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Vitalik Buterin Touts Layer 2 as Ethereum’s Scaling Future

2 mins
Updated by Ryan Boltman
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In Brief

  • Layer 2 rollups are the best way to scale Ethereum.
  • Sharding could still be a long way off.
  • Arbitrum is the leading L2 network with 61% market share.
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Ethereum co-founder Vitalik Buterin has been talking up layer 2 scaling solutions at a blockchain conference in China.

Speaking at the Shanghai International Blockchain Week, Vitalik stated that Layer 2 is the future of scaling the network and the only way to preserve its decentralization.

The programmer, who also speaks Chinese, acknowledged that there is a serious need to scale the network, admitting that native solutions such as sharding could still be a long way off.

Buterin confirmed that base layer scaling for applications will not be rolled out until the final phases of the ETH 2.0 upgrade according to reports. He suggested that rollups were a current solution that works well and should be adopted.

Rollups come in several forms, such as zero-knowledge or optimistic, and they process some of the transaction data off the main root chain. This leads to much greater throughput and lower fees.   

Any sign of sharding?

Ethereum’s own solution involved side-chains or shards, which will effectively do the same thing. However, as noted by Buterin, they’re not expected to be deployed until Phase 1 of the upgrade which is at least another year away according to the official docs.

 “Shard chains should ship sometime in 2022, depending on how quickly work progresses after the merge.”

Initially, there will be 64 of them deployed according to the roadmap, and they will give Ethereum more capacity to store and access data, but will not be used for executing code.

Before they are deployed, Ethereum needs to be fully secured by proof-of-stake which will come with “the merge”. This is when the existing Ethereum chain is merged with the Beacon Chain, which is expected sometime in Q1 or Q2, 2022.  

Until then, Layer 2 scaling is the only practical way to use Ethereum without having to shell out fortunes for gas.

Layer 2 outlook

Layer 2 protocols and aggregators have been increasingly popular this year, as Ethereum transaction fees show no signs of decreasing.  

According to L2beat, which monitors the scaling scene, the total value locked across L2 platforms has reached a record $4 billion.

Arbitrum is the most popular of the bunch with $2.5 billion locked or 61.5% of the entire share. The L2 exchange dYdX which uses zk-rollups is in second with a TVL of $900 million and a 22% share. Optimism is the third most popular L2 solution with $290 million and a 7% market share.

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Martin Young
Martin Young is a seasoned cryptocurrency journalist and editor with over 7 years of experience covering the latest news and trends in the digital asset space. He is passionate about making complex blockchain, fintech, and macroeconomics concepts understandable for mainstream audiences.   Martin has been featured in top finance, technology, and crypto publications including BeInCrypto, CoinTelegraph, NewsBTC, FX Empire, and Asia Times. His articles provide an in-depth analysis of...
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