Original Title: Ethereum's Integrated Era

Original Author: mteam.eth

Original Translation: Deep Tide TechFlow    

Any successful blockchain must build a flywheel effect as shown below:

Economic progress (such as TVL, price, revenue, transaction volume, etc.) must bring attention and visibility to the chain, thus:

Enabling new applications to receive funding, new developers to learn the relevant technology, and new users to leverage everything we have built to improve their lives, which will inevitably bring:

Innovation, as well as improvements to infrastructure and applications, to enhance efficiency and explore new use cases and architectures. In the innovation stage, collaboration is particularly crucial, but this stage often leads to team dispersion due to natural incentive mechanisms. Innovation drives economic progress, and the cycle restarts.

The problem Ethereum faces is quite simple—we have broken every part of this flywheel. Note: this article discusses Ethereum's advanced technical roadmap and does not focus on the social aspect of the roadmap. Both must be combined to present a complete picture.

First, Accept the Problem

New applications, developers, and users are all on L2! Innovation is happening on L2! Economic progress is also shifting to L2. It is not a problem for Ethereum if these L2s can provide feedback to the flywheel, but this situation is often not common.

Where is the root cause of the flywheel breakdown?

Ethereum (since around 2020) believed that scaling via Rollups was the only scaling method and severely overestimated the contribution of L2 to the overall Ethereum flywheel. Rollup was seen as a scaling solution. Compared to sharding, Rollup appears simpler, avoids diluting the security of Ethereum L1, and can even provide better composability.

But Rollup is not just a scaling architecture; it is also an incentive architecture. A simplified logical chain might look like this:

· We need to scale Ethereum.

· Some form of sharding is a necessary condition to scale a blockchain with the features we need.

· Sharding is overly complex and has other issues in protocol execution.

Therefore, Rollup is the only way to scale Ethereum. In my view, the second point here is the first major mistake. Experientially, it is obvious that we were wrong (at least to some extent). For example, Solana and Monad have both demonstrated a reasonable scaling roadmap that does not involve any form of sharding. At the same time, many of Ethereum's core developers have already demonstrated that we can push the performance of L1 further than it is now.

While I do not believe that one chain can meet all needs, I think we have pushed towards this endgame before pursuing the L1 scaling opportunity. The fourth point in this reasoning is also insufficient. We failed to properly assess the potential downsides of a Rollup-centric roadmap on the L1 network effect flywheel.

Ideal Flywheel

I believe we can rebuild the network effect flywheel as follows:

L2 should not extract network effects from the flywheel but should accelerate the flow between each network effect. Specifically, this means:

· Providing nearly infinite flexible scaling as overflow

· Driving customization, specialization, and bold experiments

· Attracting users and developers

· Increasing the total revenue of the Ethereum ecosystem as well as Ethereum L1 itself

· Maintaining high composability with Ethereum

This interaction has had the expected effect on both Ethereum and L2 — rising tides.

Slides from my speech at the "Sequencing Day" in November 2024

Solid Foundation

To effectively restart the flywheel, we need a strong L1. A composable L1. An ETH worth holding in your treasury. An innovative coordination point. How do we achieve this? The answer couldn't be simpler. Actively scale L1.

We start with innovation at the L1 level. There are three reasons:

1. Scaling L1 increases network effects under the ideal flywheel

2. Scaling L1 raises the competitive barrier for any L2

3. Scaling L1 is beneficial for L2! (Especially the kind I will discuss in the next section)

Most readers of this article are likely familiar with what Layer 1 scaling means in practice, but at its core is increasing TPS and Gas per second while reducing latency. We must build Ethereum L1 to be not just the ultimate settlement network, but also the execution network. Together, that's the solid foundation Layer 2 needs.

Bringing Rollup Back

As L1 scales out and establishes its own network effects, optimizing L2 to contribute to the ideal flywheel is time well spent. There are a few things to balance here:

· Ethereum's impression of Rollups as first-class citizens on Ethereum.

· Rollups have successfully grown their own network effects.

· Any shifts back to L1 scalability must be careful not to alienate major L2 (although some L2s arguably have no reason to exist and definitely should die).

I propose a simple Rollup design:

· Rollup uses Ethereum for Data Availability (DA).

· Rollup uses Ethereum for execution. This means it's a native Rollup.

· Rollup uses Ethereum for sequencing. This means it's a Rollup-first.

· Rollup uses ETH as its native Gas token.

This design of Rollups is referred to as "Ultrasound Rollups" and "Base+Native Rollups." I've written about them in detail!

"Ultrasound Rollups" are not achievable on the current Ethereum. Enabling their native part requires Ethereum to introduce a new opcode via a hard fork, the Execution Engine Opcode. There are also practical issues with the sequencing-based design currently, and these issues are closely related to L1 scaling.

Assuming we could achieve this, what would we get?

Ultrasound Rollups contribute to Ethereum's network effects flywheel by staying compositional and enabling customization. Their aggregate scaling capabilities are theoretically very potent, where any Ultrasound Rollup can drive execution like MegaETH or RISE. Ultrasound Rollups are not a step backward but a necessary step forward. Their synergy with Ethereum is so strong that I see them as an extension of Ethereum's network effects. Solana's idea of network scaling is correct, but Ultrasound Rollups are not just enhancing Ethereum's capacity; they are the network itself.

Existing Rollups could potentially transition into Ultra Sound Rollups. In fact, some teams have already committed to further explore this option. New Rollups and Appchains should prioritize this direction. Through this approach, a unified Ethereum ecosystem can achieve Universal Synchronous Composability, bringing insane scalability and limitless expressiveness.

In this ecosystem, user and developer activities take place on L1 or specialized Rollups. Significant and contentious state may still reside on L1. Developers can build cross-chain applications without having to worry about the underlying differences between chains. Users experience chain abstraction within the Ethereum scaling economy.

This is the integration era of Ethereum.

From "Choice Overload" to "Obvious Choice"

Ethereum is constructing premier Data Availability (DA), with Order-based Rollup outputting our ever-improving ordering techniques, while Native Rollup will offer superior execution capability.

Ethereum L1 will integrate core Rollup services into a unified Ultra Sound Rollup. While the market remains permissionless and chains can stay modular, Ethereum itself provides such crucial and comprehensive services that any competitor becomes irrelevant.

In this model, value accumulation (in fee form) becomes straightforward: providing the most valuable services, accessing the largest synchronous economic area, the strongest economic security, the most censorship-resistant ordering, the most reliable settlement layer, and the most secure data availability.

A narrative also naturally forms: "Ethereum is the best" → Ethereum indeed is the best.

· Scale L1.

· Bring Rollup back.

· Integrate everything.

· And launch as soon as possible.

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