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Ethereum Scaling Must Move Beyond L2s

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Ethereum (CRYPTO: ETH) co-founder Vitalik Buterin has reversed his long-held view that layer-2 solutions should be the primary engine for scaling the network, arguing that the approach no longer makes sense in its current form. In a concise post on X, he said a “new path” is needed as the Ethereum mainnet continues to scale through ongoing gas-limit enhancements and the advent of native rollups. The comments reflect a broader rethinking within the ecosystem about how best to relieve congestion, cut fees, and maintain robust security while enabling developers to push the boundaries of on-chain applications.

Buterin’s stance stands in contrast to years of rhetoric positioning L2s as the principal scaling lever for Ethereum. He noted that many rollups have fallen short of the decentralization and security ideals originally envisioned, and that the mainnet’s capacity is approaching a scale where a pivot toward other architectural approaches may be warranted. “Both of these facts, for their own separate reasons, mean that the original vision of L2s and their role in Ethereum no longer makes sense, and we need a new path,” he wrote, underscoring the complexity of balancing throughput with trust minimization.

Layer-2 networks—such as Arbitrum, Optimism, Base, and Starknet—were conceived as fast, low-cost extensions that inherit Ethereum’s security properties. The goal was to create block space that remains secured by the L1 mainnet, ensuring transactions could be validated and final, uncensored. But Buterin contends that many L2 designs rely on bridges and mediations that can undermine true scaling if critical security guarantees are mediated by complex cross-chain mechanisms rather than being anchored to base-layer security.

While the narrative around scaling has often centered on throughput, the discussion has also touched on the security and decentralization characteristics of L2 ecosystems. Buterin’s comment that a 10,000 TPS “EVM” connected to L1 through a multisig bridge does not represent real scaling sparked renewed debate about whether the path to higher capacity lies primarily in more efficient rollups or in a broader reconfiguration of how Ethereum processes transactions.

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In related commentary, prominent voices within the ecosystem weighed in on the pivot. Max Resnick, a former Ethereum infrastructure researcher who shifted toward the Solana ecosystem when scaling emphasis cooled around mainnet improvements, argued that focusing scaling efforts on the mainnet could yield more tangible benefits for developers and users. His stance underscores a perennial tension within Ethereum’s community: should efforts concentrate on pushing more work through the base layer, or should they continue to rely on rollups to provide modular scaling while maintaining strong security guarantees?

Not all reactions were muted. Ryan Sean Adams, co-host of the Ethereum-focused program Bankless, welcomed Buterin’s pivot, calling it a clear signal for strategic realignment. “This is ‘the pivot.’ I’m glad it’s now being said. Strong ETH, Strong L1,” he wrote in a post that resonated with a segment of the community seeking a refocused emphasis on mainnet engineering and foundational security. The dialogue underscores a pragmatic reassessment of the roadmap that has long prioritized L2-centric scaling as the default path forward.

Native rollups, gas limit rises key scaling Ethereum mainnet

Buterin argues that native rollups—where certain scaling logic is effectively embedded in Ethereum’s own protocol stack—will play a central role as scaling advances mature. He emphasized the importance of native rollups that can be verified directly by Ethereum validators, a distinction from traditional off-chain rollups whose security relies on bridges and cross-layer data availability. The emphasis is on deeper integration and trust assumptions that align more closely with Ethereum’s base layer, especially as zk-based technology matures.

One of the pivotal technical developments underpinning this shift is the anticipated integration of zero-knowledge Ethereum Virtual Machine (zkEVM) proofs into the base layer. zkEVM technology promises to enable more private, scalable, and provable computations, potentially unlocking new use cases while preserving security guarantees. As zkEVM proofs become more mature and broadly integrated, the consensus is that the mainnet could handle larger volumes of transactions with stronger cryptographic assurances, reducing the reliance on peripheral L2 constructs.

