Vitalik Buterin identifies two obstacles to Ethereum’s growth

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Buterin explains what still holds Ethereum back

Scalability: Progress achieved, but at the cost of a more complex architecture

The first critical condition identified by Buterin is scalability. Over recent years, Ethereum has significantly reduced the load on its base layer thanks to the active development of Layer-2 solutions. These networks now process the majority of transactions and allow users to operate with much lower fees.

As reported, Ethereum’s Layer 1 set a 2025 daily transaction record after the Pectra and Fusaka upgrades — a sign of improved throughput, but not a final answer to scaling challenges.

At the same time, this approach is reshaping Ethereum’s economic model. A growing share of activity and fee revenue is moving to L2 networks, while the base layer benefits less directly from increased usage. This raises questions about the long-term sustainability of validator incentives and the role of ETH within the new multi-layer architecture.

Buterin emphasizes that scalability alone is not an end goal. It must be combined with simplicity and predictability of network behavior for both developers and users.

Privacy: Technical and regulatory challenge

The second condition, privacy, remains even more complex. Ethereum was originally designed as a transparent system, but full transparency is insufficient for mass adoption. Buterin stresses that users and businesses are not ready to operate in an environment where all activity is completely public.

At the same time, implementing private transactions faces political and regulatory constraints. Pressure on privacy tools in various jurisdictions forces the ecosystem to seek compromise solutions that protect user data without entering into direct conflict with regulators.

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According to Buterin, privacy will become one of the key stress tests for Ethereum in 2026 as a global platform capable of supporting not only DeFi or NFT use cases, but also real-world business processes.

A long-term goal without quick solutions

Buterin acknowledges that achieving both objectives does not have a quick or simple solution. Scalability and privacy require deep technical changes, as well as a rethinking of the role of Ethereum’s base layer within a multi-tier ecosystem.

In his view, the ability to simultaneously deliver high performance, strong security, and an acceptable level of privacy will determine whether Ethereum can ultimately become a true world computer rather than merely a platform for isolated financial or experimental applications.

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