News - Vitalik Buterin: "Without these three improvements, Ethereum will fail"

By Mike Hesp

Vitalik Buterin: "Without these three improvements, Ethereum will fail"

Ethereum (ETH)

L2 scaling, better wallets and more privacy: according to Vitalik Buterin, these three points are crucial to Ethereum's future.

Ethereum has established itself as a mainstay within the crypto world and blockchain ecosystem since its launch in 2015. The smart-contract platform has the largest DeFi at NFT ecosystem and has the most active developers in the entire crypto market. Yet, eight years after its launch, Ethereum still faces major challenges. The network is too slow, interacting with smart contract applications is too complicated and mainstream adoption is still delayed. So what is the future of the second-largest cryptocurrency?

The mastermind behind Ethereum, Vitalik Buterin, recently revealed in a blog post expressed concerns about the future of the smart-contract platform. His three critical improvements that must be made to Ethereum to ensure the network's long-term success: scaling via Layer 2 (L2), comprehensively improving wallets and ensuring privacy.

Buterin outlines these three points in the "transformation triangle of the Ethereum ecosystem." But what is behind these much-needed improvements and why does Buterin believe that without them, the long-term success of ETH cannot be guaranteed?

Ethereum scales through layer-2 networking

First is scalability. Buterin sees this as the primary challenge. This can be solved by implementing Layer 2-networks using rollup-technology. Rollups are a second-layer solution that enables the expansion of the existing Ethereum network by handling most of the transaction processing off-chain. This increases transaction capacity and lowers costs - an essential step for widespread adoption of Ethereum.

Buterin doubts that Ethereum will be accepted in the long run if transaction costs remain high - he cites values of $3.75 or even over $80 during bull runs. If this problem is not solved, the majority of users will continue to prefer centralized platforms with cheaper transactions.

Improve Web3 wallets

The second essential improvement Ethereum should strive for, according to Buterin, concerns the security and usability of wallets. Here, Buterin sees the need for Web3 wallets such as MetaMask or Coinbase Wallet to evolve into so-called "smart contract wallets". This type of cryptowallet offers enhanced security features and a significantly improved user experience compared to current models.

Smart contract wallets open up new possibilities, such as automating transactions. Among other things, this could make it possible to use not only ETH but also other tokens to pay for gas on the Ethereum network by allowing the wallet to automatically exchange tokens for ETH as needed. In addition, users benefit from advanced access control mechanisms and the ability to implement "social" recovery functions. The latter opens up new ways for users who have lost access to their cryptowallet to still regain access to their assets.

For Buterin, the evolution of the wallet ecosystem is essential to attract more people into the crypto space. He believes that without such improvements, a large portion of users would not store their assets in these wallets but would prefer centralized wallet services. Therefore, the intended changes could play a crucial role in making the crypto space more attractive and user-friendly.

More privacy on the blockchain

Finally, Buterin stresses the importance of privacy on the Ethereum network. As a pioneer in decentralization, Ethereum promises its users autonomy over their data - a promise it must keep if it is not to undermine its positioning. Moreover, stronger privacy protections enable certain technical innovations on the platform. Reliable computations that process sensitive data are only possible with sufficient data protection.

Buterin argues that Ethereum will fail without the expansion of privacy mechanisms. All transactions can be viewed publicly, and especially with such sensitive data as financial transactions, this would stop certain innovations in the DeFi sector. Therefore, improving privacy is not just a matter of ethics and legal compliance, but crucial to Ethereum's future and competitiveness.


De warnings by Vitalik Buterin are a call to action for the Ethereum community to address the problems on the network. Buterin's proposed solutions to these challenges include implementing a universal login protocol. He also sees Ethereum Improvment Proposals (EIP) EIPs 734 and 2535 as a way to address the challenges. While EIP 734 acts as a standardized interface for managing wallets with multiple signatures, EIP 2535 enables an upgrade and management system for smart contract wallets. This makes it possible to restore individual cryptowallet access or program other functionalities into wallets.

The EIP-4844 upgrade is also interesting in the context of Buterin's blog post. The upgrade will be implemented on Ethereum later this year and could help scale the network. Indeed, it optimizes the speed and cost of L2 networks and helps bring Buterin's vision of a scalable decentralized network closer. Equally important to Buterin's goals is the spread of the ERC-4337 standard, which could improve the security and usability of wallets.

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