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Crypto World

Vitalik Buterin issues a blunt reality check to the biggest crypto networks

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Vitalik Buterin issues a blunt reality check to the biggest crypto networks

Ethereum co-founder Vitalik Buterin said the role of layer-2 networks needs to be reconsidered as Ethereum’s main network continues to scale and transaction costs remain low.

In a post on X, Buterin said the original rollup-centric roadmap, which positioned layer-2s as the primary way Ethereum would scale, “no longer makes sense.” That roadmap envisioned layer-2s as secure extensions of Ethereum that would handle most transactions while inheriting Ethereum’s security guarantees, often described as “branded shards” of the network.

Layer 2s, such as Arbitrum, Optimism and Base, are offchain networks built on top of primary blockchains (Layer 1s) like Ethereum. The main purpose of these is to increase transaction speed and reduce transaction costs on the main network.

Think of Ethereum’s main network as a packed main hall at a conference. Space is limited, so getting in can be slow and expensive. Layer-2 networks act like overflow rooms, letting people participate and interact without crowding the main hall, while still staying connected to what’s happening there.

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‘You are not scaling Ethereum’

According to Buterin, two developments have challenged that original vision for Layer 2 networks.

First, progress among layer-2s toward later stages of decentralization has been slower and more difficult than expected. Second, Ethereum itself is now scaling directly on layer-1, with fees remaining low and gas limits expected to increase significantly in 2026.

Buterin wrote that scaling Ethereum should mean creating “large quantities of block space that is backed by the full faith and credit of Ethereum,” where activity is “guaranteed to be valid, uncensored, unreverted, untouched, as long as Ethereum itself functions.”

He argued that high-throughput chains connected to Ethereum through multisig-controlled bridges do not meet that definition. “If you create a 10000 TPS EVM where its connection to L1 is mediated by a multisig bridge, then you are not scaling Ethereum,” he wrote.

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In his view, Ethereum no longer needs layer-2s to function as “branded shards” for the network. This means that, because Ethereum itself is scaling, layer-2 networks are no longer required to function as official extensions of Ethereum. He also noted that many layer-2s are “not able or willing” to meet the decentralization and security standards required by the model.

Buterin also noted that some layer-2s may intentionally choose not to move beyond “stage 1,” including for regulatory reasons.

In one example, he wrote that a project argued it may never decentralize further because “their customers’ regulatory needs require them to have ultimate control.” While he said that approach may be appropriate for those users, he added that such systems should not be described as scaling Ethereum.

“This may be doing the right thing for your customers. But it should be obvious that if you are doing this, then you are not ‘scaling Ethereum’ in the sense meant by the rollup-centric roadmap,” Buterin wrote.”

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Instead, Buterin suggested viewing layer-2s as a spectrum of networks with different levels of connection to Ethereum, each offering different trade-offs. He said layer-2s should focus on providing value beyond basic scaling, such as privacy features, application-specific design, ultra-fast transaction confirmation, or non-financial use cases, and be clear with users about what guarantees they provide.

Read more: Ethereum co-founder Vitalik Buterin warns decentralized stablecoins still have deep flaws

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Crypto World

Vietnam Crypto Licences Draw Five Firms as Overseas Platform Ban Looms

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Vietnam Draft Rules Propose 0.1% Tax on Crypto Transfers

Five Vietnamese companies are reportedly competing to launch the country’s first licensed crypto exchanges as authorities move to bring trading onshore and ban overseas platforms.

Five companies have passed an initial qualification round, Reuters reported on Tuesday, citing a March 12 finance ministry document. The group reportedly includes affiliates of private banks Techcombank, VPBank and LPBank, alongside stockbroker VIX Securities and conglomerate Sun Group. VPBank and Sun Group reportedly confirmed their licence applications to Reuters.

Vietnam opened applications for licenses to operate crypto exchanges in January. The move came after new procedures issued by the finance ministry and a law that, for the first time, defines crypto assets as property while still banning their use as legal tender or for payments.

Vietnam has emerged as a major hub for crypto trading, ranking fourth globally in Chainalysis’ latest Global Crypto Adoption Index with $200 billion in estimated transactions over the 12 months to June. However, despite the significant activity, most traders still rely on offshore exchanges such as Binance, OKX and Bybit to access the market.

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Related: Crypto’s real boom is happening in Argentina, Nigeria, and the Philippines

Vietnam to ban overseas crypto platforms

Authorities are also reportedly drafting rules that could prohibit Vietnamese nationals from using overseas platforms. According to Reuters, officials have raised concerns about the growing use of crypto and stablecoins, particularly in relation to capital moving out of the country.

In September 2025, Vietnam launched a five-year crypto pilot with strict rules requiring all transactions to be conducted in Vietnamese dong and limiting issuance to locally registered companies. The framework also bans fiat-backed assets like stablecoins, allowing only crypto backed by real, non-financial assets.

Vietnam is ranked fourth in the world for crypto adoption. Source: Chainalysis

As a result of the strict entry conditions, including high capital requirements of around $379 million, the country’s Ministry of Finance said no companies had applied for its digital asset trading pilot by October.

Cointelegraph reached out to Techcombank, VPBank and LPBank, VIX Securities and Sun Group for comment, but had not received a response by publication.

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Related: Vietnam central bank expects credit growth amid rapid crypto adoption

Vietnam to tax crypto similar to stocks

In February, Vietnam drafted a tax framework for crypto transactions that would treat digital assets similarly to securities trading. Under the proposal, individuals would pay a 0.1% tax on each crypto transaction processed through licensed providers, while such transfers would remain exempt from value-added tax.

For companies, the rules would differ, with institutional investors facing a 20% corporate income tax on profits from crypto trading after costs and expenses.

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