Vitalik Buterin’s ETH Sell-Off Explained; New Criteria for Layer 2 Projects Announced

• Vitalik Buterin sold 950 Ether worth $2.28 million, causing concern among Ethereum holders as the altcoin faces selling pressure.
• Buterin has also staked 950 Ether on AAVE, as Ethereum Layer 2 networks face criticism of over-centralization.

Ethereum co-founder Vitalik Buterin has once again drawn attention to selling Ether (ETH) from a wallet linked to him. Data from Lookonchain, a crypto intelligence platform, revealed that Buterin’s wallet made several significant transfers since August 30, sparking concerns within the ETH holder community.

A wallet address identified as belonging to Buterin sold 950 Ether worth approximately $2.28 million since late August at an average price of $2,396 per token. The recent sale involving 190 Ether was worth around $441,971 in USD Coin (USDC). This string of transactions has caused unease among Ethereum holders as the cryptocurrency struggles under increasing selling pressure.

vitalik.eth(@VitalikButerin) deposited the 2.27M $USDC obtained from selling 950 $ETH in the past 2 weeks into #Aave 3 hours ago.#Vitalik also deposited 2,851 $ETH($6.73M) into #Aave.https://t.co/UEX85tYFwW pic.twitter.com/7SVFHjnAOT

— Lookonchain (@lookonchain) September 12, 2024

Ethereum, the second-largest cryptocurrency by market capitalization, has been underperforming recently, and Buterin’s transactions have only intensified concerns. On September 11, the amount of Ether on exchanges stood at 21.15 million, pointing to increased selling pressures. Historically, high Ether trading volumes on exchanges have often been a sign of price declines caused by selling.

Buterin Announces Stricter Rules for Ethereum Layer 2 Projects

Besides the sell-off, Buterin also discussed Ethereum’s Layer 2 (L2) solutions and announced that from 2025, there will be stricter rules for public L2 projects. He stated that only projects that have reached the “Stage 1” or higher will be mentioned, irrespective of any direct or indirect participation or investment. This helps to enhance the transparency and security since the Ethereum’s ecosystem is still growing. 

I take this seriously. Starting next year, I plan to only publicly mention (in blogs, talks, etc) L2s that are stage 1+, with *maybe a short grace period* for new genuinely interesting projects.

It doesn’t matter if I invested, or if you’re my friend; stage 1 or bust.

Multiple… pic.twitter.com/4cGxgsfmUc

— vitalik.eth (@VitalikButerin) September 12, 2024

Buterin also noted that ZK rollups are also advancing, with many teams anticipated to reach Stage 1 by the end of 2024. In stage one, at least 75% of the council must vote to cancel the proof system, while at least 26% of the council members should be independent of the roll-up team. These are considered to be major milestones in the development of Ethereum with regard to security and scalability. 

Debate Unfolds Over Layer 2 Network Security

Recently, Justin Bons of Cyber Capital stated that the centralized Layer 2 networks are dangerous as funds of users can be stolen. Buterin supported these solutions stating that only highly decentralized Layer 2 solutions can guarantee security without the need for a broader consensus. 

However, Layer 2 networks such as Arbitrum, Optimism, and zkSync have gained popularity, and currently process more than 80% of Ethereum’s transactions. However, the higher activity and advancement in Layer 2 solutions has still not affected the price of Ether in a significant manner. 

At the time of writing, Ethereum was trading at $2,326, a 1% decline within 24 hours. The downturn in price coincides with the surge in Ether supply on exchanges. 

In addition to the sale of Ether, Buterin also made headlines recently for staking 950 ETH worth $2.24 million through the AAVE protocol, paired with 2.277 million USDC. Staking is a way for Ethereum holders to earn passive income by locking up their tokens to support the network’s operations, but it also reflects a long-term commitment to the asset’s future.

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