In a blog post titled “The Three Transitions,” Vitalik Buterin, Co-Founder of Ethereum, emphasizes the importance of addressing three crucial components simultaneously to ensure Ethereum’s success. He argues that layer 2 scaling, wallet security, and privacy advancements are necessary for Ethereum to provide a global and permissionless experience for average users.
Layer 2 scaling, the first component, holds significant importance according to Buterin. He warns that Ethereum’s failure to achieve scalability on this front could lead to the abandonment of the chain by mass-market products, favoring centralized alternatives. Ethereum has witnessed notable growth in layer 2 networks, with Polygon and Matter Labs releasing ZK rollups in recent months. The upcoming Dencun upgrade, featuring proto-danksharding, aims to enhance rollup affordability.
“Without the first, Ethereum fails because each transaction costs $3.75 ($82.48 if we have another bull run), and every product aiming for the mass market inevitably forgets about the chain and adopts centralized workarounds for everything”, says Buterin.
The second component, wallet security, involves the migration of users’ wallets to smart contract wallets. Buterin argues that this transition is essential for users to feel comfortable storing their cryptocurrency payments and data on-chain, preventing their migration to centralized entities.
Privacy represents the final crucial component highlighted by Buterin. Without sufficient privacy measures, he warns that Ethereum fails, as users’ on-chain activities remain visible to the public. “Having all transactions available publicly for literally anyone to see is far too high a privacy sacrifice for many users”, argues Buterin. As such, people will transition towards centralized solutions that provide at least a certain degree of data obfuscation.
Buterin emphasizes the need for fundamental changes in the way Ethereum is interacted with, requiring significant adaptations from applications and wallets.
Buterin’s roadmap tackles the challenges posed by the blockchain trilemma, where achieving decentralization, security, and scalability simultaneously is typically challenging. By recognizing the difficulties in coordinating these transitions, Buterin underscores their necessity for Ethereum’s long-term survival.