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Historically, rollups have functioned by batching transactions off-chain and posting summary data back to Ethereum, thereby creating a balance between speed and security. The native-rollup approach, by contrast, weaves rollup logic into the core protocol, allowing transactions to be validated by Ethereum nodes directly rather than via bridging channels. This distinction is central to the argument that true scaling may hinge on deeper, more secure mainnet integration rather than layering on external validators and bridges. The idea is to maintain Ethereum’s finality and censorship-resistance while expanding throughput more aggressively than through isolated L2 ecosystems.

Looking back at the roadmap, Ethereum developers have previously discussed expanding the mainnet’s gas capacity as a mechanism to raise throughput. In late 2025 and into early 2026, discussions circulated about increasing the gas limit from roughly 60 million to 80 million per block, contingent on the successful deployment of the blob-parameter feature and subsequent hard forks. The blob fork, designed to increase block space without sacrificing security, began rolling out in December and was fully enacted in January, enabling more complex smart contracts and higher transaction throughput per block. This capacity uplift has the potential to lessen the perceived urgency for ever-larger L2 ecosystems if efficiency gains materialize quickly enough.

Industry researchers have long projected dramatic improvements in throughput. In July of the previous year, Justin Drake proposed a 10-year plan to reach approximately 10,000 transactions per second on the Ethereum mainnet once all scaling features are in place—a figure that would mark a substantial leap over today’s throughput levels and push Ethereum closer to truly global-scale usage. While ambitious, the plan continues to anchor the debate around how best to realize scalable, secure, and decentralized computation on the chain.

As the conversation evolves, the ecosystem remains split between doubling down on the mainnet’s capabilities and leveraging rollups that can be designed for specialized use cases. Proponents of L2-heavy scaling argued that external networks could unlock rapid innovation while preserving Ethereum’s security through data availability on the mainnet. Buterin’s pivot suggests a more nuanced approach: scale on multiple layers while ensuring core security guarantees are not compromised and user trust remains central to long-term adoption.

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Ultimately, the path forward may combine elements of both strategies. Native rollups could become a cornerstone of the scaling architecture, with zkEVM and other zero-knowledge proofs enabling more efficient verification on the base layer. Meanwhile, mainstream L2s could concentrate on niches—privacy-centric features, identity services, financial primitives, social apps, and even AI-driven use cases—without becoming the sole mechanism for scaling the network. The evolving stance signals a broader trend toward a more integrated, security-focused scaling framework for Ethereum.

As the debate continues, observers will watch for concrete milestones: the progress of zkEVM integration into the base layer, the deployment milestones for native rollups, and the practical impact of the upcoming gas-limit expansion on transaction costs and throughput. The dialogue also highlights the importance of maintaining a balance between innovation and security, ensuring that scaling advances do not come at the expense of decentralization or user protections. The ecosystem’s ability to execute on these milestones could shape Ethereum’s competitive position in a rapidly evolving crypto landscape.

Related: Arbitrum, Optimism, Base and Starknet are among the L2s most discussed in this pivot, but the broader question remains: can native, deeply integrated scaling finally deliver on the long-promised combination of speed, cost-efficiency, and security on the mainnet? The coming quarters are likely to reveal how far the community is willing to go in redefining Ethereum’s layering strategy, and whether the market responds to a more unified approach that prioritizes mainnet scalability and cryptographic assurances over modular, bridge-dependent solutions.

— Sources: Vitalik Buterin’s X post; zkEVM integration discussions and related zk-tech articles; discussions on gas-limit increases and blob hard forks; commentary from Max Resnick; reactions from Ryan S. Adams; and historical plans like Justin Drake’s Lean Ethereum proposal.

