Vitalik Signals the End of the Rollup-Centric Roadmap: What's Next?

Ryan:
[0:02] Hey, Bankless Nation. We haven't done one of these in a while. This is time for a Bankless Takes. We're talking about the role of L2s in Ethereum. And you know you're a big deal in crypto if Bankless will spend an entire show on one single tweet. Okay. This is a Vitalik tweet that we're going to talk about. This was a tweet, I think, that echoed around the world. It's pretty significant in my mind, in your mind, because it feels like it marks the end of an era and the beginning of a new era.

David:
[0:31] It feels like a bookend. Yeah. A bookend to a, not a tweet, but like another Vitalik post that we also did a dedicated podcast on in 2020, where he introduced the Roll-Up Centric Roadmap in October of 2020. And now this is a episode about the conclusion of the roll-up centric roadmap in 2026.

Ryan:
[0:51] And I think that in particular is important. We have to choose our words carefully because it's the conclusion not of the roll-up roadmap. The roll-up roadmap continues, but it is the conclusion of the roll-up centric roadmap.

David:
[1:04] The centric word is being ejected. Exactly.

Ryan:
[1:07] And so the roll-ups for five years in Ethereum were the center point. That was the focus. That was how we're going to scale Ethereum. And I think this tweet signifies something new. So let's get into it. What exactly did Vitalik say on, what day was it?

Ryan:
[1:23] February 3rd, 2026. What did he say?

David:
[1:25] February 3rd. What did he say and what he did not say is pretty important because there were a lot of opinions and takes on Twitter that were just misunderstandings or bad readings of Vitalik's tweet. So what did Vitalik say? The punchline that I think Ryan and I agree on is like what this tweet, really the punchline of this tweet is for both of these facts, we'll talk about what these two facts are, for both of these facts, for their own separate reasons, means that the original path of layer twos and their role in Ethereum no longer makes sense and we need a new path. We need a new path.

Ryan:
[1:57] That's the ending of the centric part, right?

David:
[1:59] Yes, that's the ending of the centric path. And so Vitalik is basically saying Ethereum needs a new non-roll-up centric roadmap. The two core bits of data as to why Vitalik comes to this conclusion, the two bits that he was referring to, is that stage two roll-ups and roll-up interoperability, has been far more slow and difficult than previously expected. Stage two rollups essentially means that rollups get to the point where they are complete, decentralized, code-based extensions of Ethereum, that they are the block space of a layer two stage two rollup is given the full faith and credit of Ethereum security.

Ryan:
[2:37] That's right.

David:
[2:38] We cannot get there. It's been seemingly difficult as an industry to move our rollup ecosystem into stage two. We seemingly are stuck on stage one and for good reason.

Ryan:
[2:48] Yes, that's one part of it, the security part of it. The second part of it is the interoperability part of it. And this is the vision of roll-ups and scaling Ethereum block space, I thought was shared liquidity across all of these roll-ups. And that's why Vitalik- Shared network effects,

David:
[3:03] Shared state, shared.

Ryan:
[3:05] Shared, and it's not shared. It feels very fragmented. And that's why he mentions interop as the second.

Ryan:
[3:11] So that's the first core bit. What's the second?

David:
[3:15] The second core bit is that layer one scaling is out. now actually catching up to a meaningful degree. The ZKVM, which I think was an understated part of this tweet, and we'll go into why, but the ZKVM and overall Layer 1 block space is going to, quote, projected to increase greatly in 2026. So Vitalik just highlights, like, actually, we can just do the things on the Layer 1. Not only can we scale the Layer 1 in, like, the traditional sense with more throughput and faster block times, but we also have this ZKVM thing, which will massively scale Ethereum far beyond what any other layer one could ever do ever. That's the bullish piece. And so let's go there. Let's go down that path.

Ryan:
[3:53] Yeah, that's the bullish piece. And that was not available, importantly, like five, six years ago in 2020.

David:
[4:00] We thought ZKVM's five, six years ago were a decade away. And it turns out they're kind of here today.

Ryan:
[4:06] There's, so those are the two core bits why the roll-up centric roadmap as it was in 2020 and as Ethereum, the track that Ethereum had been on no longer makes sense. There's some more happening here though, David. And this is some association of the question of like, what is Ethereum? The Ethereum brand, it values the community. And both this tweet mentions that. And then he tweeted something later, a couple of days later that we may want to touch on too. But he said, L1 does not need L2s to be branded shards because L1 itself is scaling. So that's the point we talked about. And he said, we should stop thinking about L2s as literally being branded shards

Ryan:
[4:49] of Ethereum with the social status and responsibilities that this entails. Instead, we can think of L2s as being a full spectrum. This gets into part of the reason I think, this is my theory, on why Vitalik felt he needed to tweet this at this point in time. Because as we'll discuss later, a lot of the elements of this were already obvious to many. And indeed, the Ethereum roadmap had already shifted. I mean, you could already feel it. Probably shifted 12 months ago, let's say.

David:
[5:19] This tweet feels a lagged reflection of what the market and the industry has already digested.

Ryan:
[5:26] And actually what I think Vitalik thinks at this point. I mean, I think he's thought this for quite a long time. Part of the reason or the psychology of why to tweet this publicly goes into, and this is my take anyways, what is Ethereum? And this idea of like, call it, I don't want to use words that are too strong, but a laundering of the Ethereum brand.

David:
[5:48] Oh, I think that's extraction. Very, very accurate.

