@VitalikButerin, the creator of #Ethereum, has outlined three crucial "transitions" essential for Ethereum's long-term success and viability.

In his latest article, Buterin shared a new roadmap for Ethereum to follow in the coming years. The plan emphasizes the importance of layer-2 (L2) scaling solutions, smart contract wallets, and improved privacy for fund transfers. These upgrades need to be implemented through a series of network updates.

Scaling Solutions

Buterin believes that the success of Ethereum in the mass market is dependent on its ability to scale at layer 2. If this component fails, centralized workarounds may become the norm.

L2s are crucial for Ethereum to achieve its vision of a world computer. Without them, Ethereum will not be able to scale and support the world's compute demand, hindering its full potential.

“Without L2 scaling, Ethereum fails because each transaction costs $3.75 ($82.48 if we have another bull run), and every product aiming for the mass market inevitably forgets about the chain and adopts centralized workarounds for everything.”

Users should not be simply moved off the mainnet. Rather, it's the Ethereum network's capabilities must be enhanced. This can be accomplished by balancing the demand for the Ethereum mainnet with other highly secure OP chains.

Recently, Ethereum has experienced substantial growth in the number of layer 2 networks, with ZK rollups being released by Polygon and Matter Labs.

A rollup is a scaling solution that bundles transactions to validate them as smaller data on the mainnet. This helps to prevent congestion and ultimately reduces the cost of an Ethereum transaction.

Wallet Security

Wallet security is another critical aspect highlighted by Buterin. He emphasizes the need to transition all user wallets to smart contracts to boost users' confidence in storing cryptocurrency payments and data on the blockchain. Without this level of security, users may opt to use centralized entities instead.

The transition to smart contract wallets may encounter some technical obstacles, but Buterin believes they can be resolved easily.

Privacy Enhancements

Buterin also emphasizes the significance of privacy as the last essential element. Users worried about data privacy will avoid Ethereum if adequate measures are not in place.

“It's not just features of the protocol that need to improve; in some cases, the way that we interact with Ethereum needs to change pretty fundamentally, requiring deep changes from applications and wallets.”

Buterin identified meeting privacy concerns as one of the major challenges in the three transitions. To tackle this issue, Buterin suggested using "stealth address" to protect user identities. However, the implementation of these methods is still in the early stages due to cost and functionality issues.

“Without privacy, Ethereum fails because having all transactions available publicly for literally anyone to see is far too high a privacy sacrifice for many users."

Blockchain trilemma, again

According to Buterin, it is essential to tackle all these technical transitions simultaneously. This will ensure that crucial elements of the protocol are preserved while also offering an accessible and unrestricted experience to regular users.

These proposals encounter, however, a major obstacle known as the "blockchain trilemma." A blockchain's key characteristics are decentralization, security, and scalability, but only two can be accomplished simultaneously.

Buterin acknowledges that coordinating these transitions will be difficult but necessary for Ethereum's survival.

“These three transitions are crucial. But they are also challenging because of the intense coordination involved to properly resolve them.”