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- [00:03]
Ryan Sean Adams
Hey, Bankless Station, we haven't done one of these in a while. This is time for a Bankless takes. We're talking about the role of L2s in Ethereum. And you know you're a big deal in crypto if Bankless will. Will spend an entire show on one single tweet. Okay, this is a Vitalik tweet that we're going to talk about. This was a tweet, I think, that echoed around the world. It's pretty significant in my mind. In your mind, because it feels like it marks the end of an era and the beginning of a new era.
- [00:32]
David Hoffman
It feels like a bookend. Yeah, a bookend to a. Not a tweet, but like another Vitalik post that we also did a dedicated podcast on in 2020 where he introduced the roll up centric roadmap in October of 2020. And now this is a episode about the conclusion of the roll up centric roadmap in 2026.
- [00:51]
Ryan Sean Adams
And I think that's. That in particular is important. We have to choose our words carefully because it's the conclus rollup roadmap. The rollup roadmap continues, but it is the conclusion of the rollup centric.
- [01:05]
David Hoffman
The centric word is being ejected.
- [01:07]
Ryan Sean Adams
Exactly. And so the roll ups for 5 years in Ethereum were the center, center point. That was the road, that was the focus. That was how we're going to scale Ethereum. And I think this tweet signifies something new. So let's get into it. What exactly did Vitalik say on what day was it? February 3, 2026. What did he say?
- [01:26]
David Hoffman
February 3? What did he say? And what he did not say is pretty important because there were a lot of opinions and takes on Twitter that were just misunderstandings or bad readings of Vitalik's tweet. So what did Vitalik say? The punchline that I think Ryan and I agree is like, what this tweet. The really the punchline of this tweet is for both of these facts. We'll talk about what these two facts are for. Both of these facts, for their own separate reasons, means that the original path of Layer 2s and their role in Ethereum no longer makes sense. And we need a new path. We need a new path.
- [01:58]
Ryan Sean Adams
That's the ending of the centric part, right?
- [02:00]
David Hoffman
Yes, that's the ending of the centric path. And so Vitalik is basically saying Ethereum needs a new non roll up centric roadmap. The two core bits of data as to why Vitalik comes to this conclusion, the two bits that he was referring to is that Stage two roll ups and roll up interoperability has been far more slow and difficult than previously expected. Stage 2 rollups essentially means that rollups get to the point where they are complete, decentralized, code based extensions of Ethereum, that they are the block space of a layer two. Stage two roll up is given the full faith and credit of Ethereum security. That's right, we cannot get there. It's been seemingly difficult as an industry to move our rollup ecosystem into Stage two. We seemingly are stuck on stage one and for good reason.
- [02:48]
Ryan Sean Adams
Yes, that's one part of it, the security part of it. The second part of it is the interoperability part of it. And this is the vision of rollups and scaling Ethereum block space I thought was shared liquidity across all of these rollups and that's why Shared network effects shared state. Exactly.
- [03:05]
David Hoffman
Shared.
- [03:06]
Ryan Sean Adams
Shared. And it's not shared. It feels very fragmented. And that's why he mentions Interop as the second. So that's the first core bit. What's the second?
- [03:15]
David Hoffman
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- [04:51]
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- [04:52]
David Hoffman
The gold USD pair is liquid macro driven and a familiar natural bridge between crypto and traditional markets. Try trading gold on bitget now@bitget.com click the link in the show notes for more information. This is not financial advice. The second core bit is that layer one scaling is out now, actually catching up to a meaningful degree. The zkvm, which I think was an understated part of this tweet and we'll, we'll go into why, but the Z, K, VM and overall Layer one block space is going to quote projected to increase greatly in 2026. So Vitalik just highlights like actually we can just do the things on the layer 1. Not only can we scale the layer 1 in like the traditional sense with more throughput and faster block times, but we also have this ZKVM thing which will massively scale Ethereum far, far beyond what any other layer one could ever do ever. That's the bullish piece. Let's go there. Let's go down that path.
- [05:42]
Ryan Sean Adams
Yeah, that's the, that's the bullish piece. And that was not available importantly six, like five, six years ago.
- [05:48]
David Hoffman
And we thought ZKVM this five, six years ago were a decade away and turns out they were, they're kind of here today.
- [05:56]
Ryan Sean Adams
There's I. So those are the two core bits. Why the rollup centric roadmap as it was in 2020 and as Ethereum, the track that Ethereum had been on no longer makes sense. There's some more happening here though, David, and this is some association of the question of like, what is Ethereum the Ethereum brand, the values of the community and both this tweet mentions that and then he tweeted something later, a couple days later that we may want to touch on too. But he said L1 does not need L2s to be branded shards because L1 itself is scaling. So that's the point we talked about. And, and he said we should stop thinking about L2s as literally being branded shards of Ethereum with the social status and responsibilities that this entails. Instead we can think of L2S as being a full spectrum. This gets into part of the reason. I think this is my theory on why Vitalik felt he needed to tweet this at this point in time. Because as we'll discuss later, a lot of the elements of this were already obvious to many and indeed the Ethereum roadmap had already shifted. I mean, you could already feel it probably shifted 12 months ago.
- [07:08]
David Hoffman
Let's say tweet feels a lagged reflection of what the market and the industry has already digested.
- [07:15]
Ryan Sean Adams
And actually what I think Vitalik thinks at this point, I mean, I think he's thought this for quite a long time.
- [07:21]
David Hoffman
Yeah.
- [07:22]
Ryan Sean Adams
Part of the reason or the psychology of why to tweet this publicly is. Goes into. This is my take anyways, what is Ethereum? And this idea of like, call it. I don't want to use words that are too strong, but a laundering of the Ethereum brand or I think that's extract.
- [07:39]
David Hoffman
Very, very accurate.
- [07:40]
Ryan Sean Adams
Okay. In many cases it is. Or a dilution of what Ethereum means. Because if all of these L2s are Ethereum, but you're not getting Ethereum level guarantees and Ethereum network liquidity, how can you actually say they are Ethereum? And this gets into kind of the. The social piece of this, which there had been a meme that many Ethereum people had started with, that you and I even started with, I believe, because this was our. Our core belief, actually. L2s are Ethereum.