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  • Sources & verification
  • Vitalik Buterin’s X post: https://x.com/VitalikButerin/status/2018711006394843585
  • Zero-knowledge Ethereum Virtual Machine (zkEVM) proofs and scaling: https://cointelegraph.com/news/2026-is-the-year-ethereum-starts-scaling-exponentially-with-zk-tech
  • Gas limit rise discussions: https://cointelegraph.com/news/ethereum-could-get-faster-gas-limit-rise-january
  • Blob parameter hard fork and January implementation: https://cointelegraph.com/news/ethereum-blob-limit-raised-to-21-layer-2-cheaper
  • Lean Ethereum concept: https://blog.ethereum.org/2025/07/31/lean-ethereum
  • Max Resnick’s perspective: https://cointelegraph.com/magazine/great-enemies-ethereum-solana-anza-economist-max-resnick/
  • Ryan S Adams’ reaction: https://x.com/RyanSAdams/status/2018727620624384059
  • Arbitrum, Optimism, Base context: https://cointelegraph.com/news/these-5-blockchains-led-2025

Risk & affiliate notice: Crypto assets are volatile and capital is at risk. This article may contain affiliate links. Read full disclosure

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Glassnode flags extended sell-side pressure ahead

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OpenAI launches smart contract security evaluation system

BTC is down ~28% this month; Glassnode’s sub‑1 realized P/L ratio signals 5–6 more months of downside pressure.

Summary

  • BTC trades near ~$63k after a sharp February selloff, about 47% below its ~$126k ATH from October 2025.
  • Glassnode’s 90D realized profit/loss ratio has fallen below 1, historically preceding at least 5–6 months where realized losses dominate realized profits.
  • In prior cycles, BTC dropped ~25% over six months in 2022 and >50% over five months in 2018 after this metric flipped sub‑1, implying risk of further drawdown if patterns repeat.

Bitcoin has approached previous highs following a sharp decline in February, though blockchain analytics firm Glassnode has indicated further downward pressure may persist for several months, according to the company’s recent analysis.

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Glassnode reported that Bitcoin’s realized profit/loss ratio, measured as a 90-day moving average, has fallen below 1. The firm stated this metric suggests the decline could continue for an additional five to six months.

In a post on social media platform X, Glassnode cited historical data showing that drops in the Realized Profit/Loss Ratio below 1 have preceded decline periods lasting at least six months. The firm noted that a return above 1 generally indicates a decrease in selling pressure.

The analytics company referenced the 2022 and 2018 bear markets as comparative examples. During the 2022 bear market, Bitcoin declined 25% in value six months after its profit/loss ratio fell below 1, according to Glassnode. Under similar conditions in 2018, Bitcoin experienced a drop exceeding 50% over five months.

Glassnode stated that if historical patterns repeat, the cryptocurrency’s price could continue its downward trend for five months or longer.

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The Realized Profit/Loss Ratio measures the ratio of profits to losses realized on the Bitcoin network, providing insight into market sentiment and selling pressure among holders.

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5 red months, 74% LTH profit rapidly eroding

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5 red months, 74% LTH profit rapidly eroding

BTC is down ~50% from ATH, with 74% LTH profit shrinking as supply in loss hits 50% amid multi‑month selling.

Summary

  • Long-term BTC holders still sit on ~74% average profit, but that margin is compressing as price grinds toward the LTH cost basis near ~$39k.
  • BTC has printed almost five straight red monthly candles after a volatility spike above 150%, while weekly RSI hits one of its most oversold levels ever around the $60k-$65k zone.
  • BTC supply in loss has hit ~10m coins, roughly 50% of the 20m circulating, a capital destruction level that has historically coincided with bear market bottoms.

Bitcoin long-term holders currently hold an average profit of approximately 74%, though that margin continues to decline as the cryptocurrency’s price moves closer to their cost basis, according to CryptoQuant analyst Darkfost.

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The analyst noted that historical bear market cycles have been characterized by prices breaking below the long-term holder cost basis, triggering capitulation phases marked by realized losses of around 20%. Long-term holders are defined as investors known to be less sensitive to short-term price fluctuations, Darkfost stated.

