Bankless: The Integrated Era of Ethereum

To become a successful Blockchain, a positive feedback loop must be established, with the following structure:

• Economic progress (such as TVL, price, revenue, trading volume, etc.) brings attention and visibility to the blockchain, thereby: ↓
• New applications can obtain financing, new developers are willing to learn this technology, and new users can also benefit from everything we create to improve their lives, which will ultimately lead to: ↓
• Innovation —— Improvements in infrastructure and applications, enhancing efficiency, exploring new use cases and architectures. The innovation phase is the most collaborative part of the entire cycle, but it is also the stage where natural incentives can easily lead teams to act independently. Innovation drives economic progress, and the cycle begins anew.

The problem with Ethereum is very simple - we have broken every link in this flywheel.

Note: This article focuses on the high-level technical roadmap of Ethereum and does not address the evolution of its social layer. However, both must coexist to present a complete picture.

First, acknowledge the problem

New applications, developers, and users are all on Layer-2! Innovation is happening on Layer-2! Even economic progress is leaning towards Layer-2.

If these L2s can feed back into the entire flywheel cycle, then this would not be a problem - but the reality is that they often do not achieve this.

So, where is the root of this flywheel fracture?

Since 2020, Ethereum has regarded Rollup as the only scalable path and has seriously overestimated the contribution potential of L2 to Ethereum's feedback loop.

Rollup is positioned as a scaling solution. Compared to sharding, it appears simpler, does not weaken the security of the Ethereum main chain, and can even bring stronger composability.

But Rollup is not just a scaling architecture; it is more of an incentive architecture. Its basic logical pathway can be simplified as:

• We need to expand Ethereum.
• To expand the Blockchain with the characteristics we need, some form of sharding is necessary.
• In the execution of the protocol layer, sharding is too complex and accompanied by other issues.
• Therefore, Rollup is the only scaling method.

In my opinion, the second point in this logic is a significant misjudgment. Practically speaking, we have clearly made a mistake (at least to some extent). For example, Solana and Monad have demonstrated a roadmap for achieving scalability without relying on any form of sharding. Meanwhile, many core Ethereum developers have also proven that we can significantly enhance the performance potential of L1.

Although I do not believe a single chain can meet all needs, we clearly rushed towards the conclusion before exploring L1 expansion opportunities.

The reasoning in point 4 is equally untenable. We failed to accurately assess the potential negative impact of the "Rollup-centric roadmap" on the network effects flywheel of the Ethereum mainchain.

Ideal Flywheel

I believe we can rebuild the network effect flywheel of Ethereum:

Instead of letting the network effects be drawn away from the flywheel, it is better to allow Layer-2 to accelerate the transmission of network effects among each other through collaboration.

Specifically, this means:

• Provides nearly unlimited elastic scaling capacity as an overflow layer for the main blockchain;
• Promote customization, specialization, and bold experimental exploration;
• Attract users and developers to settle in;
• Drive revenue growth for the entire Ethereum ecosystem while enhancing the revenue of Ethereum L1 itself;
• Maintain high composability with Ethereum.

This interactive mechanism is beneficial not only for Ethereum but also for Layer-2 as well — a rising tide lifts all boats.

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Solid Foundation

To effectively restart this flywheel, we need a powerful Layer 1 network (L1) —

A main chain worth being composed of;

An ETH worth holding as a treasury asset;

A platform that can serve as an innovation coordination center.

How to do it? The answer couldn't be simpler: Significantly expand L1.

We should start with innovations at the L1 level.

This is for three main reasons:

1. L1 scaling can enhance network effects under an ideal flywheel.
2. L1 scaling will raise the competitive threshold for L2;
3. L1 scaling also directly helps L2! (Especially the type of L2 that I will discuss in the next section)

Most readers are likely aware of what L1 scaling means in practice: increasing TPS and gas limits per second while shortening block time.

We want to build Ethereum L1 into the strongest settlement network, and it should also be the strongest execution network.

And all of this is the solid foundation that Layer-2 truly needs.

Let Rollup Return to the Main Field

As L1 expands and establishes its own network effects, we must seize the time to optimize Layer-2 so that it can contribute to the ideal flywheel.

We need to strike a balance between the following two points:

• Ethereum once promised Rollups that they would be the prioritized path for Ethereum's scalability support;
• Rollup has indeed established its own network effect.

If we now turn to L1 scaling, we must act with caution to avoid completely alienating the main L2 projects (of course, some L2s have no reason to exist in the first place, and those that should perish should indeed perish).

I propose a simple Rollup design:

• Rollup uses Ethereum as the Data Availability (DA) layer;
• Rollup uses Ethereum for execution — that is, it is native Rollup;
• Rollup uses Ethereum for ordering — that is, it is Ethereum-based Rollup;
• Rollup uses ETH as the native gas token.

This design of Rollup is called "Ultrasound Rollup", or "based on + native Rollup. I have previously discussed this type of design in detail.

However, ultrasound Rollup is still not feasible on today's Ethereum.

To realize the "native" part, Ethereum needs to add an opcode called execution engine opcode through a hard fork.

There are also some issues in actual execution based on sorting. All these changes are closely related to L1 scaling.

From Multiple Choices to a Unique Answer

Ethereum is building top-tier data availability (DA) services, and the Rollup based is outputting sorting capabilities, while we are also continuously improving.

Native Rollups will bring exceptional execution performance.

The Ethereum main chain integrates core Rollup services into a unified Ultrasound Rollup architecture.

Although the blockchain can still remain modular (after all, the market is permissionless),

But the services provided by Ethereum are so critical and comprehensive that other competitors have become irrelevant.

In this model, the logic of value capture (through transaction fees) is very straightforward:

Provide the most valuable services, connect the largest synchronized economic zones, possess the strongest economic security, the most censorship-resistant ordering capability, the most reliable settlement layer, and the most secure data availability layer.

Narrative Naturally Takes Shape: "Ethereum is the best" → Ethereum is the best.

**Expand the main chain, ****bring Rollup back to the main stage, ****fully integrate everything. **And complete all of this as soon as possible.