Ryan:
[5:51] Okay. In many cases it is. Or a dilution of what Ethereum means. Because if all of these L2s are Ethereum, and but you're not getting Ethereum-level guarantees and Ethereum network liquidity, how can you actually say they are Ethereum? And this gets into kind of the social piece of this, which there had been a meme that many Ethereum people had started with that you and I even started with, I believe, because this was our core belief, actually. L2s are Ethereum.

David:
[6:22] L2s are Ethereum.

Ryan:
[6:22] This is kind of like what we thought the roadmap was. This is what we thought we were building. You and I abandoned this meme probably like 18 to 24 months ago when it became obvious like, oh, shoot, when I go into another chain, it's not Ethereum. I'm not getting all of the, it's not stage two, and I don't get the liquidity, and we started pushing back on that. But that's been hard for the community to forsake. To digest,

Ryan:
[6:45] yes. Yeah, and so there's, yeah, go ahead.

David:
[6:47] I think with this tweet, we can formally say Layer 2's or Ethereum is dead. It was already dead. Now, like, there's no way for layer twos to be Ethereum. And this is what we are admitting to. And it's something, like, to go back into the shoes of October of 2020, when the roll-up-centric roadmap was introduced, the plan here was that we would make stage two roll-ups, stage two being functional equivalent extensions of Ethereum block space without any sort of lack of any sort of property rights or guarantees of Ethereum. The guarantees of the Ethereum layer one, because layer twos are stage two.

David:
[7:25] Extended without loss, no lossiness. And then with Interop, we would have these stage two extensions that would be shared, shared state, shared liquidity. And so therefore, with some abstractions, we would be able to abstract everything and it would be one unified experience. That's right. That was always the plan. So like stage two rollups was like, yes, Optimism, Arbitrum, ZK Sync would build their rollups. But with stage two and Interop standards, we would collapse everything into one shared experience this is what we are saying that like this is not happening and we need to account for that and therefore when we say layer twos are ethereum that just cannot be accurate because now these branded shards are their own thing yes and i think when he says we can consider these layer twos to be full spectrum you know full spectrum layer twos, It's kind of unlocking the potential of layer twos to be anything, which was always the promise and always the potential of layer twos. So you can be anything. You can be, you can have any sort of relationship with Ethereum that you want. And it doesn't have to be any sort of constrained. You must be a layer two. You must conform to the interop standards. You must be an extension of Ethereum. And we're kind of like opening up the design space and going away from layer twos or Ethereum.

Ryan:
[8:43] That's right. And I think there was a, there's a concession here and we, we've read it earlier. When Vitalik said L2 progress around full security of Ethereum and Indrop has been slower and more difficult than originally expected. I think that's true. I don't think that there was something, there's something insidious about the roadmap. We're going to launch all these L2s and we're going to invest in all these L2 tokens and VCs are going to get rich. And, you know, we always knew this wouldn't work out. I genuinely think the Ethereum community, Vitalik as well, all the participants of the L2s, and all the teams we talked to in those early days, they thought they were building a mirror of Ethereum L1 block space. Indeed, that was what they were trying to build. The tech just couldn't get us there. That's my perspective on it. I don't think there's anything insidious here going on. But now that we are in 2026, the meme of L2s are Ethereum does not ring true, right? And so we have to recognize that and probably it's never been true. That was the ambition, but we have to recognize that we are never going to accomplish that full ambition. Now, I do want to put an asterisk here, which is it's also not true that L2s are just side chains. Okay.

David:
[10:03] Correct. Yeah.

Ryan:
[10:04] And so if you want to like, I mean, this is not in memetic form, but L2s do inherit some of the security guarantees and a little bit of the liquidity, I guess, preferences of Ethereum. So they do inherit some of it. You can't put that in meme form, but there are things here that are, I guess, more nuanced than just saying, no, it's L2s.

David:
[10:27] There is a symbiotic relationship between the layer twos and the layer one.

Ryan:
[10:30] That's right. That's right. And so we could swing too far in the other direction. I guess the second Vitalik tweet. Also, he put a tweet out a couple days later. He said he's been following reactions to what I said on L2s one and a half days ago. And he clarified a few more things here.

Ryan:
[10:48] Actually, I felt like he was mostly restating what he had already said, though, in clear terms. And a part that we missed in his original tweet is he sees a role for L2s to fill a very differentiated a much more differentiated place now in the updated you know l2 roadmap of 2026 called these gen 2 l2s which is it's less an evm clone of ethereum that you kind of hook an optimistic bridge to and you port all the apps from ethereum over into these these l2s and it's more differentiated chains things like app chains like lighter or privacy chains like Aztec, bringing something net new to this alliance of chains that Ethereum L1 does not already have, especially when it's in scaling mode.

David:
[11:41] Differentiation, I think, is the key word here. Back in 2022 to 2023, when the layer two era was really in full swing, there was a huge push for Ethereum equivalents, EVM equivalents. I mean, I was pushing for that because that's how I saw we get to this, you know, roll up ecosystem that is one big shared pool of state and liquidity. That is dead. Ethereum equivalents is dead. It's the same thing as Layer 2s are not Ethereum. Ethereum is Ethereum. EVM equivalents is now just redundant. And now it's go to the opposite end of the spectrum and be very, very differentiated. Have a specialized VM like ASIC or StarkNet and do things that the Ethereum Layer 1 can never do, like scale, like mega ETH, be an app chain like LIDAR. Just don't do the same thing that Ethereum is doing because Ethereum is going to do that thing.

