The Next Phase of Ethereum: Scaling, Upgrading, Moving Towards the Aggregation Era

Author: mteam.eth

Compiled by: Shenchao TechFlow

Any successful blockchain must create a flywheel effect as shown below:

Economic progress (such as TVL, price, revenue, trading volume, etc.) must bring attention and visibility to the chain, thereby:

To enable new applications to receive funding, to allow new developers to learn relevant technologies, and to empower new users to leverage everything we have built to improve their lives, this will inevitably lead to:

Innovation, along with improvements in infrastructure and applications, aims to enhance efficiency and explore new use cases and architectures. In the innovation phase, collaboration is particularly crucial, but this phase often leads to team dispersion due to natural incentive mechanisms. Innovation drives economic progress, and the cycle begins anew.

The problem facing Ethereum is simple - we have broken every part of this flywheel.

Note: This article explores the advanced technical roadmap of Ethereum and does not focus on the social aspect of the roadmap. These two must be combined to present a complete picture.

First, accept the question.

New applications, developers, and users are all on L2! Innovation is happening on L2! Economic progress is also shifting towards L2.

If these L2s can provide feedback to the flywheel, it is not an issue for Ethereum, but this situation is often not common.

What is the root cause of the flywheel fracture?

Ethereum (around 2020) believed that scaling through Rollup is the only way to expand, and it seriously overestimated the contribution of L2 to the overall flywheel of Ethereum.

Rollup is regarded as a scaling solution. Compared to sharding, Rollup appears to be simpler, avoids diluting the security of Ethereum L1, and may even bring better composability.

But Rollup is not just a scaling architecture; it is also an incentive architecture. A simplified logical chain might be as follows:

1. We need to expand Ethereum.
2. A certain form of sharding is a necessary condition for expanding the blockchain with the desired characteristics.
3. In the execution of the protocol, sharding is overly complex and there are other issues.
4. Therefore, Rollup is the only way to scale Ethereum.

In my opinion, the second point here is the first major mistake. It is empirically obvious that we were wrong (at least to some extent). For example, both Solana and Monad have demonstrated reasonable scalability roadmaps that do not involve any form of sharding. At the same time, many core Ethereum developers have proven that we can push the performance of L1 further than it is now.

Although I don't believe a single chain can meet all demands, I think we pushed towards this endgame before pursuing L1 expansion opportunities.

The fourth point in this reasoning is also insufficient. We failed to correctly assess the potential drawbacks of a Rollup-centric roadmap on the L1 network effect flywheel.

Ideal Flywheel

I believe we can reconstruct the network effect flywheel like this:

L2 should not extract network effects from the flywheel, but should accelerate the flow between each network effect.

Specifically, this means:

• Provides virtually unlimited flexible expansion as overflow
• Promote customization, specialization, and bold experimentation
• Attract users and developers
• Increase the total revenue of the Ethereum ecosystem and the revenue of Ethereum L1 itself.
• Maintain high compatibility with Ethereum

This interaction has had the expected effect on Ethereum and L2 – a rising tide lifts all boats.

My presentation slides at "Sequencing Day" in November 2024

solid foundation

To effectively restart the flywheel, we need a strong L1. An L1 worth combining. An ETH worth holding in your treasury. An innovative coordination point.

How to achieve it? The answer is as simple as it gets. Actively expand L1.

We start with innovations at the L1 level.

There are three reasons:

• Expand L1 to increase network effects under the ideal flywheel
• Extended L1 raises the barrier to competition for any L2
• Extending L1 is beneficial for L2! (Especially the kind I will discuss in the next section)

Most of the people reading this article may understand what extending L1 means in practice, but at its core, it involves increasing TPS and Gas per second while reducing slot time. We must build Ethereum L1 into the most powerful settlement network, yes, but also an execution network.

Together, this is the solid foundation that L2 needs.

Let Rollup Return

As L1 expands and establishes its own network effects, optimizing L2 to contribute to the ideal flywheel cannot be delayed.

We need to balance a few things here:

• Ethereum gives the impression that Rollups will be prioritized within Ethereum.
• Rollup has successfully grown its own network effects.

Any transition back to L1 scaling must be done cautiously and cannot completely alienate the main L2 (even though some L2s have no reason to exist and should absolutely be phased out).

I propose a simple Rollup design:

• Rollup uses Ethereum for data availability (DA).
• Rollup uses Ethereum for execution. This means it is a native Rollup.
• Rollup uses Ethereum for ordering. This means it is a Rollup-based solution.
• Rollup uses ETH as its native gas token.

This design of Rollup is called "Ultrasound Rollup" and "Base + Native Rollup". I have written about them in detail!

"Ultrasound Rollups" cannot yet be implemented on the current Ethereum. To enable its native part, Ethereum needs to add a new opcode through a hard fork, namely the execution engine opcode. The current design based on ordering also faces some practical issues, all of which are closely related to scaling L1.

What would we get if we could achieve this?

Ultrasound Rollups contribute to the network effect flywheel of Ethereum by maintaining composability and achieving customization. Their combined scalability is theoretically very powerful, and any single Ultrasound Rollup can drive execution like MegaETH or RISE. Ultrasound Rollups are not a regression but a necessary step forward.

The synergy between Ultrasound Rollup and Ethereum is so strong that I see it as an extension of Ethereum's network effects. Solana's philosophy on network scalability is correct, but Ultrasound Rollups do not just enhance Ethereum's capabilities; they are, in themselves, Ethereum's network.

Existing Rollups may transition to ultrasonic Rollups. In fact, some teams have already committed to further exploring this option. New Rollups and application chains (Appchains) should prioritize this direction.

Through this method, a unified Ethereum ecosystem can achieve "Universal Synchronous Composability," bringing crazy scalability while also possessing unlimited expressiveness.

In this ecosystem, user and developer activities occur on L1 or specialized Rollups. Important and controversial states may still remain on L1. Developers can build cross-chain applications without worrying about the underlying differences between chains. Users experience chain abstraction within the Ethereum expanded economic zone.

This is the integration era of Ethereum.

From "multiple choices" to "the obvious choice"

Ethereum is building top-tier data availability (DA), with sorted Rollups outputting our continually improving sorting technology, while native Rollups will provide outstanding execution capabilities.

Ethereum L1 integrates core Rollup services into a unified Ultra Rollup. While the market remains permissionless and chains can stay modular, Ethereum itself provides such important and comprehensive services that any competitors become irrelevant.

In this model, the accumulation of value (in the form of fees) becomes clear and straightforward: providing the most valuable services, accessing the largest synchronized economic zone, the strongest economic security, the most censorship-resistant ordering, the most reliable settlement layer, and the safest data availability.

Ethereum is indeed the best.

Expand L1.

Let Rollup return.

Integrate everything.

and launch as soon as possible.