- [08:10]
David Hoffman
This is L2s are Ethereum.
- [08:12]
Ryan Sean Adams
This is kind of like what we thought the roadmap was. This is what we thought we were building. You and I abandoned this meme probably like 18 to 24 months ago when it became obvious like, oh, shoot, when I go into another chain, it's not Ethereum. I'm not getting all of the. It's not stage two, and I don't get the liquidity. And we started pushing back on that, but that's been hard for the community to for digest. Yes.
- [08:34]
David Hoffman
Yeah.
- [08:34]
Ryan Sean Adams
And so there's. Yeah, go ahead.
- [08:36]
David Hoffman
I think with this tweet, we can formally say layer twos or Ethereum is. Is dead. It was already dead now. Now, like, there's no way to look for layer twos to be Ethereum. And this is what we are admitting to. And it's something like to go back into the shoes of October of 2020 when the rollup centric roadmap was introduced, the plan here was that we would make stage two roll ups. Stage two being functional equivalent extensions of Ethereum block space without any sort of lack of any sort of property rights or, or guarantees of Ethereum. The guarantees of the Ethereum Layer one. Because layer two is our stage two get extended without loss, with. Without loss, no lossiness. And then with Interop we would have these stage two extensions that would be shared, shared state, shared liquidity. And so therefore with some abstractions we would be able to abstract everything and it would be one unified experience.
- [09:33]
Ryan Sean Adams
That's right.
- [09:33]
David Hoffman
That was always the plan. So like stage two roll ups was like, yes, optimism, Arbitrum, ZK Sync would build their roll ups. But with stage two and interrupt standards we would collapse everything into one shared experience. This is what we are saying that like this is not happening and we need to account for that. And therefore when we say layer twos are Ethereum, that just cannot be accurate because now these branded shards are their own thing.
- [09:59]
Ryan Sean Adams
Yes.
- [09:59]
David Hoffman
And I think when he says we can consider these layer twos to be full spectrum, you know, full spectrum layer twos, it's kind of unlocking the potential of layer twos to be anything, which was always the promise and always the potential of layer twos. So you can be anything, you can be, you can have any sort of relationship with Ethereum that you want and it doesn't have to be any sort of constrained. You must be a Layer two, you must conform to the Interop standards, you must be an extension of Ethereum. And we're kind of like opening up the design space and going away from layer twos or Ethereum.
- [10:33]
Ryan Sean Adams
That's right. And I think there was a, there's a concession here and we've read it earlier when Vitalik said L2 progress around full security of Ethereum and Indrop has been slower and more difficult than originally expected. I think that's true. I don't think that there was something, there's something insidious about the roadmap. We're going to launch all these L2s and we're going to invest in all these L2 tokens and VCs are going to get rich. And you know, we always knew this wouldn't work out. I genuinely think the Ethereum community, Vitalik as well, all the participants of the L2s and all the teams we talked to in those early days, they thought they were building a mirror of Ethereum L1 block space. Indeed, that was what they were trying to build. The tech just couldn't get us there. I mean, that's my perspective on it. I don't think there's anything insidious here going on. But now that we are in 2026, the meme of L2's R Ethereum does not ring true. Right. And so we have to recognize that, and probably it's never been true. That was the ambition. But we have to recognize that we are never going to accomplish that full ambition. Now I do want to put an asterisk here, which is. It's also not true that L2s are just sidechains. Okay.
- [11:52]
David Hoffman
Correct. Yeah.
- [11:53]
Ryan Sean Adams
And so if you want to like, I mean, this is not in memetic form, but L2s do inherit some of the security guarantees and a little bit of the liquidity, I guess, preferences of Ethereum. So they do inherit some of it.
- [12:09]
David Hoffman
Yes.
- [12:09]
Ryan Sean Adams
You can't put that in meme form. But there are things here that are, I guess, more nuanced than just saying no.
- [12:15]
David Hoffman
There is a symbiotic relationship between the layer twos and the layer one.
- [12:19]
Ryan Sean Adams
That's right. That's right. And so we could swing too far on in the other direction, I guess. The second Vitalik tweet also, he put a tweet out a couple days later. He said he's been following reactions to what I said on L2S one and a half days ago. And he clarified a few more things here, actually. I felt like he was mostly restating what he had already said though in clear terms. And a part that we missed in his original tweet is he sees a role for L2s to fill a very differentiated, a much more differentiated place. Now in the updated, you know, L2 roadmap of 2026 called these gen 2 L2s, which is, it's less an EVM clone of Ethereum that you kind of hook an optimistic bridge to and you port all the apps from Ethereum over into these, these L2s and it's more differentiated chains, things like app chains like Lighter or privacy chains like Aztec, like bringing something net new to these, this alliance of chains that Ethereum L1 does not already have, especially when it's in scaling mode.
- [13:31]
David Hoffman
Differentiation I think is the key word here. Back in 2022-2023, when the Layer 2 era was really in full swing, there was a huge push for Ethereum equivalents, EVM equivalence. I mean, I, I was, I was pushing for that because that's how I saw we get to this, you know, roll up ecosystem that is one big, one big shared pool of, of state and liquidity that's, that is dead. Ethereum equivalence is dead. It's the same Thing as layer. Layer twos are not Ethereum. Ethereum is Ethereum. EVM equivalence is now just redundant and now it's go to the opposite end of the spectrum and be very, very differentiated. Have a specialized VM like Asic or Starknet and do things that the Ethereum layer one can never do, like scale, like mega eth, be an app chain, like lighter. Just don't do the same thing that Ethereum is doing because Ethereum is going to do that thing.
- [14:23]
Ryan Sean Adams
Vitalik sums it up like this in this second follow up tweet. Basically, number one, do something if you're an L2, here's my advice for L2s. He says, number one, do something that brings something actually new to the table. And number two, the vibe should match the substance. The degree of connection to Ethereum, your public image should reflect the degree of connection to Ethereum that your thing has in reality. And that second point gets to kind of the, the laundered reputation of Ethereum. Right. If you're like a stage 0L2, like do you get to call yourself part of Ethereum and sort of launder the reputation of, of Ethereum with that brand when you don't offer the things that Ethereum is actually offering? Right?
