Ethereum’s Scaling Woes: Why Layer 1 Fixes Fall Short (And What Comes Next)

Ethereum’s congestion problem isn’t going anywhere—no matter how much you tweak Layer 1. Kyle Samani’s blunt take cuts through the maximalist hype: throwing more bandwidth at the base chain just kicks the can down the road.

Enter the real solution: modular architectures. Rollups, app-chains, and parallelized execution layers are eating Ethereum’s lunch while bankers still argue over gas fee predictions. The future’s already multi-chain, whether the old guard likes it or not.

Funny how the ’world computer’ narrative crumbles when you realize Wall Street would rather use a spreadsheet than pay $50 for a token swap.

Ethereum post-Pectra

It’s worth pointing out that Samani’s Multicoin Capital is heavily invested in solana [SOL]. Which begs the question: Is the criticism unbiased? 

According to Electric Capital’s 2024 developer count report, Base accounted for 42% of new code being written within the Ethereum ecosystem.

Base is an Ethereum L2 but is relatively faster than the L1 and ranks third on throughput after Solana and Internet Computer (ICP). 

In fact, from a builder interest perspective, a 2024 a16z report ranked Base third after Ethereum and Solana. 

Source: a16z

Simply put, Base moat was growing at a remarkable speed, and perhaps partly explained why some felt it was a threat to Ethereum. 

But Base founder, Jesse Pollak, discredited the notion and said, 

“Base is probably the largest single customer of Ethereum in the world. We get a lot of value, and we return a lot of value. And we are onboarding millions of people (and tens of thousands of developers) on-chain.”

Source: Artemis 

Although Ethereum has nearly 20x more TVL (total value locked) compared to Base, the L2 has outpaced it in address activity.

Besides, Base has closed the gap on the fee, revenue, and DEX volume fronts, Artemis data showed. 

That said, on the price chart, ETH blasted 38% in the past 48% and nearly tapped $2.5K for the first time since March.

It briefly eased to $2.3K at the time of writing. If the risk-on sentiment continues, ETH’s next key targets will be the $2.7K and $2.8K, which doubled as 200DMA (Daily Moving Average) and bearish order block (cyan). 

Source: ETH/USDT, TradingView