Vitalik Buterin, a renowned co-founder of the second-largest crypto project, Ethereum, has raised critical discussions surrounding the challenges of the Ethereum proof-of-stake network. It included centralized staking and transaction processing efficiency alongside scaling issues of layer two.

Buterin took the move during his presentation in the ongoing Ethereum Hong Kong Hackathon. The prominent Chinese report, Colin Wu, spotlighted the development in a recent tweet, including screenshots of Buterin’s presentation slides. Also, Wu noted that the Ethereum co-founder suggested four issues that often plague layer-two blockchain scaling solutions.

Vitalik’s latest speech in Hong Kong raised the issues of staking centralization and transaction processing efficiency faced by Ethereum POS, and proposed four issues faced by L2. In conclusion, he stated that three balances need to be maintained.

— Wu Blockchain (@WuBlockchain) October 23, 2023

Based on the shared screenshot, the four scaling challenges of Layer Twos, which highlighted Buterin, included proof system security and decentralization, sequencing decentralization, cross-L2 wallets, and data availability space.

Notably, zero-knowledge (ZK) and fraud proofs are examples of proof systems used in layer two scaling solutions to prove the validity of transactions without processing them on the main Ethereum chain. It is worth mentioning that there are arguments that some ZK proofs are centralized due to reliance on particular hardware.

On the other hand, sequencing denotes the ordering of transactions before they are included in a block. In Ethereum layer 1, miners handle sequencing. However, potentially centralized entities run some layer two sequencers. Furthermore, Cross-L2 Wallets allow users to interact with multiple layer two solutions without switching wallets.

As for data availability space, it refers to the challenge of storing a full copy of the blockchain data to validate transactions. Vitalik Buterin highlighted these four issues as some of the most critical challenges that must be addressed to achieve scalability for Ethereum.

In his closing remark, the ETH co-founder suggests maintaining three balances. One of Buterin’s arguments was that “keeping the base layer robust while cautiously expanding a few aspects of its capability is paramount.”

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