- [15:03]
David Hoffman
Yeah. And we saw that like one of the worst examples of this was the movement layer 2. The move VM as a layer 2 on Ethereum whole project ended up just being an unsavory grift to use different, to use harsh words. And like this was what was allowed. When we don't control what the future of Ethereum scaling look like is like there are barbarians at the gate. And if the Ethereum community allows branded shards to come in and raise VC dollars and promote themselves as extensions of Ethereum to the Ethereum community and the Ethereum community praises them because all layer twos are good. This isn't a failure mode. And that started to happen and went too far.
- [15:42]
Ryan Sean Adams
Agreed. All right, let's get to the community reaction and then you and I can give our takes on what this means and what happened. So what was the community reaction to this?
- [15:52]
David Hoffman
Yeah, like five, five different categories. There's just like praise for Vitalik's like honesty, adaptability and truth seeking. There were a lot of I told you so's and criticisms and frustration over delays and wasted effort. John Charbonneau had this tweet where he tweeted out this meme saying sor about all the mean shit I said when I was right. Like I think he gets that tweet. He gets to tweet that tweet. I'm not going to complain. Max Resnick, who was one of the original, like, layer two roadmap is broken. He just tweeted out the skeptics. Yeah, he tweeted out. I'm very much enjoying reading this app today, which is just like a coded of. Just like, I'm drinking my tea and enjoying, like, reading all this.
- [16:29]
Ryan Sean Adams
Those are two individuals. I would say that, you know, heart and mind have defected someone to.
- [16:32]
David Hoffman
The more they defected because they were like, this Layer two shenanigans is bullshit and we should change it. And when they realized it's not changing, they went to Solana. That's what happened. Yeah. There was agreement that Layer Twos aren't Ethereum. Stephen Goldheader had a very good tweet thread where he started off with CEO of Arbitrum. We should say CEO of Arbitrum. Number one. Number one tweet in the thread starts off with, arbitrum is not Ethereum, which is a divergence from previous rhetoric.
- [17:00]
Ryan Sean Adams
Sure.
- [17:00]
David Hoffman
And so, like, previously, Arbitrum was Ethereum. Now Arbitrum is not Ethereum. And like, I. I think this is the correct thing to say. The cool thing about Arbitrum is that, you know, despite Arbitrum also being in the EVM equivalence camp, they were like the one. One of the first ones them and optimism to be EVM equivalent. Arbitrum also established its own unique identity and culture.
- [17:20]
Ryan Sean Adams
Yeah.
- [17:21]
David Hoffman
That was distinct from Ethereum, and I think that has served them very, very well.
- [17:25]
Ryan Sean Adams
I agree. And so. So Stephen, many of the Ethereum community used to go around saying that L2s are Ethereum. Or Stephen has said in the past, arbitrum is Ethereum. And I just want to point out that while that's not correct, that's also not entirely wrong either.
- [17:41]
David Hoffman
Correct. Yes.
- [17:42]
Ryan Sean Adams
So the truth of that is Arbitrum is partially Ethereum. Or it's like Arbitrum is an ally of Ethereum. Or like.
- [17:51]
David Hoffman
Yeah, Arbitrum overlap in the Venn diagram.
- [17:53]
Ryan Sean Adams
Yeah. Arbitrum is part of the Ethereum alliance. So I don't think it's necessarily dishonest to like, say Arbitrum is Ethereum, because it is. It's just like, not the complete story here. You have to put an asterisk and you have to explain what you're actually talking about there.
- [18:10]
David Hoffman
Arbitrum flies the flag of Arbitrum and it does so inside of the Ethereum empire.
- [18:17]
Ryan Sean Adams
That's kind of right. Okay, so the way if we want to Analogize this to nation states, which I love doing, as you know, David. Okay, so I think it's less a state in the union the way Colorado is a state in the union of the United States. And it's more like an ally. It's more like, you know, Sweden being part of NATO, which is protected by the United States of America and being this network of allies. It's sort of like the. The alliance of Ethereum rather than sort of the. The nation. The coordinated nation state of Ethereum.
- [18:48]
David Hoffman
The laws of Ethereum.
- [18:49]
Ryan Sean Adams
Exactly. You know, so that's one analog.
- [18:51]
David Hoffman
The laws of Ethereum would have been able to have been established if we had come up with very strong interoperability standards, and that would have been a much stronger binding, all between layer twos. But we didn't.
- [19:02]
Ryan Sean Adams
That's right. Steven's whole post, I thought, was fantastic. And it's. It's pretty long and we don't have to read all of it, but there's some more worth pulling out here. What else does he say?
- [19:11]
David Hoffman
There's a tweet that I, I liked that he said Vitalika is correct that the rollup story has evolved over time. In 2018, rollups were primarily, primarily created for scaling. This is true. We were like, oh, we're going to scale with rollups. He finishes and says, today they're as much about customization and dominion as they are about scaling. That is to say, even if a layer one could scale infinitely, there are plenty of institutions that want their own customized environment. And this is the market sector that Arbitrum has really penetrated into. Why did they win Robin Hood as a customer of Arbitrum Orbit Technology? Because Arbitrum Orbit Technology is part of the Ethereum EVM tech stack, which is extremely robust, extremely developed, the best developer ecosystem in crypto. Undoubtedly, it's the Microsoft Excel for blockchains. And Robinhood gets to customize it as they see fit and they get to control it, they get to own it. It is their ledger, and that's the customizability. That Vitalik also echoed in his tweet is like, this is all, all about customized control. This is not about scale. You're not scaling Ethereum. You are able to customize things to fit your specific needs. And that's what Arbitrum is. Stephen is identifying, like, where Arbitrum is bent towards.
- [20:21]
Ryan Sean Adams
I think that's right. And I want to get into a critique that I've heard from some in the Ethereum community, other than a critique that maybe you'll express later, which is like, why did it take so long to say this out loud? Right.
- [20:33]
David Hoffman
So you got that eagerly trying get to that point.
