Ethereum's Main Problem: Vitalik Buterin Weighs In

Vitalik Buterin, co-founder of Ethereum, has pinpointed the lack of a unified ecosystem as the main pressing issue plaguing the network. He made this statement at the 2024 Shanghai Blockchain Week, as reported by Colin Wu.

Ethereum’s Current State: 34 Different Chains

According to Buterin, the Ethereum space is currently more like 34 different blockchain networks, rather than a single, cohesive ecosystem. To address this, he outlined several long-term goals for Ethereum’s development, including:

Achieving a throughput of over 100,000 transactions per second (TPS) through layer 2 solutions
Completing transactions between any two chains within two seconds
Implementing a unified interface
Additional Challenges and Goals

Buterin also touched on the need to improve the Ethereum Virtual Machine (EVM) and enhance security measures. In a previously published essay on the “potential future” of blockchain, he emphasized the importance of supporting solo staking to accelerate transaction processing and ensure network security.

Ethereum’s Current Performance

Meanwhile, Ethereum’s combined staking revenue has decreased due to a decline in network activity, according to analysts at The Block. In September, the figure stood at $174 million, down from a peak of $247 million in March – a drop of approximately 30%.

Transaction Fees and Validator Growth

The total transaction fees in the first month of the quarter were $35.5 million, down from $62.4 million in March. However, the number of validators continues to grow, reaching 1.09 million.

Deflationary Mechanism and EIP-4844

The deflationary mechanism of burning a portion of Ethereum’s transaction fees is working, but experts have observed signs of a reversal. After the Merge hard fork, the annual rate of ETH reduction was -0.06%, resulting in the removal of 861,000 ETH from circulation. The highest burn rate was recorded on April 5 at -0.38%, but has been declining steadily since.

The implementation of EIP-4844 during the March hard fork, Dencun, significantly reduced fees for layer 2 solutions, particularly on Rollups technology, leading to a decrease in gas consumption on the network.