The Block Size Debate and the Path to a Unified Ethereum Architecture

From 2015 to 2017, Bitcoin underwent a well-known conflict over block size. This was a pivotal conflict in Bitcoin’s history, where hardliners debated endlessly about the correct expansion strategy for the Bitcoin network. The correct strategy would ensure that the Bitcoin network could scale over time to meet the growing demand.

The debaters were divided into two groups: “Big Blockers” and “Small Blockers”.

Big Blockers advocated increasing the original size of Bitcoin blocks from 1MB to 8MB. This would increase Bitcoin’s transaction throughput by eightfold while reducing transaction costs.

Small Blockers advocated maintaining a smaller block size, arguing that increased block size would damage Bitcoin’s decentralization feature, making it more challenging for ordinary users to run and verify the Bitcoin blockchain.

An alternative pathway called SegWit (Segregated Witness) was eventually proposed. This pathway could optimize the number of transactions that a single block could accommodate without directly increasing the block size. SegWit would also open the door to expansion solutions outside the core Bitcoin protocol, i.e., Layer 2 expansion.

To emphasize these points fully, Small Blockers hoped to expand in two ways:

Increase block density, allowing more transactions to fit in the same space.

Open the door to layered expansion strategies, creating space for practical off-chain expansion solutions.

So, the point of debate was: Should we increase the block size, or should we maintain a certain block size and force expansion towards higher layers?

1. Current Situation of Big Blockers and Small Blockers

The debate over block size has been a long-standing issue in the history of cryptocurrency development and continues to this day.

We no longer refer to these camps as Big Blockers or Small Blockers; today, people have found more resonant modern camps, usually defined by specific Layer 1 (L1) technologies. However, the different philosophies expressed by these two camps can still be seen in the cultures and belief systems of various L1 camps, whether they realize it or not.

Today, the debate between Small Blockers and Big Blockers is embodied in the competition between Ethereum and Solana.

The Solana camp points out that Ethereum is too expensive and too slow to bring the world onto the blockchain. Unless transactions are instantaneous and free, consumers will not use cryptocurrencies, and we need to design L1s to have as much capacity as possible.

The Ethereum camp, on the other hand, argues that this represents a fundamental compromise on decentralization and trust neutrality. Winners and losers are predetermined, and this will ultimately lead to the same social and financial stratifications we are trying to escape. We should focus on increasing the density and value of L1 blocks and mandating expansion to Layer 2s (L2s).

This debate is nothing new. The crypto landscape is constantly changing, adapting, and evolving, but the debate over the concepts of small blocks and big blocks remains the same.

2. Complex Blocks vs. Primitive Blocks

Ethereum’s most significant innovation from zero to one was the addition of a virtual machine to the blockchain. All chains prior to Ethereum lacked this critical element, the virtual machine, as they tried to add single opcode functionalities rather than a fully expressive virtual machine.

Early Bitcoiners did not agree with this choice, as it increased the system’s complexity, expanded the attack surface, and made block verification more difficult.

Although both Bitcoin and Ethereum are considered “small block” chains, the expansion of the virtual machine scope still created a significant divide between these two major communities. Even today, you can clearly see some divisions between larger camps in modern blockchain concepts.

Although this perspective might face challenges in 2024, I believe these four L1 blockchains represent four different types of valid logical conclusions within the L1 architecture:

• Bitcoin is highly restricted; it limits L1 performance at all costs.
• Ethereum L1 is heavily constrained, but the addition of new L1 performance is meant to create room for unconstrained block supply on L2s.
• Celestia limits its L1 performance but maximizes its capacity, pushing more functionality to L2s, yet providing them with the largest space for building (this is the origin of the motto “Build Anything”).
• Solana is extremely unconstrained; it maximizes the capacity and functionality of L1 while limiting the ability to build higher layers.

3. Functional escape velocity

My viewpoint on crypto investment is that the blockchain that integrates the concepts of both small blocks and large blocks will ultimately win the game of crypto power.

Neither Small Blockers nor Big Blockers are wrong. They each have their points of view. Arguing about who is right or wrong is pointless—the key is to establish a system that maximizes both approaches.