Ryan:
[12:34] Vitalik sums it up like this in this second follow-up tweet. Basically, number one, do something if you're an L2. Here's my advice for L2s, he says. Number one, do something that brings something actually new to the table. And number two, the vibe should match the substance. The degree of connection to Ethereum, your public image, should reflect the degree of connection to Ethereum that your thing has in reality. And that second point gets to kind of the laundered reputation of Ethereum, right? If you're like a stage zero L2, like, do you get to call yourself part of Ethereum and sort of launder the reputation of Ethereum with that brand when you don't offer the things that Ethereum is actually offering?

David:
[13:15] And we saw that like one of the worst examples of this was the movement layer two. The move VM as a layer two on Ethereum, the whole project ended up just being an unsavory grift to use harsh words. And like this was what was allowed when we don't control what the future of Ethereum scaling look like is like there are barbarians at the gate. And if the Ethereum community allows branded shards to come in and raise VC dollars and promote themselves as extensions of Ethereum to the Ethereum community and the Ethereum community praises them because all layer twos are good, this is a failure mode. And that started to happen and went too far.

Ryan:
[13:53] Agreed.

Ryan:
[13:54] All right, let's get to the community reaction and then you and I can give our takes on what this means and what happened. So what was the community reaction to this?

David:
[14:03] Yeah, like five different categories. There's just like praise for Vitalik's like honesty, adaptability and truth seeking. There were a lot of I told you so's and criticisms and frustration over delays and wasted effort. John Charbonneau had this tweet where he tweeted out this meme saying sorry about all the mean shit I said when I was right. Like, I think he gets that tweet. He gets to tweet that tweet. I'm not going to complain. Max Resnick, who was one of the original like layer two roadmap is broken. He just tweeted out. He has skeptics. Yeah, he tweeted out. I'm very much enjoying reading this app today, which is just like a coded of just like I'm drinking my tea and enjoying like reading all this.

Ryan:
[14:40] Those are two individuals I would say that, you know, heart and mind have defected somewhat to the more monolithic strategy.

David:
[14:44] They were affected because they were like, this Layer 2 shenanigans is bullshit and we should change it. And then when they realized it's not changing, they went to Solana. That's what happened. Yeah. There was agreement that Layer 2s aren't Ethereum. Stephen Goldfeder had a very good tweet thread where he started off with Arbitrum.

Ryan:
[15:01] CEO of Arbitrum, we should say.

David:
[15:02] CEO of Arbitrum. Number one tweet in the thread starts off with, Arbitrum is not Ethereum, which is a divergence from previous rhetoric. Sure. And so like previously Arbitrum was Ethereum, now Arbitrum is not Ethereum. And I think this is the correct thing to say. The cool thing about Arbitrum is that despite Arbitrum also being in the EVM equivalents camp, they were one of the first ones, them and Optimism, to be EVM equivalent, Arbitrum also established its own unique identity and culture that was distinct from Ethereum. And I think that has served them very, very well.

Ryan:
[15:35] I agree. And so... So, Stephen, many in the Ethereum community used to go around saying that L2s are Ethereum or Stephen has said in the past Arbitrum is Ethereum. And I just want to point out that while that's not correct, that's also not entirely wrong either. So, the truth of that is Arbitrum is partially Ethereum. Or it's like Arbitrum is an ally of Ethereum. Or like

David:
[16:02] Arbitrum is part.

Ryan:
[16:03] Of the Ethereum alliance. So I don't think it's necessarily dishonest to like say Arbitrum is Ethereum because it is. It's just like not the complete story here. You have to put an asterisk and you have to explain what you're actually talking about there.

David:
[16:21] Arbitrum flies the flag of Arbitrum and it does so inside of the Ethereum empire.

Ryan:
[16:28] That's kind of right. Okay. So the way, if we want to analogize this to nation states, which I love doing, as you know, David. Okay. So I think it's less a state in the union, the way Colorado is a state in the unity of the United States. And it's more like an ally. It's more like, you know, Sweden being part of NATO, which is protected by the United States of America and being this network of allies. It's sort of like the alliance of Ethereum rather than sort of the coordinated nation state of Ethereum.

David:
[16:59] The laws of Ethereum. Exactly.

Ryan:
[17:01] So that's one analog.

David:
[17:02] The laws of Ethereum would have been able to have been established if we had come up with very strong interoperability standards, and that would have been a much stronger binding alliance between Layer 2s, but we didn't.

Ryan:
[17:13] That's right. Steven's whole post, I thought, was fantastic. It's pretty long, and we don't have to read all of it, but there's some more worth pulling out here. What else does he say?

David:
[17:22] There's a tweet that I liked that he said, Vitalik is correct that the roll-up story has evolved over time. In 2018, roll-ups were primarily created for scaling. This is true. We were like, oh, we're going to scale with roll-ups. He finishes and says, today, they're as much about customization and dominion as they are about scaling. That is to say, even if a layer one could scale infinitely, there are plenty of institutions that nevertheless want their own customized environment. And this is the market sector that Arbitrum has really penetrated into. Why did they win Robinhood as a customer of Arbitrum Orbit technology? Because Arbitrum Orbit technology is part of the Ethereum EVM tech stack, which is extremely robust, extremely developed, the best developer ecosystem in crypto, undoubtedly. It's the Microsoft Excel for blockchains. And Robinhood gets to customize it as they see fit and they get to control it and they get to own it. It is their ledger. And that's the customizability that Vitalik also echoed in his tweet is like, this is all about customized control. This is not about scale. You're not scaling Ethereum. You are able to customize things to fit your specific needs. And that's what Arbitrum is, Stephen, is identifying like where Arbitrum is bent towards.

