Ethereum’s next phase – Buterin proposes new scalability strategy

• Ethereum’s Layer 2 solutions enhance scalability and reduce transaction costs
• Blob transactions are vital for scaling Ethereum and supporting millions of users

In his latest blog post, Vitalik Buterin reignited the conversation around Ethereum’s [ETH] scalability, offering fresh insights into how the network can evolve to maintain its dominance in the blockchain ecosystem.

With Ethereum’s growth hitting a bit of a plateau recently, Buterin stressed on the urgency of embracing Ethereum’s Layer 2 solutions more fully. Both to enhance the market value of ETH and to solidify its critical role in the wider blockchain economy.

Here, it’s worth pointing out that his proposal came just days after Buterin announced significant changes in the Ethereum Foundation. Hence, this could be a pivotal moment for the network as it seeks to adapt and thrive in an increasingly competitive space.

Ethereum – Reaching the limits of layer 1

Ethereum has grown significantly, but scalability remains a major issue for it. High transaction fees and congestion have plagued the network, with Vitalik Buterin noting that while Layer 1 has matured, it can’t meet the demands of decentralized applications.

He emphasized that “L2 scaling is working,” with Layer 2 protocols increasing transaction capacity by 17x and reducing fees. However, challenges like scaling blobs and L2 heterogeneity remain. To overcome these, Ethereum must innovate both technically and socially, further integrating ETH into Layer 2 solutions.

What is Buterin proposing?

Vitalik Buterin has now presented a strategy for improving Ethereum’s scalability, one that involves deeper integration of ETH into Layer 2 protocols. He noted that L2s should embrace ETH as their “primary collateral” to strengthen the Ethereum ecosystem. According to him, L2 networks should burn or stake a portion of their gas fees, which would create additional demand for ETH and reinforce its deflationary characteristics.

He also noted that the ecosystem should leverage ETH’s value across both L1 and L2 networks. This strategy aims to provide Ethereum with the scalability needed to support millions of users, while preserving the decentralization and open-source ethos that the platform was founded on.

Blob transactions

One of the key technical aspects of Ethereum’s scaling strategy is the use of “blob transactions” – A crucial component of Layer 2 solutions. Blob transactions allow for more efficient data storage and processing, thus improving Ethereum’s scalability. In fact, Buterin emphasized on the importance of increasing the blob count to handle future demands. He explained,

“If you take the average blob fee of the last 30 days, and suppose it stays the same while blob count increases to 128, Ethereum would burn 713,000 ETH per year.”

Increasing the blob count will help scale Ethereum and create a revenue stream through ETH burns, contributing to its deflationary pressure. However, Buterin also cautioned that the demand curve is not guaranteed, and flexibility is needed for future adjustments.

With EIP-4844 introducing 3 blobs per slot and the Pectra upgrade set to double that, Ethereum is on track to achieve 100,000 transactions per second, driving both scalability and revenue growth.

Read Ethereum’s [ETH] Price Prediction 2025–2026

Ethereum – Price analysis, market sentiment

Source: TradingView

At the time of writing, Ethereum remained stable, trading at $1,860 after facing minor resistance at $1,880 earlier this week. The RSI signaled neutral sentiment, while trading volumes plateaued – A sign of caution among market participants.

Analysts also suggested that ETH’s price action mirrored the broader market’s consolidation, with traders eyeing $1,920 as the next key resistance level and $1,800 as critical support.

Additionally, Vitalik Buterin’s latest remarks about Ethereum Foundation shake-ups have sparked diverse reactions. While Buterin outlined ambitious goals – improving technical expertise and ecosystem collaboration – critics argue these changes seem more incremental than transformative.

The debate over Ethereum’s future leadership coincides with concerns about staying true to its Cypherpunk ethos. Especially as stakeholders weigh its decentralized values against the pressing need for execution speed and innovation.