Bitcoin’s architecture cannot satisfy the needs of both Big Blockers and Small Blockers at the same time. Bitcoin Small Blockers claim that scaling will occur on Layer 2s, pointing Big Blockers towards the Lightning Network as a solution, while still keeping them as Bitcoiners within the Bitcoin system. However, due to the functional limitations of Bitcoin’s Layer 1 (L1), the Lightning Network struggles to gain the necessary support and momentum, leaving Bitcoin Big Blockers with no place to go.

In 2019, Vitalik Buterin published an article titled “The Base Layer and Functional Escape Velocity”, discussing the same issue and advocating for minimally increasing the capabilities of L1 to facilitate practical Layer 2s (L2s).

“While L1 cannot be too powerful, as increased functionality means greater complexity and vulnerability, L1 must be powerful enough to make the L2 protocols people want to build feasible.”

“Keeping L1 simple and compensating on L2” is not a universal solution to the scalability and functionality issues of blockchain because it does not consider that the L1 blockchain itself must have sufficient scalability and functionality to make development on it feasible.

My conclusion is this:

To ensure that L2s can reach “functional escape velocity,” we need to expand the scope of L1 blocks beyond just maximizing small blocks. We need more complexity in blocks.

We should not increase the scope of L1 blocks to a degree beyond achieving the “L2 functional escape velocity,” as it unnecessarily compromises the decentralization and trust neutrality of L1. Any additional L1 utility can be pushed to L2s. We should maintain the concept of small blocks.

This also represents a compromise between both sides. Small Blockers must accept that their blocks become more complex and (slightly) harder to verify, while Big Blockers must accept a layered expansion method.

Once the compromise is agreed upon, the synergistic effects will naturally flourish.

4. Ethereum L1—The Root of Trust

Ethereum is the root of trust.

Ethereum L1 harnesses advancements in cryptography to achieve a higher level of functional escape velocity, thus maintaining its concept of small blocks. By accepting fraud proofs and validity proofs from higher layers, Ethereum can effectively compress an infinite number of transactions into a single, easily verifiable transaction package, which is then validated by a decentralized network of consumer hardware.

This architectural design preserves the fundamental promise of the cryptography industry to society: Ordinary people can check the power of experts and elites. Everyone has an equal opportunity to enter the system. No one has privileges. No one is predestined to win.

The cryptography industry has made a philosophical commitment, and Ethereum has turned this philosophy into reality through cryptographic research and traditional engineering techniques.

Imagine small blocks below and large blocks above, meaning L1 is decentralized, trust-neutral, and consumer-verifiable blocks, while highly scalable, instant, low-cost transactions occur on L2s!

Ethereum does not view the concepts of small and large blocks from a horizontal perspective but rather flips it vertically, building a large block structure on the secure decentralized foundation of small blocks.

Ethereum is the anchor of the large block universe.

Ethereum supports the thriving development of thousands of large block networks, with synergistic effects blossoming from a coherent, composable ecosystem rather than forming many fragmented L1s.

5. Cosmos: The Lost Tribes

So, what role does Cosmos play in this debate? Cosmos does not insist on strictly conforming to network designs. After all, there is no “Cosmos” network yet—Cosmos is still just a concept.

This concept is the internet of sovereign chains. Each chain possesses the utmost, uncompromising sovereignty and can to some extent come together through shared technical standards, and to a certain extent abstract away their complexity.

The problem with Cosmos is that it is fundamentally committed to serving sovereignty so much so that Cosmos chains struggle to coordinate and organize themselves to share each other’s successes. An excessive focus on sovereignty leads to excessive chaos, which is detrimental to the expansion of the Cosmos concept. Maximizing sovereignty inadvertently optimizes for an anarchic state. Without a central coordinating structure, Cosmos remains a niche concept.

6. Sovereign Escape Velocity

Similar to Vitalik’s concept of “feature escape velocity,” I believe there exists a phenomenon known as “sovereign escape velocity.” To truly allow the Cosmos concept to take root and flourish, it needs to make small compromises in network sovereignty to fully realize its potential.