- [20:35]
Ryan Sean Adams
Okay, but the other. The other point is, like, Vitalik, you could have said it in a different way. And this is how Steven expresses this. So there, if there is the perception with the way Vitalik said things, may be the communication, that he thinks L2s are a dead end or dead. Right. This is Steven's worry. He says, I worry that if Ethereum is perceived as being hostile to rollups, it will push them away from the ecosystem. To be clear, it won't push them to launch on Ethereum L2 L1. Instead, they'll launch their own L1, like Ark and Tempo, and Ethereum will ultimately lose out. This is a delicate communication balancing act. Right. And so some have criticized Vitalik's tweet for being too aggressive or, like, trying to push L2s out of the ecosystem, or that it's just like, that's not.
- [21:22]
David Hoffman
How I read it.
- [21:23]
Ryan Sean Adams
That's not how I read it. Some people read it this way that it's just, like, not a good commercial stance for Ethereum to say these things. Because at a time when we're trying to attract L2s, we want to give them the good graces of Ethereum. We want to say, you're good and you're okay and, like, welcome to the community, rather than kind of like, push them away for not being, quote, unquote, pure enough.
- [21:43]
David Hoffman
I mean, do you think there's anything. I don't think that's a valid conclusion of Vitalik Suite. There was a lot of bad readings of Vitalik on Twitter. And I consider anyone who is like, oh, Ethereum is abandoning its L2s just did not read the tweet correctly.
- [21:59]
Ryan Sean Adams
Okay, well, let's get to some more takes here. This is one from Polychain. What is this? Oh, excuse me.
- [22:04]
David Hoffman
Polygon. Polygon.
- [22:05]
Ryan Sean Adams
Polygon.
- [22:06]
Sponsor/Ad Voice
It was.
- [22:06]
David Hoffman
It just tweeted out the retweet of Vitalik and they just said, due to market conditions, we now identify as a sidechain, which is like a facetious admission of kind of like what? Poly Polygon is a sidechain. And finally, that's. We can talk plainly about that. I think that's one of the benefits of this tweet is like, people are finally just like, ripping off this aspirational ideal for what the Layer two roadmap could be. And now just speaking plainly about what it actually is.
- [22:32]
Ryan Sean Adams
That's refreshing. It's refreshing to me. It is funny because Polygon is an ally for certain. They did so much for Ethereum in terms of investment, in terms of just like Mindshare, in terms of onboarding. During previous cycles, they've done so much for Ethereum, but they're not kind of in the alliance of L2s. Right. Because they are. Right.
- [22:53]
David Hoffman
Somewhat of a proof of a chain.
- [22:54]
Ryan Sean Adams
Yeah. So they're not a part of NATO, but they're still an Ethereum ally. Again, it's nice to be able to just redefine these terms and for them to be able to say it. John Charbonneau, again, you said don't shoot the messenger. Is he just.
- [23:07]
David Hoffman
Okay, this is a tweet that I've really, really enjoyed. There are. There were people stating this exact problem that Vitalik eventually stated in this tweet in 2026, in 2021 and 2022. So the part of the industry, part of the frustration here is that different people who have identified this problem in Ethereum and then got loud about it started in an order that was like very unpalatable and offensive to the Ethereum community and has slowly worked its way to inside the community of more palatable people and eventually gets all the way to Vitalik.
- [23:44]
Ryan Sean Adams
So, sure.
- [23:44]
David Hoffman
Starting with Kyle Samani, who identified this problem and then invested heavily in Solana because of what he identified as a market weakness in the Ethereum strategy. Kyle, like enemy of the state number one to the Ethereum community. The next person after that, Max Resnick, very offensive individual. Kind of just like, didn't he. Max doesn't do himself any favors. Also said the same thing goes to Solana. John Charbonneau, like, closer to, you know, the Ethereum community, still offensive to many. And then like, I'll even throw. Then after John comes somebody like, like us, like bankless. We're in 2020.
- [24:23]
Ryan Sean Adams
I definitely think that.
- [24:24]
David Hoffman
So in 2024, we were like, hey, guys, I don't know if this is working out for us, actually.
- [24:29]
Ryan Sean Adams
Okay, so here's the thing. I think that Kyle, obviously, Team Solana, obviously, like always paints Ethereum in the worst possible light and that there's no use case and all these things like Max, at some level, I mean, as evidenced by him defecting to Solana too, is not sort of not in the camp of rooting for Ethereum and hoping for its best. John is someone who is investor, so he's somewhat more pragmatic about it, but doesn't actually believe that ETH is a store of value asset and can compete against Bitcoin Bankless we, however, do. We are, like, have been team Ethereum for a very long time. We do still believe, you know, even though the market's telling us otherwise, that ETH is a store of value asset and has the biggest opportunity to compete against Bitcoin on that. Even when we were saying it, it kind of, dude, it was not received.
- [25:18]
David Hoffman
We got brand, like, not everyone, obviously, but we got branded. We got called enemies of Ethereum.
- [25:24]
Ryan Sean Adams
Yes.
- [25:25]
David Hoffman
During the years of 2024, when we brought Max and John on the podcast and Kyle Samani to talk about this problem. And then Bankless is an enemy of Ethereum because we were saying, guys, this roadmap ain't working for us.
- [25:37]
Ryan Sean Adams
Let's talk about what parts aren't working right.
- [25:40]
David Hoffman
And then after. After us, you know, maybe it'd be Anthony Sedano. I don't think he really ever did that. But then it goes to Vitalik. And now, now, now that Vitalik is saying it, like, it's finally palatable for the Ethereum community, which I find frustrating because there were, and I'm sure there were other people listening to bank lists who are like, guys, why are you so naive about this? Kyle Somani, Max and Resnick and John Charbonneau have figured this out years ago. Why are you guys taking so long?
- [26:03]
Ryan Sean Adams
Yeah, but that's just how things happen. I mean, I think that's how opinions change. That's how it happens, right? Imagine listening to Kyle Simani about everything on. You just shut the project down. You'd believe that decent. It doesn't matter. You'd believe there's no such thing as ethos, a monetary asset. You just. Why not shut it down if you listen to everything that guy says?