Ryan:
[18:31] I think that's right. And I want to get into a critique that I've heard from some in the Ethereum community, other than a critique that maybe you'll express later, which is like, why did it take so long to say this out loud, right?

David:
[18:43] I'm eagerly trying to get to that point.

Ryan:
[18:46] But the other point is, like, Vitalik, you could have said it in a different way. And this is how Steven expresses this. So if there is the perception with the way Vitalik said things, maybe the communication that he thinks L2s are a dead end or dead, right? This is Steven's worry. He says, I worry that if Ethereum is perceived as being hostile to rollups, it will push them away from the ecosystem. To be clear, it won't push them to launch on Ethereum L1. Instead, they'll launch their own L1 like ARK and Tempo and Ethereum will ultimately lose out. This is a delicate communication balancing act, right? And so some have criticized Vitalik's tweet for being too aggressive or like trying to push L2s out of the ecosystem or that it's just like,

David:
[19:31] That's not how I read it.

Ryan:
[19:33] That's not how I read it. Some people read it this way, that it's just like not a good commercial stance for Ethereum to say these things because at a time when we're trying to attract L2s, we want to give them the good graces of Ethereum. We want to say you're good and you're okay and like welcome to the community rather than kind of like push them away for not being quote unquote pure enough.

David:
[19:54] I mean, do you think there's anything? I don't think that's a valid conclusion of Vitality Suite. There was a lot of bad readings of Vitality Suite, I'm sure. And I consider anyone who is like, oh, Ethereum is abandoning its L2s just did not read the tweet correctly.

Ryan:
[20:09] Okay, well, let's get to some more takes here. This is one from Polychain. What is this?

David:
[20:14] Oh, excuse me, Polygon. Oh, Polygon. It just tweeted out the retweet of Vitalik and they just said, due to market conditions, we now identify as a sidechain, which is like a facetious admission of kind of like what Polygon is a sidechain. And finally, we can talk plainly about that. I think that's one of the benefits of this tweet is like people are finally just like ripping off this aspirational ideal for what the Layer 2 roadmap could be. And now I'm just speaking plainly about what it actually is.

Ryan:
[20:43] That's refreshing. It's refreshing to me. It is funny because Polygon is an ally for certain. For sure. They did so much for Ethereum in terms of investment, in terms of just like mindshare, in terms of onboarding during previous cycles. They've done so much for Ethereum. But they're not kind of in the alliance of L2s, right? Because they are somewhat of a sidechain. So they're not a part of NATO, but they're still an Ethereum ally. Again, it's nice to be able to just redefine these terms and for them to be able to say it.

Ryan:
[21:14] John Charbonneau, again, you said, don't shoot the messenger. Is he just- Okay,

David:
[21:18] This is a tweet that I've really, really enjoyed.

Ryan:
[21:20] Okay, let me find this.

David:
[21:21] Because there were people stating this exact problem that Vitalik eventually stated in this tweet in 2026 in 2021 and 2022. So part of the industry, part of the frustration here is that different people who have identified this problem in Ethereum and then got loud about it started in an order that was like very unpalatable and offensive to the Ethereum community and has slowly worked its way to inside the community of more palatable people and eventually gets all the way to Vitalik. So starting with Kyle Samani, who identified this problem and then invested heavily in Solana because of what he identified as a market weakness in the Ethereum strategy. Kyle, like enemy of the state number one to the Ethereum community. The next person after that, Max Resnick, very offensive individual, kind of just like, didn't he max doesn't do himself any favors also said the same thing goes to solana john charbonneau like closer to you know the ethereum community still offensive to many and then like i'll even throw then after john comes somebody like like us like bankless where.

Ryan:
[22:33] Oh i definitely think that in 2024

David:
[22:35] We were like hey guys i don't know if this is working out for us actually.

Ryan:
[22:39] Okay so here's the thing i think that kyle obviously team solana obviously for sure like always paints ethereum in the worst possible light and that there's no use case and all these things like max at some level i mean as evidenced by him defecting to solana too is not sort of team not in the camp of rooting for ethereum and hoping for its best john is someone who is an investor so he's somewhat more pragmatic about it but doesn't actually believe that eth is a store of value asset and can compete against Bitcoin. Bankless, we however, do. We have been team Ethereum for a very long time. We do still believe, even though the market is telling us otherwise, that ETH is a store of value asset and has the biggest opportunity to compete against Bitcoin on that. Even when we were saying it, it kind of... Dude, we got brand...

David:
[23:30] Not everyone, obviously... We got called enemies of Ethereum during the years of 2024 when we brought Max and John on the podcast and Kyle Somani to talk about this problem. And then Bankless is an enemy of Ethereum because we were saying, guys, this roadmap ain't working for us.

Ryan:
[23:48] Yeah, let's talk about what parts aren't working.

David:
[23:49] Yeah, right. And then after us, maybe it'd be Anthony Cezano. I don't think he really ever did that. But then it goes to Vitalik. And now that Vitalik is saying it's finally palatable for the Ethereum community, which I find frustrating because there were, and I'm sure there were other people listening to Bankless who were like, guys, why are you so naive about this? Kyle Somani, Max and Resnick and John Charbonneau have figured this out years ago. Why are you guys taking so long yet?

Ryan:
[24:14] Yeah, but that's just how things happen. I mean, I think that's how opinions change. That's how it happens, right? Imagine listening to Kyle Somani about everything on his own. You just shut the project down. You'd believe that decentralization doesn't matter. You'd believe there's no such thing as eat as a monetary asset. You just, why not shut it down? If you listen to everything that guy says, okay? So you have to process it and you have to filter it, but it did take a while for that to happen. There's another take here you've got from Patrick McCrory.