Market recovery and bull phase entry have historically occurred only after such capitulation events, according to the analysis.

Glassnode reported that the 90-day moving average of the Realized Profit/Loss Ratio has fallen below 1, confirming a transition into an excess loss-realization regime. The blockchain analytics firm stated that these bearish conditions have historically persisted for at least six months before liquidity returns to markets.

Analyst James Check reported that Bitcoin has recorded nearly five consecutive red monthly candles following the largest volatility spike of the current cycle. Check observed that one-week realized volatility spiked above 150%, a level typically associated with capitulation events, and that weekly RSI has reached one of the most oversold readings in Bitcoin’s history. A significant amount of Bitcoin has migrated to new holders in a high price range this year, according to Check’s analysis.

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Bitcoin supply in loss reached 10 million coins, the fourth-highest reading on record, analyst James Van Straten reported. Van Straten noted that circulating supply will reach 20 million Bitcoin next week, with 50% held at a loss. Historical patterns suggest such capital destruction levels are sufficient for a bear market bottom, according to Van Straten.

Bitcoin experienced a minor price rebound during early Asian trading hours, though bearish sentiment remains dominant in the market. The price movement formed another lower high while a key support level continues to hold, according to technical analysis.

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Anchorage Digital Buys Strategy STRC as Stock Becomes Most-Shorted

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Anchorage Digital Buys Strategy STRC as Stock Becomes Most-Shorted

Crypto bank Anchorage Digital said it now holds Strategy’s perpetual preferred security STRC on its balance sheet, adding an institutional backer to Michael Saylor’s Bitcoin treasury company at a time when Wall Street traders are increasingly betting against it.

In a Wednesday post on X, Anchorage co-founder and CEO Nathan McCauley said the purchase shows alignment between two companies built around Bitcoin (BTC) infrastructure and corporate treasury adoption. “Conviction compounds. Institutions don’t just talk about Bitcoin, they structure around it,” McCauley wrote.

“When the company that operationalizes Bitcoin infrastructure puts capital alongside the company that operationalized the Bitcoin treasury strategy…that’s a signal,” he added. Anchorage did not reveal the size or timing of the position.

According to Strategy’s website, STRC is a Nasdaq-listed perpetual preferred security marketed as a short-duration, high-yield instrument. The shares pay an 11.25% annual dividend distributed monthly in cash. Capital raised through the instrument has historically financed the firm’s continued Bitcoin accumulation.

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Related: Michael Saylor says quantum threat to Bitcoin is more than 10 years away

Strategy becomes Wall Street’s most-shorted stock

Anchorage’s purchase comes as Strategy has climbed to the top of Goldman Sachs’ list of most-shorted large-cap US equities by short interest as a percentage of market capitalization. A year ago, it did not rank among the top 50. The company began rising on the list in late 2025 as its share price weakened even before Bitcoin peaked in October.

Strategy becomes the most shorted large-cap stock. Source: Goldman Sachs

Short selling involves borrowing shares and selling them with the expectation of repurchasing later at a lower price. Losses can grow if the stock rises.

Strategy functions as a leveraged public-equity proxy for Bitcoin. It issues securities and deploys the proceeds into BTC. Gains can amplify during rallies, while downturns magnify pressure on the share price.

The company currently holds 717,722 Bitcoin worth about $46.68 billion at current market prices. On Monday, it announced another purchase, acquiring 592 BTC for $39.8 million. The coins were acquired at an average cost of roughly $76,020, leaving the company sitting on an estimated $7 billion unrealized loss with Bitcoin trading near $66,000.

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Related: Michael Saylor hints at Strategy’s 100th Bitcoin buy

Strategy plans debt-to-equity shift

Last week, Strategy founder Michael Saylor said the company intends to convert roughly $6 billion in convertible bond debt into equity, replacing repayment obligations with newly issued shares. The change would lower leverage on the balance sheet by turning bondholders into shareholders, though it could dilute existing investors.