The vision of the Cosmos concept is essentially the same as that of Ethereum L2s. It consists of a horizontal structure made up of independent, sovereign chains that are free to choose their own destinies.

The core difference lies in that Ethereum L2s compromise some degree of sovereignty by publishing their state roots on L1 bridge contracts. This slight change externalizes previous internal operations by choosing a central L1 to settle their native bridges.

By using cryptographic proofs to extend the security and settlement assurances of L1, the myriad of L2s based on Ethereum functionally become the same global settlement network. This is the flower bloomed from the extraordinary synergistic effect between the concepts of small blocks and large blocks.

(1) Synergistic Effect 1: Chain Security

L2 chains do not have to pay for their own economic security, they eliminate a significant source of network inflation from their underlying assets, retaining an annual inflation rate of 3-7% in their respective tokens.

For example, with Optimism’s FDV of $14 billion and an annual security budget assumption of 5%, $700 million annually does not need to be paid to third-party external security providers. In fact, last year Optimism’s mainnet paid $57 million in gas fees to Ethereum L1, an indicator measured before the release of EIP-4844, reducing L2 costs by over 95%!

The cost of economic security dropping to zero makes Data Availability (DA) the only meaningful ongoing operational cost for L2 networks. Since DA costs are also near zero, the net costs for L2s are similarly almost nonexistent.

By creating sustainability for L2s, Ethereum can release as many chains as possible based on market demand, creating more sovereign chains than the Cosmos model could generate.

(2) Synergistic Effect 2: Composability

The customer acquisition cost for L2s also becomes marginal, as cryptographic proof settlements from L1 provide reliable links between all L2s. By retaining L1’s settlement assurances, users can easily navigate between L2s. However, service providers offering chain abstraction services (bridges, intent fillers, shared sorters, etc.) can offer more powerful services if they have uncompromised security guarantees for building their businesses.

Moreover, as many L2s come online, each L2 attracts its fringe users into the larger Ethereum ecosystem. As all L2s bring their users to Ethereum, the total number of Ethereum users grows as the network expands, making it easier for fringe L2s to find enough users.

Ironically, Ethereum is criticized for being “fragmented,” but the reality is quite the opposite, as Ethereum is the only network that stitches other sovereign chains together through cryptographic proofs. In contrast, many L1 domains are thoroughly and completely fragmented, while the L2 domain of Ethereum only suffers from latency fragmentation issues.

(3) Synergistic Effect 3: Unit of Account

All advantages converge on the Schelling point of the ETH asset. The more network effects around the Ethereum ecosystem, the stronger the tailwind for ETH as a currency.

ETH becomes the unit of account for all its L2 networks, each generating economies of scale by centralizing security on Ethereum L1.

7. Conclusion

The Ethereum project is pursuing a single unified architecture that encompasses the widest possible set of use cases. It represents a one-stop network. The combination of small yet powerful L1s lays the foundation necessary to unlock the maximum potential design space on L2s. An early saying among Bitcoiners was, “Anything useful will eventually be built on top of Bitcoin.” I fully believe in this statement, especially in relation to the Ethereum network, as it aligns with Ethereum’s optimization goals. The preservation of the crypto industry’s value occurs at the L1 level.

Decentralization, censorship resistance, permissionless access, and trustworthy neutrality—if these can be maintained at the L1 level, then they can functionally scale to an unlimited number of L2s, which can cryptographically bind themselves to the L1. A core argument for Ethereum in the crypto power play is that any alternative L1 could be better constructed as an L2, or integrated as a feature set into L1.

Ultimately, all will become branches on the great tree of Ethereum.

Disclaimer:

1. This article is reproduced from Jinse Finance, originally titled “Bankless Co-Founder: The Debate Over Block Size and Ethereum’s Path to a Unified Architecture” by [David Hoffman, Bankless]. The copyright belongs to the original author. If there are any objections to this reproduction, please contact the Gate Learn team. The team will handle it according to relevant procedures as soon as possible.

2. The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.

3. Other language versions of the article have been translated by the Gate Learn team, and unless Gate.io is mentioned, no reproduction, dissemination, or plagiarism of the translated articles is allowed.