Ethereum’s Vitalik Buterin Amps Up Pressure on Layer-2 Networks to Decentralize Further

From now on, Vitalik Buterin, a co-founder of Ethereum, has announced that he will approach the topic of layer 2 networks differently in his public statements, choosing not to mention projects that do not meet the decentralization criteria he deems necessary.

To merit any ink, they have to at least meet a decentralization threshold known as “Stage 1,” under a hierarchy he laid out years ago in a blog post.

From the new year onwards, Buterin intends to limit his public endorsements (in blogs, speeches, etc) solely to L2s that have reached stage 1+. This decision is not influenced by whether I’ve invested in them, or if we are friends; it’s all about the stage they’re at – at least stage 1 is a must.

In 2022, Buterin suggested a series of developmental phases for rollups, which aim to categorize them based on their journey towards decentralization. The criteria are designed to highlight that rollups often employ “guided modes” and make their protocols accessible to users before they’re fully prepared for complete decentralization.

2022 saw Buterin penning a blog post stating that, despite the tech of the project being relatively untested and immature, an early launch was chosen to initiate the development of the ecosystem. Instead of solely relying on fraud-proofs or zero-knowledge proofs, there is a multi-signature system in place which can override the usual outcome in case coding errors occur.

In simpler terms, within the context of blockchain technology, ‘multisig’ refers to a security feature that requires more than one signature to authorize an action. This is typically employed when decisions need approval from multiple individuals, such as a group of trustees who can make changes in urgent situations, effectively bypassing the usual verification process used within the network.

Taking off the ‘training wheels’

As an analyst, I’ve observed that Vitalik Buterin has broken down projects into three distinct phases, labeled from 0 to 2. At stage 0, a layer 2 network heavily relies on support from the main blockchain, similar to a beginner cyclist using training wheels.

In simpler terms, L2Beat, a monitoring tool for layer-2 networks, compares various layer-2 methods based on different development stages. At this moment, none of the top rollup platforms have progressed to Stage 2 yet.

In simpler terms, Buterin stated that the time when rollups were viewed as just complex multi-signature systems is ending. Instead, we’re entering a period where cryptographic trust will be more significant.