Ryan:
[24:39] Yeah, I enjoyed this.

David:
[24:41] I read this this morning. He says that his interpretation of what Vitalik is saying is that it's not that rollups have failed. In fact, it's the opposite. Rollups have differentiated themselves relative to Ethereum and have succeeded hugely. But this is just not what was anticipated in the original vision. So it's a very big point is like roll-ups are doing great.

Ryan:
[25:00] They are actually.

David:
[25:01] They're just doing their own thing. And it's not the Ethereum thing. They are.

Ryan:
[25:05] They are. And you even see, and I mean, roll-ups are scaling Ethereum like right now. Even sort of the closest EVM match to L1, they are there. Ethereum is what, 40 transactions per second now? Base is, you know, pushing 800, something like that. Arbitrum is like a thousand, right? And they're scaling too. I mean, that is helpful. And then you're right. We already do have these differentiated L2s that have popped up just due to market forces.

David:
[25:33] And then the last take that I like came from my friend, John Sterlachy. Do you, I think you are watching Foundation.

Ryan:
[25:41] Right? Yes, yes, yes.

David:
[25:42] The Foundation TV show.

Ryan:
[25:43] Yes.

David:
[25:43] Yeah, also a book series, mainly known as a book series, but now a TV show.

Ryan:
[25:47] Isaac Asimov.

David:
[25:48] Isaac Asimov, yeah. So like this requires to understand this a little bit, but I'll do my best to explain. He goes, the Harry Seldon approach to leadership doesn't work. Okay, what's the Harry Seldon approach to leadership in this movie series, TV series? It spans over.

Ryan:
[26:02] It's such a deep cut.

David:
[26:03] It's a very deep cut. It spans over like a thousand years. And so people go into like cyber sleep and they extend their lifespan in order to do this intergalactic, huge coordination problem across vast amounts of time. And Harry Seldon is this guy who comes up with this plan for the next thousand years of how we come to coordinate across this very future problem that we need to prepare for that's a thousand years, multiple generations in the future. So the idea here is centralized, predictive, long-term master planning by a single genius or small elite fails in practice because the real world is based on messy human systems. You can't set a grand plan in motion and expect it to unfold perfectly via predetermined interventions. Real leadership needs to be adapted, responsive, and decentralized and account for chaos. Individual initiative, black swans are unpredictable actors, not rigid top-down orchestration, assuming people will behave like predictable particles. Over-reliance on inevitable trajectories or this plan will save us leads to brittleness, detachment from reality, or failure when anomalies appear. I think this is such an astute comparison as to how and how the layer two roadmap got implemented and why it failed.

Ryan:
[27:16] I actually think that that's exactly what's happening, though. Right. This is this is this is like top down and bottom up discovering that this didn't work from a market perspective and adjusting. So this is just like not making the Harry Seldon mistake. The Harry Seldon mistake would be now in 2026.

David:
[27:34] We are not we are learning to not make the Harry Seldon mistake. But I think for the last five years of time, it has been that.

Ryan:
[27:39] A little bit, but as evidenced by this pivot, it's all fine. This is how it works out. We went and we tried something. It's late. It's later than it needed to be, but it's not too late. We'll get to some takes on this. Let me ask you some questions just to prompt. Three options for you.

Ryan:
[27:54] Was the roll-up-centric roadmap wrong?

Ryan:
[27:57] The whole idea of, remember, modular versus monolithic, right? And theorem's going the modular path and, you know, other chains going the monolithic plan. Let me give you three options. One, it was dead wrong. Two, it was partially wrong. Three, it was still the right play at the time. What do you think?

David:
[28:14] Somewhere between partially wrong and still the right play at the right time, leaning towards more partially wrong, the more correct thing would have been to identify the roll-up roadmap, not ever say the word centric, and run with, we, the Ethereum ecosystem, has a monopoly on smart contract chains. Sure. And we need to make sure we never give that up. And now that everyone is on the Ethereum layer one, we need to aggressively scale the layer one as fast as reasonably possible without sacrificing Ethereum's values. And in parallel, because we love doing things in parallel, we will also develop the roll-up roadmap in parallel and it will not have the word centric in it. We will keep and point the word centric at the Ethereum layer one. That would have been the best pass.

Ryan:
[29:01] We got to figure it out. We got to figure it out. But here's why I'm probably more a three. It was still the right play at the time, but also part two, because we could have adjusted sooner, is because hindsight is 20-20, man. We had no idea how this was going to work out. Like, it's really rich of us, like six years later to be like, Like, hey, 2020 idiots, you should have seen this coming.

David:
[29:23] But the thing is, like, some people did. Some people did see it coming.

Ryan:
[29:27] Earlier, but not in 2020. Let me go through another thought exercise with you, which is I put this together. What we thought versus what we got, and see how much you agree. What we thought, this is back in 2020, the thought, right, is that L2s would fully scale Ethereum block space and scaling would be solved. What we got instead was fragmented liquidity, not Ethereum-level security on our L2s, And this idea of like sidechain plus, which is kind of what L2s ended up being. Here's another one. Thought, what we thought, L2s would unleash new use cases and apps, but what we got is mostly a lot of DeFi on L2s that was similar to the L1. Yep. What we thought was stage two would be a breeze. We'll get there. It's no problem. What we got is it's really, really freaking hard, and do chains and users even want it? I'm not sure that I want a chain that can't be- I think we know that

David:
[30:16] We do not.

