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

Author: mteam.eth

Compiled by: Deep Tide 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:

Providing funding support for new applications, enabling new developers to learn relevant technologies, and allowing new users to utilize everything we have built to improve their lives will inevitably lead to:

Innovation, as well as improvements in infrastructure and applications, aims to enhance efficiency and explore new use cases and architectures. Collaboration is especially crucial during the innovation phase, but this stage often leads to team dispersion due to natural incentive mechanisms. Innovation drives economic progress, and the cycle begins again.

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 to L2.

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

What is the root cause of the flywheel fracture?

Ethereum (around 2020) believes that Rollup scaling is the only way to expand and has seriously overestimated the contribution of L2 to the overall flywheel of Ethereum.

Rollups are seen as scalability solutions. Compared to sharding, rollups appear simpler, avoiding the dilution of Ethereum L1's security and can even offer better composability.

But Rollup is not just a scalability architecture; it is also an incentive architecture. A simplified logical chain might be like this:

We need to expand Ethereum.

Some form of sharding is a necessary condition for expanding a blockchain with the characteristics we need.

The sharding is too complex and there are other issues during the execution of the protocol.

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. Meanwhile, many of Ethereum's core 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 needs, I think we pushed towards this endpoint before pursuing L1 expansion opportunities.

The fourth point in this reasoning is also insufficient. We have failed to properly 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 rather accelerate the flow between each network effect.

Specifically, this means:

Provides almost 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 - rising tides lift 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 vault. An innovative coordination point.

How to achieve it? The answer couldn't be simpler. 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.

The expansion of L1 has raised the competitive threshold for any L2.

Expanding L1 is beneficial for L2! (Especially the kind that I will discuss in the next section)

Most people reading this article may understand what extending L1 means in practice, but at its core, it is about 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.

Here we need to balance a few things:

Ethereum gives the impression to Rollups that they will be prioritized within Ethereum.

Rollup has successfully grown its network effect.

Any transition back to L1 expansion must be cautious and should not completely alienate the main L2 (although some L2s have no valid reason for existence and should absolutely cease to exist).

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 based on Rollup.

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 be implemented on the current Ethereum. In order to enable its native component, 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 achieve if we could make this happen?

The ultra-sound Rollup contributes to the network effect flywheel of Ethereum by maintaining composability and enabling customization. Their combined scalability is theoretically very powerful, and any ultra-sound Rollup can drive execution like MegaETH or RISE. The ultra-sound Rollup is not a regression but a necessary step forward.

The synergy between the Ultra Sound 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 Ultra Sound Rollups are not just about increasing Ethereum's capabilities; they are, in themselves, the Ethereum 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 insane scalability while also possessing infinite expressiveness.

In this ecosystem, the activities of users and developers 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 expanded economic zone of Ethereum.

This is the integration era of Ethereum.

From "multiple choices" to "obvious choice"

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

Ethereum L1 integrates core Rollup services into a unified super Rollup. While the market remains permissionless and chains can remain modular, Ethereum itself offers such important and comprehensive services that any competitor becomes irrelevant.

In this model, the accumulation of value (in the form of fees) becomes straightforward: providing the most valuable services, accessing the largest synchronized economic zones, 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 it as soon as possible.