Yesterday Vitalik Buterin published a post on his official X profile in which he effectively calls for greater decentralization of layer-2 on Ethereum.
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 is the famous co-founder of Ethereum, and his words carry a very significant weight in this field.
The decentralization on Ethereum layer-2 according to Vitalik Buterin
The layer-2 in theory inherit security from the layer-1 to which they are attached.
The problem, however, is that it is not certain that if a layer-1 is decentralized, such as Ethereum, the layer-2s that rely on it are necessarily decentralized as well.
Indeed, for a layer-2 it is often very difficult to reach the level of decentralization of Ethereum, so much so that one of these upper layers for example is Base by Coinbase.
Moreover, new layer-2s continue to be launched, many of which are in fact not decentralized at all.
For a layer-2 to truly make sense, it must be decentralized; otherwise, it is more convenient to use other equally centralized solutions that are much simpler to manage, such as proprietary platforms of companies.
What truly distinguishes blockchain technology from other technologies that allow the management of financial transactions is precisely decentralization, because otherwise, from other points of view, centralized technologies turn out to be much more performant, that is, more scalable and less costly.
Since layer-2 are precisely used to make crypto transactions on blockchain more scalable and economical, it is evident that the same best practices of layer-1 must also be applied at these higher levels.
The speech by Vitalik Buterin on the decentralization of Ethereum layer-2
Buterin starts right from the explosion of layer-2.
Not only are there already many, but more are still being born.
The co-founder of Ethereum says that starting next year he will only consider those layer-2 that are at least in phase 1, meaning those that have reached a 75% threshold in the council to ignore the proof system, and that have more than 26% of the council outside the rollup team.
He added:
“The era of rollup as glorified multisig is coming to an end. The era of cryptographic trust is upon us”.
Furthermore, he shared a screenshot in which it is explicitly stated not only that the ecosystem standards must become stricter, but that it will no longer be sufficient to declare being on the path to decentralization.
The goal is to reach the point (phase 2) where rollups are truly supported only by the code, and where the security council can intervene only if the code is demonstrably in disagreement with itself.
The path towards decentralization
As clearly emerges from Buterin’s words, these are mainly governance problems.
That is, if a crypto protocol is manipulable by a team of people in an arbitrary way, or if it allows arbitrary decisions by one or more people towards others, it cannot be considered decentralized.
If it is not decentralized, it is not trustless, and this inevitably entails the need to trust those who manage it. This is not a characteristic that a decentralized project should have, because it is instead one of the main characteristics that distinguish centralized projects.
Moreover, centralized projects tend to be not only much easier to develop, but also much more performant, so there is no need to use decentralized technologies if they are not truly decentralized.
Buterin realized that the projects claiming to be decentralized and that actually are, starting with Ethereum, are very few. On the other hand, there are many more that claim to be decentralized, but in reality, they are not at all.
A crypto protocol in which there are one or more people who are able to intervene arbitrarily to modify the code at will, or to ensure that the operations carried out within the protocol do not exclusively follow what is written in the code, is not truly decentralized.
The risks of centralization
The intrinsic risk in a centralized protocol is not only related to the fact that it requires absolute trust from the users.
There is also, for example, the risk related to the security of the funds, because as has happened many times before, they can be stolen by a malicious actor. For example, the crypto exchange Mt. Gox in 2014 failed precisely for this reason.
There are also other risks, such as arbitrary changes to the code, without any user being able to oppose, not even the majority of the users.
In the past, it has also happened more than once that protocols claiming to be decentralized actually had backdoors specifically designed by their authors to allow them to appropriate users’ funds.
Since the advent of decentralized protocols, it has become increasingly clear that when these are secure, well-designed, and well-implemented, they tend to have far fewer governance management issues than centralized ones.
In the crypto field, what is truly decentralized will always have an edge over what is not, and for this reason, Buterin has decided to further emphasize this point.