Ryan:
[30:17] That can't be corrected or updated if there's a bug. what we thought L2s would bring value accrual to ETH the asset, either as money, ETH is money, people using it in the ecosystem or fees. What we got instead was low fees generated by L2s and also Other assets started invading some of these L2s, right? Tokenized Bitcoin is a thing. Stable coins are a big thing. So we didn't even get the money, monetary value accrual. What we thought is ETH would go to 10K this cycle. And what we got was barely an all-time high, barely. And we got bleeding on the ETH Bitcoin ratio. We were beaten at some level. Ethereum was beaten this cycle by app chains. In particular, a pure store of value app chain, which is called Bitcoin. What do you think of those? You agree with that?

David:
[31:01] Those are all right. I agree with all of us.

Ryan:
[31:03] All right, let's give our takes and a retrospective.

David:
[31:06] You want to go first?

Ryan:
[31:07] Okay, you want to, okay. Indulge me.

David:
[31:09] Oh, I'm happy to go first. I've got some stuff I would like to get off my chest.

Ryan:
[31:13] I got to jump soon. So we got to constrain our time. We probably had like 15 minutes. I'm going to zoom out and give you my take on the retrospective. So there were definitely some wins over the last five years in L2s. And I don't want to downplay that. Massive wins. We had this successful alliance of chains. We delivered ZK EVM tech, discovered ZK, flesh that tech tree out. It's freaking awesome. That's coming back to the L1. Without the L2 roadmap, we wouldn't have had that. We had massive user onboarding on base and Arbitrum. It's all EVM network effect. It's all good. And plus, I would say, this might have been the only option at

Ryan:
[31:48] the time in 2022, if you're going to scale Ethereum and also keep the decentralized promise. And the decentralized promise is Bitcoin level decentralization or better. That was the only option in 2020. So we preserved that through all of this. That's in the win column. There were three missteps, I think, that Maybe the first one we could have seen the most and prevented. The first was we missed an interop strategy with L2s. For sure.

David:
[32:16] That was the biggest miss.

Ryan:
[32:18] If we were doing the L2 roadmap, we totally could have done this. Ethereum totally could have done this. It could have prioritized shared liquidity. And you're not an L2. You're not connected to the Ethereum network unless we have a liquidity standard here. And it shared from Ethereum to the L2s. Now, I don't know the technical, like how this could have been made possible. But there should have been at least a standard for this. Adam, like, or sorry, the Cosmos ecosystem, they had a standard. They had like ICP standard. We could have done something much more here and we didn't. So we didn't transmit Ethereum's killer DeFi liquidity network effect to L2s and it became this war of all against all where the L2s didn't really share liquidity and so they were all competing each other with each other and it felt more like a bunch of side chains rather than a true alliance. Number two, that was the first mistake. Number two, it took us too long to figure this out. We could have course corrected probably 24 months sooner, I feel like. And we didn't. We could have realized that the coordination glue just wasn't there to make a tight, united chains of Ethereum, which was the vision. We had this more fragmented, loose alliance. And then we could have pragmatically adjusted the strategy. But instead, we were still too hopium-filled.

David:
[33:32] We relied more on how it'll probably work out.

Ryan:
[33:35] There was a lot of naive hopium. The last thing, I got to say this too. I feel like we lost some focus on the use case. So the core use case for max decentralized block space. We've seen this. It's been enough time in crypto. We've seen this. It's slow DeFi. It's money. It's ETH as a store of value. That is the single most important app for Ethereum. We chased all these secondary narratives, right? Social and all of these other things that could be enabled by L2s and we forgot the core narrative. We didn't make that a shelling point for Ethereum. Hey, builders, we have a store of value on ETH. We have DeFi. We have deep liquidity. Come build your money thing here. I feel like leadership could have pushed that a little bit more. It is not as bad as it feels. I think these mistakes and the feeling that we have right now, probably due to price, it's a lagging indicator. So 12 months ago, the course started to correct and And the pivot started to happen, actually. And so we're not now just waking up and realize this. Things have already been put in motion to course correct. We also have ZK, which is a gift from the gods. It is Ethereum's UNO card. I think it's going to totally bail out any mistakes

David:
[34:47] Of the L2. Yes, I totally agree with that.

Ryan:
[34:50] And I do think the backlash is too, like, the backlash is too lashy right now. In other words, like, the reports of L2's demise are greatly exaggerated. Okay. And so there's this counter swing of the pendulum being like, okay, well, I guess L2s are useless. They're not useless. The wins are actual wins for corporate, for chains that want their own sovereignty, for some of these app chain type use cases. Net-net, L2s are good for Ethereum. They have been good for Ethereum. We've distributed a whole bunch of the Ethereum development to well-funded, highly competent teams. That's a massive win as well. And it's a core advantage. No one else is building L2s on any other chain. They're all on Ethereum.

Ryan:
[35:33] And this partial side quest is a huge win that Ethereum will bring forward. All right, that's my rant. That's my take.

David:
[35:40] I agree with all of those. Some of mine overlap with yours. So I'll start with mine. I have the good and the bad side for mine. The good is the ZKVM precompile. That needs to be Ethereum's like merge or 4844 dank sharding. Like we need to elevate the importance of the ZKVM hard fork that's going to come where we put ZKVM scale and Ethereum scales at a thousand X's current speed as our new North Star. Like the Ethereum community needs to rally around that like we once.

Ryan:
[36:13] Did the merge. This is native rollups, right?