- [26:20]
David Hoffman
Okay?
- [26:21]
Ryan Sean Adams
So you have to process it and you have to filter it. But it did take a while for that to happen. There's another take here you've got from Patrick McCory.
- [26:29]
David Hoffman
Yeah, yeah, I enjoyed this. I read this this morning. He says that his interpretation of what Vitalik is saying is that it's not that rollups have failed. In fact, it's the opposite. Rollups have differentiated themselves relative to Ethereum and have succeeded hugely. But this is just not what was anticipated in the original vision. So it's a very big point, is, like, rollups are doing great.
- [26:50]
Ryan Sean Adams
They are.
- [26:50]
David Hoffman
They're just doing their own thing. And it's not the Ethereum thing.
- [26:54]
Ryan Sean Adams
They are. They are. And you even see, and I mean, rollups are scaling Ethereum, like, right now, even, like, even sort of the closest EVM match to L1, they are there. Ethereum is what, 40 transactions per second now? Base is you know, pushing 800, something like that. Arbitrum is like a thousand. Right. And they're scaling too. I mean that is helpful. And then you're right, we already do have these differentiated L2s that have popped up due, just due to market forces. Mm.
- [27:22]
David Hoffman
And then the last take that I like came from my friend John Sterlocki. Do you, you, I think you are watching foundation, right? Yes, yes. Foundation TV show.
- [27:32]
Ryan Sean Adams
Yes.
- [27:32]
David Hoffman
Yeah. Also a book series, mainly known as a book series, but now it now a TV show.
- [27:36]
Ryan Sean Adams
Isaac Asimov.
- [27:38]
David Hoffman
Isaac Asimov. Yeah. So like this requires to understand this a little bit, but I'll do best to explain. He goes, the Harry Seldon approach to leadership doesn't work. Okay, what's, what's the Harry Seldon approach to leadership in, in this movie series, TV series? It spans, it's a very deep cut. It spans over like a thousand years. And so people go into like cyber sleep and they extend their lifespan in order to do this intergalactic huge coordination problem across vast amounts of time. And Harry Seldon is this guy who comes up with this plan for the next thousand years of how we come to like coordinate across this very future problem that we need to like prepare for. That's a thousand years, multiple generations in the future. So the idea here is centralized, predictive, long term master planning by a single genius or small elite fails in practice because the real world is based on messy human systems. You can't set a grand plan in motion and expect it to unfold perfectly via predetermined interventions. Real leadership needs to be adapted, responsive and decentralized and account for chaos, individual initiative. Black swans are unpredictable actors, not rigid top down orchestration. Assuming people will behave by predict like predictable particles over reliance on inevitable trajectories or this plan will save us, leads to brittleness, detachment from reality or failure when anomalies appear. I think this is such an astute comparison as to how and how the layer two roadmap got implemented and why it failed.
- [29:06]
Ryan Sean Adams
I actually think that that's exactly what's happening though, right? It, this is, this is, this is like top down and bottom up. Discovering that this didn't work from a market perspective and adjusting. So this is just like not making the Harry Seldon mistake. The Harry Seldon mistake would be now in 2026.
- [29:23]
David Hoffman
We are not, we are learning to not make the Harry Seldon mistake. But I think for the last five years of time it has been that.
- [29:29]
Ryan Sean Adams
A Little bit, but. But as evidenced by this pivot, it's all fine. This is how it works out. We went, we tried something, it's late, it's later than it needed to be, but it's not too late. We'll get to some takes on this. Let me ask you some questions just to prompt three options for you. Was the rollup centric roadmap wrong? The whole idea of, remember, modular versus monolithic. Right. Ethereum's going the modular path and other chains going the monolithic plan. Let me give you three options. One, it was dead wrong. Two, it was partially wrong. Three, it was still the right play at the time. What do you think?
- [30:04]
David Hoffman
Somewhere between partially wrong and still the right play at the right time, leaning towards more partially wrong. The more correct thing would have been to identify the rollup roadmap, not ever say the word centric and run with we. We. The Ethereum ecosystem has a monopoly on smart contract chains.
- [30:26]
Ryan Sean Adams
Sure.
- [30:26]
David Hoffman
And we need to make sure we never give that up. And now that everyone is on the Ethereum layer one, we need to aggressively scale the layer one as fast as reasonably possible without. Without sacrificing Ethereum's values. And in parallel, because we love doing things in parallel, we will also develop the roll up roadmap in parallel and it will not have the word centric in it. We will keep and point the word centric at the Ethereum layer one. That would have been the best.
- [30:51]
Ryan Sean Adams
We got to figure it out. We got to figure it out. But here's why I'm probably more a 3. It was still the right play at the time, but also part two, because we could have adjusted sooner is because hindsight is 20 20, man. We had no idea how this was going to work out. Like it's really rich of us like six years later to be like, Hey, 2020 idiots, you should have seen this coming.
- [31:13]
David Hoffman
But the thing is, like some people did, some people did see it earlier.
- [31:17]
Ryan Sean Adams
But not in 2020. Let me go through another thought exercise with you, which is I put this together, what we thought versus what we got, and see how much you agree what we thought this is back in 2020, the thought, right, is that L2s would fully scale Ethereum block space and scaling would be solved. What we got instead was fragmented liquidity, not Ethereum level security on our L2s. And this idea of like sidechain plus, which is kind of what L2s ended up being. That's right. Here's. Here's another one thought. What we thought L2s would unleash new use cases and apps. But what we got is mostly a lot of defi on L2s that was similar to the L1.
- [31:54]
David Hoffman
Yep.
- [31:54]
Ryan Sean Adams
What we thought was stage two would be a breeze. We'll get there. It's no problem. What we got is it really, really freaking hard. And do chains and users even want it? I'm not sure that I want a.
- [32:06]
David Hoffman
I know that we do not.
