With simple contract interactions now costing in the hundreds of dollars, Vitalik Buterin has shifted his focus to scaling Ethereum. Demand for blockspace on the mainnet has skyrocketed over the last year, and transaction fees are pricing many users out of using the most coveted decentralized finance (DeFi) and non-fungible token (NFT) ecosystem.
This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum 2.0 and its sweeping impact on crypto markets. Subscribe to Valid Points here.
How is this being solved in the short term without sacrificing decentralization? Buterin claims, “Rollups are in the short and medium term, and possibly in the long term, the only trustless scaling solution for Ethereum.” Plenty of alternative layer 1 blockchains have looked for expandable systems outside of vertical rollups but have sacrificed liveliness, state growth and more, something the Ethereum developer community has taken a strong stance against.
Are current layer 2 companion networks cheap enough?
Read more: Ethereum Could Hold Lead as Dominant Smart-Contract Blockchain: Coinbase Analysts
“Rollups are significantly reducing fees for many Ethereum users: Optimism and Arbitrum frequently provide fees that are ~3-8x lower than the Ethereum base layer itself, and ZK rollups, which have better data compression and can avoid including signatures, have fees ~40-100x lower than the base layer,” said Buterin.