David:
[36:14] This is native rollups, yes. The Ethereum layer one is going to become a ZKVM and it's going to be so fast and so scaled that it's the Manhattan Project that once we deploy this, like no other layer one will ever come after that fact because the Ethereum layer one will be so scaled. And so I think we need to, as a community, elevate that strength. Yes, focus on it and deploy it. That's the good, and I think that was understated in Vitalik's tweet. The other good thing is that The layer two business model is undefeated. Nonetheless, despite whatever this tweet is about, we are taking the centric away from Ethereum. Layer twos are still the best business model in crypto. You don't need to pay for the infrastructure, the very costly infrastructure to run your chain. You don't need to issue your assets to pay for validators. The day after Vitalik's tweet, Pay, which is a Celestia-based app chain, becomes an Ethereum, migrates to becoming an Ethereum roll-up. The business model will be undefeated. This is why a lot of the Layer 2s, like some people might be worried about, like, is base going to become a Layer 1? Is like Arbitrum going to be a Layer 1? No, they don't want to pay for the infrastructure costs. The Layer 2 business model is still as good as it ever was. And the other good thing that I really like is that Layer 2s, our Ethereum is dead. We don't have to ever mention about that. We can just sweep that under the rug and pretend it's the bad.

David:
[37:34] Wasted time and lost effort. This is my main gripe. Like so many people have been like a response to this is this has just been obvious for so long. Like Mary tweeted out, this has been obvious for years. Clouded tweeted out something that I thought was I aligned with. The annoying part about the Vitalik layer two shenanigans for me is like, thanks for having hundreds of billions of dollars of our industry's liquidity going into funding these layer twos over the past three years while on-chain DeFi choked, as Vitalik called it, Ouroboros. And then Joseph DeLong got even spicier and said, Ethereum kind of feels like Vitalik's little Erbit-esque side project, building a temple to nothing. And this is kind of how I feel. There was a too large amount of capital mismanagement and poor capital allocation.

David:
[38:22] And we didn't course correct in time. And I don't know, dude, a lot of people's lives went into building this future that the Ethereum community led by Vitalik identified.

David:
[38:34] And sure, like if we got it wrong and course corrected in time, like excusable. What's not excusable is that like so many people identified this and like nonetheless, capital continued to be mismanaged.

David:
[38:47] Like people continue to spend their lives working towards this vision that like much of the industry had identified as obsolete. And this is what Vitalik does. He like waits for, Until he's like 100% sure. And like there's this fundamental disconnect in timing where Vitalik is like happy being overly patient to make sure that Ethereum eventually gets to the right spot. And he doesn't have the position that the rest of the industry wants him to be in, which is some sort of like CEO executional leader who's ready to be aggressive and take risks. And there's just like a mismatch of urgency see that people like you and me is like, we have competition. Like there's competition out there. Solana is competing with us. They're taking advantage of our weaknesses. And that's the, that is the time cadence that most people are on. And Metallica is like, I'll wait until I'm 99.9% sure that this is the right thing before I tweet this. And it wastes money and time and it's so So inefficient and we as a community get hurt as a result of that. And like, I think everyone would appreciate it if he was in a little bit more of an executional position that had a stronger feedback loop of signal where he could actually push forward on the gas a little bit more aggressively. And I don't think that's that crazy to ask for.

Ryan:
[40:13] Now that you got that out,

Ryan:
[40:14] You doing okay, David?

Ryan:
[40:16] Okay.

Ryan:
[40:17] I feel like that was some venting.

David:
[40:19] Yeah, dude.

Ryan:
[40:20] This is the community venting.

David:
[40:21] Yes, yes.

Ryan:
[40:23] So I get that. And I also think that the weakness and the trade-off that you're pointing out is basically disillusionment. And you see people that kind of leave. You get people like Joseph saying this. I joined Ethereum to displace the banks, not this kind of like side project thing that just like, I don't know what it is. That same style that Vitalik has, I also think is a massive strength.

David:
[40:47] Sure.

Ryan:
[40:48] Sure.

Ryan:
[40:49] It's like, because it's just like slow to consensus. It's kind of like slow DeFi, right? So you end up getting in the right direction. And also the trade-off for Vitalik is, Ethereum has preserved the thing that it set out to preserve, which is max decentralization. Yeah. Okay? And so Vitalik is not willing to sacrifice that. And he's done so, I think, as a leader with integrity. I don't want him to be the CEO of Ethereum. Like, I like him in the place that he is, which is he has spiritual guidance and sort of social, like, here's what we should do. And he's willing to course correct. I don't know. The problem is he occupies

David:
[41:32] The space of the CEO of Ethereum and he doesn't allow anyone else to inhabit it just by being there.

Ryan:
[41:38] I get the challenge, right? It's sort of the, what's that famous essay? The Tyranny of...

David:
[41:45] Structurelessness.

Ryan:
[41:46] Structurelessness.

David:
[41:47] This is Vitalik's pattern, is that he leaves voids of power. He leaves power vacuums wherever he goes, which is what the Layer 2-centric roadmap always was, is a power vacuum that Layer 2's tried to inhabit with their own standard, their own branded chart.

Ryan:
[42:03] There's a tyranny of structurelessness, but there's also an upside of...

Ryan:
[42:09] Experimentation on structurallessness.

