moment for the network as it tries to adapt and thrive in an increasingly competitive space.
Ethereum – Reaching the Limits of Layer 1
Ethereum has grown significantly, but scalability remains a major problem. High transaction fees and congestion have plagued the network, with Vitalik Buterin noting that while Layer 1 has matured, it cannot meet the demands of decentralized applications.
He emphasized that “L2 scaling works,” with Layer 2 protocols increasing transaction capacity seventeen times and reducing costs. However, challenges such as blob scaling and L2 heterogeneity remain. To overcome these, Ethereum must innovate both technically and socially and further integrate ETH into Layer 2 solutions.
What does Buterin propose?
Vitalik Buterin has now presented a strategy to improve Ethereum’s scalability, a strategy that includes deeper integration of ETH into Layer 2 protocols. He noted that L2s must embrace ETH as their “primary collateral” to strengthen the Ethereum ecosystem. According to him, L2 networks would have to burn or deploy some of their gas fees, which would create additional demand for ETH and reinforce its deflationary characteristics.
He also noted that the ecosystem needs to leverage the value of ETH in both L1 and L2 networks. This strategy aims to provide Ethereum with the scalability needed to support millions of users, while maintaining the decentralization and open source ethos on which the platform is based.
Blob transactions
One of the key technical aspects of Ethereum’s scaling strategy is its use of ‘blob transactions’ – a crucial part of Layer 2 solutions. Blob transactions allow for more efficient data storage and processing, improving Ethereum’s scalability. Buterin even emphasized the importance of increasing the number of blobs to meet future demands. He explained,
“If you take the average blob fee over the past 30 days, and assume it stays the same while the number of blobs increases to 128, Ethereum would burn 713,000 ETH per year.”
Increasing the number of blobs will help Ethereum scale and create a revenue stream through ETH burns, adding to its deflationary pressures. However, Buterin also warned that the demand curve is not guaranteed and flexibility is needed for future adjustments.
With EIP-4844 introducing 3 blobs per slot and the Pectra upgrade set to double that, Ethereum is on track to achieve 100,000 transactions per second, driving both scalability and revenue growth.
Read Ethereum’s [ETH] Price forecast 2025–2026
Ethereum – Price analysis, market sentiment
Source: TradingView
At the time of writing, Ethereum was steady and trading at $1,860 after facing mild resistance at $1,880 earlier this week. The RSI indicated neutral sentiment, while trading volumes stabilized – a sign of caution among market participants.
Analysts also suggested that ETH’s price action reflected the broader market’s consolidation, with traders seeing $1,920 as the next major resistance level and $1,800 as critical support.
Additional, Vitalik Buterin’s latest comments on the Ethereum Foundation shake-up have led to varying reactions. While Buterin outlined ambitious goals – improving technical expertise and collaboration between ecosystems – critics argue that these changes appear incremental rather than transformative.
The debate over Ethereum’s future leadership coincides with concerns about staying true to the Cypherpunk ethos. Particularly as stakeholders weigh its decentralized values against the urgent need for speed of execution and innovation.