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The Great Layer-2 Reshuffle: As Ethereum Scales, Rollups Reposition

Earlier this month, Ethereum co-founder Vitalik Buterin declared that “the original vision of L2s no longer makes sense.” We dive deep into the forces driving this insight and what key industry stakeholder think about this reshuffle.

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Louis Tellier & Fiodar Yuzhyk
February 27, 2026

While tokens are bleeding, Circle’s equity is doing the opposite. After Wednesday’s earnings, the stock jumped more than 35%, a move so strong you almost wonder whether Wall Street knows you can watch USDC growth on platforms like Artemis or Token Terminal.

Anyway, Circle is showing early signs of revenue diversification and can fuel fantasies about AI agents settling onchain. But the structural tensions remain: $733 million in reserve income, $461 million paid out to distributors like Coinbase and Binance.

These costs are likely to persist. Also on Wednesday, the OCC became the first regulator to publish a GENIUS Act rulemaking proposal. Issuers like Circle would still be allowed to share revenue with partners, but partners using those flows to fund retail yield schemes on USDC will likely be curtailed.

It’s only a draft, open for comment. Yet until the broader framework is finalized, the banking lobby can reasonably call this round a partial win.

Today, we take you behind the scenes of:

  • the great reshuffle of Ethereum and its Layer-2 ecosystem

  • Bitwise acquiring staking provider Chorus One

HIGH SIGNAL NEWS

  • Meta explores stablecoin comeback. The tech giant is evaluating how to integrate stablecoin payments across its apps and has issued a request for proposals to third-party firms to support the rollout, with Stripe cited by CoinDesk as a leading pilot partner. 💸

  • Kraken launches perpetual futures for tokenized U.S. stocks. The contracts trade 24/7 with leverage of up to 20x and represent the first regulated offering of their kind based on tokenized equities. 🐙

  • Spiko crosses $1 billion in AuM. This makes the French startup the largest European issuer and the third-largest issuer of tokenized money market funds globally, trailing only BlackRock’s BUIDL at $2.2 billion and Circle’s USDYC at $1.6 billion. 💰️

  • Binance brings back tokenized public equities. Through a partnership with Ondo Finance, the exchange now offers trading in a selection of tokenized U.S. stocks and ETFs. This marks its first tokenized equity listing since discontinuing the product in 2021 after regulatory warnings. The offering is not available to users in the U.S. 🏦

TOP STORY

The Great Layer-2 Reshuffle: As Ethereum Scales, Rollups Reposition

Reset: Earlier this month, Ethereum co-founder Vitalik Buterin declared that “the original vision of L2s no longer makes sense.” That vision, first outlined in 2020, imagined rollups as “branded shards” — tightly connected extensions of Ethereum that would scale the network while inheriting its full security guarantees.

  • At the time, Ethereum processed roughly 15 transactions per second and faced persistent congestion. Rollups emerged as the primary scaling strategy, a vision reinforced by upgrades such as Dencun in March 2024, which dramatically reduced L2 data costs through blobs.

A shifting foundation: Today, the environment looks different. Layer-1 throughput has increased, fees remain low, and further gas limit expansions are planned. Ethereum now has a credible path to scaling directly on L1, reducing the urgency of L2s as pure scaling extensions.

  • At the same time, structural questions have intensified. As activity migrated to rollups, doubts mounted over how much this export of blockspace actually benefits ETH’s value accrual.

  • Meanwhile, many major rollups have not fully decentralized. Some openly acknowledge that they may never progress to “Stage 2,” where Ethereum alone enforces the rules, due to business or regulatory constraints.

Pressure builds: With blockspace increasingly abundant and dozens of chains competing for users, differentiation has become essential. L2 tokens have underperformed, and “cheaper and faster” is no longer enough.

  • Base’s recent departure from Optimism’s Superchain to build its own technology stack, together with a broader wave of vertically specialized Layer-2 networks, signals that the era of generic scaling rollups is coming to an end.

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To better understand how this reset is reshaping the ecosystem, we spoke with key actors across the stack:

  1. The EF-Perspective (Ethereum Foundation) on how it views the role of Layer-2s today.

  2. The Layer-2 perspective (Aztec) on what it means to build differentiated blockspace.

  3. The VC perspective (Greenfield) on the outlook for today’s leading Layer-2 networks.

  4. The L2-Arbitrator perspective (L2BEAT) on why Layer-2s are not moving towards full decentralization.

Josh Rudolph is a Product Lead at the Ethereum Foundation and part of the Platform team, which aims to strengthen Ethereum as an integrated L1–L2 system and ensure both layers operate cohesively.

How does the Ethereum Foundation view the role of Layer-2s today?

Layer-2s remain central to Ethereum’s long-term growth and success. What has changed is that the Layer-1 now has a credible path toward significantly greater scalability while preserving Ethereum’s core properties: decentralization, censorship resistance, and resilience.

What has not changed is that no single chain can serve the full range of needs of a global onchain economy. L2s are essential not only for certain forms of scaling, but also to enable greater customization, control, and differentiated services built on top of Ethereum — while still inheriting its security and liquidity.