Ryan:
[42:11] Like we are letting the market decide and we are trying all of these things. And this is why I think you can come with more confidence that as long as Ethereum has preserved decentralization, some of the core values that it somehow managed to preserve, it didn't go down the trap of trying to scale through shortcuts, right? Yeah. The market will kind of figure it out. As long as Ethereum adapts, it will take on these technologies and make its system better. And that's the benefit of like, let a thousand flowers bloom. But unfortunately, 900 of those flowers are going to go die. And people are going

David:
[42:44] To get disillusioned in the process. That's people's jobs. That's people's lives. That's like hundreds of billions of dollars of malinvestment. Like that is a very significant cost. It feels like an unforced error. It doesn't feel like a double-edged sword. It feels like an unforced error.

Ryan:
[43:01] I'm partially there and partially not. I see the trade-off with the good there. But let's talk, let's bring this to a close, David, and ask some remaining questions that I think are significant and talk about where we go from here and where this leaves Ethereum. So there is the question of if you don't have the social blessing of Ethereum and kind of the L2 beat thing saying that, hey, we love you, you're part of the alliance, right? Or if that weakens at some level, is there enough network effect to keep base on Ethereum, to keep arbitrum? slash Robinhood on Ethereum? Or do they get enticed to go the Tempo direction or the CircleArk direction and go launch their own token and split out of the alliance? They don't have that liquidity as a thing holding them into Ethereum. Is like shared security and cost savings enough? That's an outstanding question, I think some people are asking.

David:
[43:53] I don't see that, at least in this present moment. Like I said, the layer two business model is undefeated. Like it's not an alignment thing to say that you are saving millions of dollars a year by not having to do layer one validation, which is an extremely expensive and inefficient thing to do.

Ryan:
[44:10] Okay, so that's one outstanding question. The other is I think If the roll-up-centric roadmap is over, if that era is over, what has replaced it? And I think we're getting glimpses of what's replaced it.

David:
[44:21] The ZKVM precompile, bro. I know.

Ryan:
[44:23] That needs to be more specific. I think you made this point earlier. That needs to be merge-level focus. The entire community now rallies around it. We have pivoted. So let's talk about now, not the mistakes of the past. Let's talk about the thing that we are doing and excited about. And there's not yet enough of that. I think there will be more in the months to come, but that needs to be the rallying point for it.

David:
[44:43] We need to meme the ZKVM precompile.

Ryan:
[44:47] That's right. The other question I think, and this is maybe where the skeptics come in, is I mentioned my tweet. I feel like Ethereum coming out of the last cycle had like, if it got shared network liquidity correct across all of the L2s, it would have had a thousand year reign as the DeFi platform.

David:
[45:03] For sure, and we would have hit 10K. Like, yeah.

Ryan:
[45:06] Some ground was lost this cycle, all right? And some people look at that and say, Well, this Ethereum, it's now anyone's game. So you have other chains that are, you come with ranks, maybe like Solana, BNB chain, who knows what else. Now Ethereum has lost its lead, or at least things have leveled off, and it's anyone's game right now. So that's one take, and that's what the bears would say about Ethereum. The other take, somewhat I'm more sympathetic with, is no, Ethereum actually stacked some wins in this L2 partial side quest. It did stack some genuine wins that are totally differentiated. We've made these points. And it has preserved the thing, the only thing that matters in crypto, which is Bitcoin level decentralization. And by the way, the whole ZK thing, soon to be better than Bitcoin level of decentralization. If you can have rather than 15,000 validators, you can have hundreds of thousands of validators because you can run them on a mobile phone, for instance, and you have smart contracts. You are delivering on the Bitcoin plus smart contract vision that I think is the core of crypto and is the thing that Ethereum set out to do. So it's preserved those things despite the side quest, which is the only thing in crypto worth preserving. That's more my take.

David:
[46:18] Yeah, yeah, that's right. And about like, did Ethereum lose? Like the Ethereum market cap, which is the scoreboard, is at $240 billion. The next closest thing is Binance at $88 billion. And then the next closest thing after that is Solana at $52 billion. If it was going to get flipped because of this incorrect North Star for the last four or five years, it would have already happened and nothing came close. And now like that was the window of opportunity for somebody like Solana or Binance to win against Ethereum and flip Ethereum did not happen. And now I actually think like now finally Ethereum is on the right track and is going to figure out how to cement its lead and increase its market share.

Ryan:
[47:02] So let's close this out and let's call this cycle sort of a partial win, not a full victory for Ethereum, but a partial win. And I'm going to be looking for these signs of whether the new strategy is working or not. First of all, you got to look at are more corporate chains actually onboarding as L2s for that sovereignty? It's been mixed so far. We get some of them, not all of them. So look for more of that. Also, app chains and these new Gen 2 L2s that are differentiated, will they win some traction? We'll see about that. We've got some promising signs, but it's still pretty early. Things like LIDR, other chains launching, we'll see. Existing L2s like BASE and Robinhood, will they stay? It's part of Ethereum. If they do, that is bullish. If they start to fracture, I don't know. I mean, that's a breaking of the alliance. It's not great. Ethereum also needs to ship like hell on scaling L1 now and lean Ethereum and the ZK vision. You need to look for signs of that. And I also think, I threw this in there, but Ethereum and the ETH alliance needs to win AI. I think that's the next billions of users for Ethereum. And that's sort of white space right now. Anybody could come in and sort of win that. And lastly, I think from a price perspective, ETH needs to bounce back next cycle. It needs to prove itself as a store of value asset, not just a revenue asset.

David:
[48:17] That's what I'm looking for. Next cycle, we can't have just a partial win.

Ryan:
[48:21] There you go. Bankless Nation, none of this has been financial advice. We're going to end it there. Crypto is risky. You could lose what you put in. But thanks for hanging with us on the Bankless Journey. We'll see you next time.