- [32:07]
Ryan Sean Adams
That can't be corrected or updated if there's a bug. What we thought L2s would bring value accrual to eth the asset either as money. Eth is money. People using it in the ecosystem are fees. What we got instead was low fees generated by L2s and also other assets started invading some of these L2s. Right. Tokenized Bitcoin is a thing. Stablecoins are a big thing. So we didn't even get the money monetary value accrual. What we thought is eth would go to 10k this cycle. And what we got was barely an all time high. Barely. And we got bleeding on the eth. Bitcoin ratio. We were beaten at some level. Ethereum was beaten this cycle by app chains. In particular a pure store of value app chain which is called Bitcoin. Bitcoin. What do you think of those? You agree with that?
- [32:51]
David Hoffman
Those are all right. I agree with all those.
- [32:53]
Ryan Sean Adams
All right. Let's give our takes and a retrospective.
- [32:56]
David Hoffman
You want to go first?
- [32:57]
Ryan Sean Adams
Okay. You want to. Okay. Indulge me.
- [32:59]
David Hoffman
I'm happy to go first. I've got some stuff I would like to get off.
- [33:03]
Ryan Sean Adams
I got to jump soon. So we gotta constrain our time. We probably have like 15 minutes. I'm gonna zoom out give you my take on the retrospective. So there were definitely some wins over the last few five years in L2s. And I don't want to downplay that massive wins. We had this successful alliance of chains. We delivered ZKEVM tech, discovered zk fleshed that tech tree out. It's freaking awesome. That's coming back to the L1. Without the L2 roadmap, we wouldn't have had that. We had massive user onboarding on base and arbitrum. It's all EVM network effect. It's all good. And plus I would say this might have been the only option at the time. In 2022 if you're going to scale Ethereum and also keep the decentralized promise and the decentralized promise is bitcoin level decentralization or better. That was the only option. In 2020. Okay. So we preserved that through all of this. That's in the win column. There were three missteps. I think that maybe the first one we could have seen the most and prevented. The first was we missed an interop strategy with ours.
- [34:06]
David Hoffman
That was the biggest mission.
- [34:08]
Ryan Sean Adams
If we were doing the LT roadmap, we totally could have done this. Ethereum totally could have done this. It could have prioritized shared liquidity. And you're not an L2. You're not connected to the Ethereum network unless we have a liquidity standard here and it's shared from ethereum to the L2s. Now, I don't know the technical like how this could have been made possible, but there should have been at least a standard for this atom, like, or, sorry, the Cosmos ecosystem, they had a standard. They had it like ICT standard. We could have done something much more here and we didn't. So we didn't transmit Ethereum's killer defi liquidity network effect to L2S and it became this war of all against all where the L2s didn't really share liquidity. And so they were all competing each other with each other. And it felt more like a bunch of side chains rather than a true alliance. Number two, that was the first mistake. Number two, it took us too long to figure this out. We could have course corrected probably 24 months sooner, I feel like.
- [35:04]
David Hoffman
Yeah.
- [35:05]
Ryan Sean Adams
And we didn't. We could have realized that the coordination glue just like wasn't there to make a tight united chains of Ethereum, which was the vision. And we had this more fragmented, loose alliance. And then we could have pragmatically adjusted the strategy. But instead we are still too hopium filled. We relied more on. It'll probably work out. The last thing. I gotta say this too. I feel like we lost some focus on the use case. So the core use case for max decentralized block space. We've seen this. It's been enough time in crypto. We've seen this. It's slow defi. It's money. It's ETH as a store of value. That is the single most important app for Ethereum. We chased all these secondary narratives, right? You know, social and all of these other things that could be enabled by L2S. And we forgot the core narrative. We didn't make that a shelling point for Ethereum. Hey builders, we have a store of value on ETH. We have DeFi, we have deep liquidity. Come build your money thing here. I feel like leadership could have pushed That a little bit more. It is not as bad as it feels. I think these mistakes and the feeling that we have right now probably due to price, it's a lagging indicator. So 12 months ago the course started to correct and the pivot started to happen actually. And so we're not now just waking up and realize this things have already been put in motion to course correct. We also have ZK which is a gift from the gods. It is Ethereum's Uno card. I think it's going to totally bail out any mistakes of the L2.
- [36:38]
David Hoffman
Yes, I totally agree with that and.
- [36:41]
Ryan Sean Adams
I do think the backlash is too like, the backlash is too lashy right now. In other words, like the reports of L2's demise are greatly exaggerated. Okay. And so there's this counter swing of the pendulum being like, okay, Well I guess L2s are useless. They're not useless. The wins are actual wins for, for, for corporate, for chains that want their own sovereignty for some of these app chain type use cases. Net net L2s are good for Ethereum. They have been good for Ethereum. We've distributed a whole bunch of the Ethereum development to well funded, highly competent teams. That's a massive win as well. And it's a core advantage. No one else is building L2s on any other chain. They're all on Ethereum. And that this partial side quest is a huge win that Ethereum will bring forward. All right, that's my rant, that's my take. That's.
- [37:31]
David Hoffman
I agree with all of those. Some, some of mine overlap with yours. So I'll start with mine. I have, I have the good and the bad side. For mine the good is the ZK VM pre compile that needs to be Ethereum's like merge or 4844 dank sharding. Like we need to elevate the importance of the ZKVM hard fork. That's, that's going to come where we put ZK VM scale and Ethereum scales at a thousand X is current speed as our new North Star. Like the Ethereum community needs to rally around that like we once did.
- [38:03]
Ryan Sean Adams
This is native roll ups, right?
