Will Vitalik’s New Proposals Shake Up the ETH Market?

The Post-Merge Era: Vitalik Buterin’s Plans for Ethereum Development

In his latest blog post, Vitalik Buterin has outlined his vision for Ethereum’s future, particularly highlighting the successes of the Proof of Stake (PoS) system and the opportunities ahead. The "The Merge" focuses on Ethereum's current operations and future PoS improvements, while "The Surge" discusses scaling solutions for Ethereum. Vitalik emphasizes the importance of Layer 2 solutions, such as rollups and sharding, aimed at processing up to 100,000 transactions per second while maintaining decentralization.

Development Plans: Faster Finality and Democratizing Staking

Currently, it takes 15 minutes to finalize an Ethereum block, as multiple rounds (2-3 epochs) are needed. Vitalik Buterin believes this duration is too long and proposes introducing "single-slot finality," which would finalize blocks in just 12 seconds in one round. This would not only enable faster transactions but also increase network security and resilience, particularly against threats like 51% attacks.

Vitalik also advocates for democratizing Ethereum's staking system. Instead of requiring 32 ETH to become a validator, lowering the threshold to 1 ETH would allow more small-scale validators to join the network. This would boost decentralization and reduce the risk of large validators dominating, thereby enhancing the network’s long-term security and stability.

Faster block finalization offers users and developers greater speed and reliability, while lowering staking requirements empowers smaller validators, increasing Ethereum's decentralization and security. Vitalik’s ideas aim to make Ethereum more efficient, faster, and accessible to everyone while preserving the blockchain's decentralized foundations.

Introducing the Goals of "The Surge"

In the second part of his blog post, Vitalik elaborated on his vision for unifying the Ethereum ecosystem.

"Ethereum must operate as a unified ecosystem, not as 34 different blockchains."

A key goal of "The Surge" is to enable Ethereum’s Layer 1 and Layer 2 solutions to work together to process over 100,000 transactions per second (TPS). The recent Dencun update – which includes the Shanghai and Cancun-Dened upgrades – introduced several scaling improvements, such as cheaper data-block systems and reduced fees for L2 networks.

While Vitalik welcomed the rollup-centric roadmap, he acknowledged the unique challenges it presents. Critics warn that so-called "extractive L2s" could draw users and revenue away from the main Ethereum network, introducing new security risks and potential inflation of Ether (ETH).

The Reliability of Rollups Is Crucial for Scalability, But Code Bugs Slow Progress

Vitalik emphasized that Ethereum must advance in new areas, including data availability sampling, improving data compression, and enhancing user experience across different blockchains. He noted that while developing Ethereum’s rollups (secondary solutions built on Ethereum), reliability remains a crucial factor.

Progress has been slow due to code bugs, hindering efforts to make rollups more dependable. According to Vitalik, reliable rollups are essential for Layer 2 solutions to effectively leverage Ethereum’s foundation and sustainably scale the network.

Improving Ethereum’s Base Layer

Buterin also discussed the need for Ethereum’s base layer to evolve in order to keep up with increasing demand.

"If L2s become highly scalable and successful while L1 can only handle a very low transaction volume, there are many risks for Ethereum."

The simplest solution would be to increase the gas limit. The gas limit determines the maximum amount of computational resources a transaction can use. Raising this limit would allow more transactions per block, speeding up the network. However, if this reduces transaction fees, it could discourage stakers, who might only approve higher-fee transactions, leading to less decentralization.

Buterin also proposed making certain operations and computation types cheaper without sacrificing decentralization. He mentioned improvements to "multi-dimensional" gas pricing, reducing gas costs for specific opcodes, and introducing new bytecode formats.

L1 and L2 Work Sharing

Enhancing User Experience

In the less technical part of his blog, Buterin stressed the importance of improving the user experience across Ethereum’s upcoming L2 networks, which has been a growing concern for many Ethereum users.

"If we are serious about L2s being part of the Ethereum ecosystem, we need to ensure that using the L2 ecosystem feels like using a unified Ethereum ecosystem."

According to Buterin, improving communication between L2 networks would reduce the technical burden on users, allowing them to transfer tokens between chains without manually bridging or converting them into native tokens for gas fees.

The Future of the Rollup-Centric Roadmap

Historically, Ethereum development focused on the ETH 2.0 roadmap, which aimed to scale Ethereum monolithically through "sharding." In October 2020, Buterin shifted from sharding in favor of Optimistic and ZK-rollups, offering new scaling opportunities.

These L2 projects offload execution and computation from the main chain while maintaining security. Buterin believes the next challenge is to develop Ethereum using rollups while ensuring the integrity of Ethereum’s core foundation.

Overall, Vitalik’s vision aims to build a faster, more reliable, and user-friendly Ethereum ecosystem that can respond to growing demands and challenges.