The post ‘Ethereum’s Future Is Bright’: Vitalik Buterin Tackles Price and Layer-2 Frustrations appeared on BitcoinEthereumNews.com.

Ethereum co-founder Vitalik Buterin laid out his latest thoughts on the blockchain’s future Friday, addressing head-on an issue that he rarely discusses: Concerns about ETH’s price, and the role of layer-2 scaling networks in depressing the asset’s financial health.  Layer-2 networks, built atop of Ethereum’s mainnet, now dominate the blockchain thanks to the miniscule gas fees and speedy transaction times they offer. But analysts have predicted that the proliferation of L2s could cost Ethereum trillions of dollars over the next few years, given how they muck up ETH’s token-burning roadmaps—and thus, the asset’s intended deflationary trajectory. Indeed, as other cryptocurrencies have soared in recent months, ETH has remained defiantly stagnant—prompting a popular meme on Crypto Twitter. On Friday, Buterin, who often appears more focused with niche technical matters than macro political and market dynamics, acknowledged the problems currently posed by L2s related to economics, as well as safety and interoperability. “One possible shortcut for scaling is to give up on L2s, and do everything through L1 with a much higher gas limit,” the crypto developer wrote in a blog post. “However, this approach compromises too much of the benefits of Ethereum’s current social structure.” Instead of abandoning L2s, Buterin said, developers in the Ethereum ecosystem should focus their efforts on key priorities—including boosting ETH’s price. “We should think explicitly about economics of ETH,” he wrote. “We need to make sure that ETH continues to accrue value even in an L2-heavy world, ideally solving for a variety of models of how value accrual happens.” One proposal floated today by Buterin, to that end, involves layer-2 networks supporting ETH by either burning a portion of their fees, or permanently staking them and then donating the proceeds to the Ethereum community. We could give up on L2s and try to do 2016-era-style L1…

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Filed under: News - @ January 27, 2025 1:25 pm