- [38:04]
David Hoffman
This is native roll ups. Yes. The Ethereum layer one is going to become a ZK VM and it's going to be so fast and so scaled that it's, it's the Manhattan Project that once we deploy this like no other layer one will ever come after that fact because the Ethereum layer one will be so scaled. And so I think we need to as a community, elevate that, that strength. Yes. Focus on it and, and, and deploy it. That's, that's the good. And I think that was understated in Vitalik's tweet. The other, the other good thing is that the layer two business model is undefeated. Nonetheless, despite whatever this tweet is about, we are taking the centric away from Ethereum. Layer twos are still the best business model in crypto. You don't need to pay for the infrastructure, the very costly infrastructure to run your chain. You don't need to issue your assets to pay for validators. The day after Vitalik's tweet, pay, which is a Celestia based app chain, becomes an Ethereum, migrates to becoming an Ethereum, roll up, the business model will be undefeated. This is why a lot of the layer twos, like some people might be worried about like is base going to become a layer one? Is like arbitrum going to be a layer one? No, they don't want to pay for the infrastructure cost. The layer two business model is still as good as it ever was. And the other good thing that I really like is that layer twos or Ethereum is dead. We don't have to ever mention about that. We can sweep that into the rug and pretend the bad. Yeah, wasted time and lost effort. This is my main gripe. Like so many people have been like response to this is this has just been obvious for so long. Like Mary tweeted out, this has been obvious for years. Clouded tweeted out something that I thought was, was I aligned with. The annoying part about the Vitalik layer two shenanigans for me is like thanks for having hundreds of billions of dollars of our industry's liquidity going into funding these layer twos over the past three years while on chain defi choked as Vitalik called it ouroboros. And then Joseph DeLong got even spicier and said Ethereum kind of feels like Vitalik's little urban side project building a temple to nothing. And this is kind of how I feel. There are like there was a too large amount of capital mismanagement and poor capital allocation and we didn't course correct in time. And a lot, I don't know dude, a lot of people's lives went into building this future that the Ethereum community led by Vitalik identified. And sure, like if we got it wrong and course corrected in time, like excusable. What's not excusable is that like so many people identified this and like Nonetheless, capital continued to be mismanaged. Like, people continue to spend their, their lives working towards this vision that like much of the industry had identified as obsolete. And this is what Vitalik does. He, like, waits until he's like a hundred percent sure. And like, there's this fundamental disconnect in timing where Vitalik is like, happy being overly patient to make sure that Ethereum eventually gets to the right spot and he doesn't have the position that the rest of the industry wants him to be in, which is some sort of like, CEO executional leader who's ready to be aggressive and take risks. And there's just like a mismatch of, of urgency that people like you and me is like, we have competition. Like, there's competition out there. Solana is competing with us. They're taking advantage of our weaknesses. And that's the, that is the time cadence that most people are on. And metallic is like, I'll wait until I'm 99.9% sure that this is the right thing before I tweet this. And it wastes money and time and it, it's so inefficient and, and it, we as a community get hurt as a result of that. And, like, I think everyone would appreciate it if he was in a little bit more of an executional position that had a stronger feedback loop of signal where he could actually push forward on the gas a little bit more aggressively. And I don't think that's that crazy to ask for.
- [42:03]
Ryan Sean Adams
Well, now that you got that out, you doing okay, David? Okay. I feel like that was some venting.
- [42:09]
David Hoffman
Yeah, dude.
- [42:10]
Ryan Sean Adams
This is the community venting.
- [42:12]
David Hoffman
Yes, yes.
- [42:13]
Ryan Sean Adams
Like, it was okay, so I, I get that. And I also think that, you know, the, the weakness and the trade off that you're pointing out is basically disillusionment. And you see people that kind of loot, like, leave. You get people like Joseph saying this. I joined Ethereum to displace the banks. Not this kind of like side project thing that just like, I don't know what it is. That same style that Vidalic has, I also think is a massive strength.
- [42:38]
David Hoffman
Sure, sure.
- [42:39]
Ryan Sean Adams
It's like, because it's just like slow to consensus. It's kind of like slow defi. Right. So you end up getting in the right direction. And also the trade off for Vitalik is Ethereum has preserved the thing that it set out to preserve, which is max decentralization. Okay. And so Vitalik is not willing to sacrifice that, and he's done. So I think as a leader with Integrity. I don't want him to be the CEO of Ethereum. I like him in the place that he is, which is he has spiritual guidance and sort of social like here's what we should do. And he's willing to course Correct. I don't know it.
- [43:21]
David Hoffman
The problem is he occupies the space of the CEO of Ethereum and he doesn't allow anyone else to inhabit it just by being the credit.
- [43:28]
Ryan Sean Adams
I get the. I get the challenge. Right. It's sort of the. What's that? That famous essay, the tyranny of structurelessness.
- [43:36]
David Hoffman
Structurelessness, this is Vitalik's pattern is that he leads, he leaves voids of power. He leaves power vacuums wherever he goes. Which is what the layer 2 centric roadmap always was is a power vacuum that Layer Twos tried to inhabit with their own standards, their own branded.
- [43:54]
Ryan Sean Adams
There is a tyranny of structurelessness, but there's also a upside of experimentation on structurelessness. Like we are letting the market decide and we are trying all of these things. And this is why I think you can come with more confidence that as long as Ethereum has preserved decentralization, some of the core values that somehow managed to preserve it didn't go down the trap of trying to scale through shortcuts. Right. Yeah. The market will kind of figure it out. As long as Ethereum adapts, it will take on these technologies and make its system better. And that's the benefit of like let a thousand flowers bloom. But unfortunately 900 of those flowers are going to go die and people are.
- [44:36]
David Hoffman
People are going to get disillusioned in the process. That's people's jobs, that's people's lives. That's like hundreds of billions of dollars of malinvestment. Like that is a very significant cost. That feel, it feels like an unforced error. It doesn't feel like a double edged sword. It feels like an unforced error.
- [44:52]
Ryan Sean Adams
I'm partially there and partially not. I see the trade off with the good there. Well, let's talk. Let's bring this to a close, David, and ask some remaining questions that I think are significant and talk about where we go from here and where this leaves Ethereum.
- [45:05]
Sponsor/Ad Voice
Hey, Bankless nation, it's David. If you're hearing this, that's because you are listening to the free Bankless podcast feed. Did you know that there is a premium Bankless RSS feed? The premium feed has extra interviews that I do for my own personal research interview. Just deeper questions that I want answered about the crypto industry. Questions that I want to answer so I can be more informed as an investor both at Bankless Ventures and also just in my own personal portfolio too. Also, there are no ads, which means if you listen to the premium feed instead of the free feed, you'll get about 20 hours of your life back every year because you choose to support Bankless directly. So if you're interested in getting extra content all while skipping the ads, or you just appreciate what we do here and want us to keep doing it, we'd appreciate it if you signed up for Bankless Premium and there is a link in the Show Notes to get started. Cheers to a good 2026 few people in crypto put real skin in the game when they make public top or bottom calls. The Defi Report is one of them. The week before the October 10th flash crash, Michael from the Defi Report emailed his entire newsletter saying he's going aggressively risk off and sold the majority of his book from crypto into cash. This is when eth was about $4,000 and Bitcoin was 110. Michael runs the Defi Report, an industry leading research platform built on data cycle awareness, risk management, transparency and most importantly.