Arnaud Schenk serves as Executive Director of the Aztec Foundation, which oversees the development of the Aztec Network, a privacy-centric Ethereum Layer-2 infrastructure.

As a Layer-2, how do you view the recent statements and priorities by Vitalik and the EF’s renewed focus on scaling the L1?

In my view, Vitalik’s statements highlight what has been evident for some time: the market for undifferentiated L2s is saturated. If your only value proposition is cheaper block space, improvements at the base layer will compress that edge. What we are seeing is not a reversal of the rollup thesis, but a sorting process. Generic L2s face pressure, while architecturally distinct execution layers remain necessary.

In our case, that differentiation lies in privacy, i.e. programmable confidentiality that cannot be implemented directly on the Layer-1 without fundamentally altering Ethereum’s transparent execution model. After years of attempting to build privacy on Ethereum itself, it became clear that its design imposes structural limits.

This is what makes our alignment with Ethereum both architectural and economic. We settle to Ethereum, rely on it for data availability, and as usage grows, generate additional demand for ETH. L1 scaling is therefore highly complementary: shorter block times and higher throughput let us post batches more frequently and settle faster, directly enhancing our performance.

Claude Donzé is Principal and Consumer Lead at Greenfield Capital, a leading European crypto VC firm with investments in companies such as Near, 1Inch and Arweave.

Do general-purpose Layer-2s still have a durable role in the ecosystem?

Absent distribution or a clear edge, it is extremely difficult to bootstrap liquidity and developer activity. Even established players like Arbitrum or Optimism face an uphill battle. They have meaningful liquidity and technical credibility, but they lack the embedded distribution of large platforms such as Coinbase or potentially Robinhood with direct access to millions of users and integrated product funnels.

In that environment, we could see deeper strategic alignments, exclusive partnerships, or even acquisition-type outcomes as possible paths forward. Not because these teams lack quality, but because distribution and network effects increasingly determine success.

Overall, we expect meaningful consolidation. Out of the many Layer-2s operating today, only a small number are likely to achieve durable, long-term relevance — primarily those with either strong distribution, clear specialization, or structural alignment with larger ecosystems.

Bartek Kiepuszewski is the Co-Founder of L2BEAT, a leading analytics platform tracking Ethereum Layer-2 solutions’ security, decentralization, and maturity. They shaped the Stages Framework, categorizing rollups from Stage 0 (centralized) to Stage 2 (fully decentralized).

What really qualifies as a Layer-2 today, and why are only so few rollups progressing to Stage 2?

Technically, a rollup qualifies as an L2 only if Ethereum verifies its state transitions and provides consensus and settlement. Without that, you are effectively trusting a separate validator set or a multisig.

Vitalik’s frustration about the slow move toward Stage 2 rollups reflects the original rollup vision: fully immutable systems with no privileged actors. In practice, however, proof systems are extremely complex. Stage 1 rollups retain Security Councils that can intervene in case of critical bugs — a safeguard that has proven useful. Major systems such as Base, Arbitrum and Optimism remain at Stage 1 not out of disregard for decentralization, but to manage real operational risk.

Importantly, not all L2s are optimizing for the same outcome. Some aim for credibly neutral, censorship-resistant infrastructure. Others, for instance those targeting institutional adoption, may require compliance features and controlled intervention.

In the future, we are likely to see two dominant models: native rollups, where proof verification is enshrined at Ethereum’s base layer, and Stage 1 rollups that consciously retain limited governance as part of their design.

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KEY TAKEAWAYS

  • Ethereum Layer-1 has been reprioritizing scaling. With higher throughput, lower fees, and further gas limit increases ahead, mainnet is regaining capacity and relevance, reshaping the original rollup-centric roadmap.

  • For Layer-2s, cheaper and faster is no longer enough. As blockspace becomes more abundant, rollups must differentiate through specialization or distribution, rather than generic scaling.

  • Long-term, the market is likely to bifurcate. Native rollups tightly anchored to Ethereum’s security will coexist with specialized L2s.

Based | $11.5 million | Series A : Trading and payments app built on top of Hyperliquid's trading infrastructure.

t54 Labs | $5 million | Seed : Protocol offering identity verification and other blockchain-based tools for agentic finance.

Bluprynt | $4.25 million | Seed : Developer of compliance and disclosure infrastructure for digital assets.

What’s the news?

  • Acquisition: On Tuesday, the crypto-native asset manager Bitwise announced the acquisition of Chorus One, one of the earliest staking providers. The firm has grown to manage approximately $2.2 billion in assets under stake and has built a strong institutional reputation.

  • Institutional yield: Beyond the broader consolidation trend in the staking sector that we highlighted two weeks ago, this acquisition positions Bitwise to meaningfully expand and institutionalize its crypto yield offering for professional investors.

Behind the scenes: Following our recent article, we spoke with Hunter Horsley, CEO of Bitwise Asset Management, to better understand how the acquisition of Chorus One expands Bitwise’s capabilities.

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Disclaimer: The information provided in the Crypto Briefing by Blockstories does not constitute investment advice. Accordingly, we assume no liability for any investment decisions made based on the content presented herein.

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