- [46:15]
David Hoffman
Skin in the game.
- [46:15]
Sponsor/Ad Voice
We like Michael at Bankless. We like his analysis and that's why you hear him on the Bankless podcast.
- [46:20]
David Hoffman
About once a month.
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And the Defi Report is giving Bankless listeners one free month of access to the Defi Report. So if you're looking for some sharp data driven analysis to make better informed decisions around your portfolio, you can learn why and how Michael called the top.
- [46:32]
David Hoffman
And what he's doing next all in.
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Sponsor/Ad Voice
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- [46:35]
David Hoffman
Check it out.
- [46:36]
Sponsor/Ad Voice
There is a link in the Show Notes.
- [46:37]
Ryan Sean Adams
So there is the question of if you don't have the social blessing of Ethereum and kind of the L2 beat thing saying that hey, we love you, you're part of the alliance, right? Or if that weakens at some level, is there enough network effect to keep base on Ethereum, to keep arbitrum slash Robinhood on Ethereum? Or do they get enticed to go the tempo direction or the circle arc direction and go launch their own token and split out of the alliance? They don't have that liquidity as a thing. Holding them into Ethereum is like shared security and cost savings enough. That's an outstanding question. I think some people are asking.
- [47:15]
David Hoffman
I don't see that, at least in this present moment. Like I said, the Layer two business model is undefeated. Like it's not. It's not an alignment thing to say that you are saving millions of dollars a year by not having to do layer one validation, which is an extremely expensive and inefficient thing to do.
- [47:33]
Ryan Sean Adams
Okay, so that's one outstanding question. The other is I think if the rollup centric roadmap is over, if that era is over, what has replaced it and I think we're getting glimpses of.
- [47:43]
David Hoffman
What'S replaced is ZKVM pre compiled bro.
- [47:45]
Ryan Sean Adams
I know that needs to be more specific. I think you made this point earlier that needs to be merge level focused. The entire community now rallies around it. We have pivoted. So let's talk about now, not the mistakes of the past. Let's talk about the thing that we are doing and excited about and there's not yet enough enough of that. I think there will be more in the months to come, but that needs to be the rallying point for it.
- [48:06]
David Hoffman
To be to meme the ZKVM pre compile.
- [48:10]
Ryan Sean Adams
That's right. The other question I think, and this is maybe where the skeptics come in, is I mentioned my tweet. I feel like Ethereum coming out of the last cycle had like, if it got shared network liquidity correct across all of the ltus, it would have had a thousand year reign as the Defi platform.
- [48:26]
David Hoffman
We would have hit 10k.
- [48:27]
Ryan Sean Adams
Like yeah, some ground was lost this cycle, all right. And some people look at that and say well this Ethereum, it's now anyone's game. So you have other chains that are. You come with ranks, maybe like Solana, BNB chain, who knows what else. Now Ethereum has lost its lead or at least things have leveled off and it's in one's game right now. So that's one take and that's what the bears would say about Ethereum. The other take, somewhat I'm more sympathetic with is no. Ethereum actually stacked some wins in this L2 partial side quest. It did stack some genuine wins that are totally differentiated. We've made these points and it has preserved the thing. The only thing that matters in crypto which is bitcoin level decentralization and by the way, the whole ZK thing soon to be better than bitcoin level of decentralization. If you can have rather than 15,000 validators, you can have hundreds of thousands of validators because you can run them on a mobile phone for instance and you have smart contracts, you are delivering on the bitcoin plus smart contract vision that I think is the core of crypto and is the thing that Ethereum set out to do so it's preserved those things despite this side quest, which is the only thing in crypto worth preserving. That's more my take.
- [49:41]
David Hoffman
Yeah, yeah, that's right. And about like, did Ethereum lose like the Ethereum market cap, which is the scoreboard, is at $240 billion. The next closest thing is Binance at 88 billion. And then the next closest thing after that is Solana at 52 billion. If it was going to get flipped because of this incorrect North Star for the last four or five years, it would have already happened and nothing came close. And now like that was the window of opportunity for somebody like Solana or Binance to, to. To win against Ethereum and flip Ethereum did not happen. And now I actually think like, now finally Ethereum's on the right track and is going to figure out how to cement its lead and increase its market share.
- [50:25]
Ryan Sean Adams
So let's close this out and let's call this cycle sort of a partial win. Not a full victory for Ethereum, but a partial win. And I'm going to be looking for these signs of whether the new strategy is working or not. First of all, you got to look at are more corporate chains actually onboarding as L2s for that sovereignty. It's been mixed so far. We get some of them, not all of them. So look for more of that. Also APP chains and these new gen 2L2s that are differentiated, will they win some traction? We'll see about that. We've got some promising signs, but it's still pretty early. Things like lightr other chains launching, we'll see existing L2s like base and Robinhood. Will they stay? It's part of Ethereum. If they do that is bullish. If they start to fracture, I don't know. I mean, that's a breaking of the alliance. It's not great. Ethereum also needs to ship like hell on scaling L1 now and lean Ethereum and the CK vision, you need to look for signs of that. And I also think I threw this in there. But Ethereum, the ETH alliance, needs to win AI. I think that's the next billions of users for Ethereum and that's sort of white space right now. Anybody could come in and sort of win that. And lastly, I think from a price perspective, ETH needs to bounce back next cycle. It needs to prove itself as a store of value asset, not just a revenue asset.
- [51:40]
David Hoffman
That's the next cycle. We can't have just a partial win.
- [51:44]
Ryan Sean Adams
There you go. Bankless nation. None of this has been financial advice. We're going to end it there. Crypto is risky. You could lose what you put in. But thanks for hanging with us on the bankless journey. We'll see you next time.