Simplicity as the Final Card: Ethereum’s Strategic Choice in High-Performance L1 Competition

The power of simplicity proven through the history of great innovations, and Ethereum’s bold step forward in the turbulent blockchain market, along with the challenging obstacles that remain

Introduction: Return to Simplicity

Looking at the history of the digital world, an interesting pattern emerges. Most innovative technologies started simply, but grew more complex over time. And when that complexity reached its limits, they evolved back towards simplicity. This is the ‘paradox of simplicity’ — to solve complex problems, a simpler approach is often needed.

In his recent blog, Vitalik Buterin presented a five-year plan to simplify Ethereum to Bitcoin’s level. He points out that previous complexity has led to increased development costs, security risks, and a closed R&D culture. His core message is that simplification is essential for Ethereum to become a sustainable base infrastructure.

In this article, we’ll examine cases of technologies that became dominant infrastructures through simplicity, and together explore the potential significance of Ethereum’s simplification strategy.

Summary of “Simplifying the L1”

In his blog post published on May 3, 2025, Vitalik Buterin proposed a set of strategies to radically simplify Ethereum’s Layer 1. The key points are summarized below:

• Consensus Simplification: Replace the complex current system with a “3-slot finality model” — proposal, vote, finalize — implementable in ~200 lines of code.
• Execution Redesign: Introduce a RISC-V–based virtual machine optimized for ZK-proofs, reducing complexity and improving rollup performance.
• Protocol Standardization: Apply consistent formats like SSZ and unified Merkle trees, enabling better tooling, proof systems, and code reuse.
• Minimal L1 Philosophy: Keep only essential functions on L1; shift complex features (e.g., staking pools, tracking logic) to L2 or off-chain to enhance simplicity and security.

This extreme simplification strategy of Ethereum is actually nothing new. Throughout the history of IT, the technologies that have survived the longest and have spread the most have always had ‘simplicity’ as their core philosophy.

Lessons from History: Dominant Infrastructures Created through Simplicity

1. Unix — An Operating System Born from Minimal Philosophy

Unix was born based on the philosophy “do one thing well and connect well.” Created by Ken Thompson and Dennis Ritchie in 1969, this operating system had fewer features but allowed infinite expansion thanks to its modularity and simplicity.

Success Factors:

• Small programs connecting to perform complex tasks
• Text-based interface facilitating scripting and automation
• Pipe (|) concept connecting one program’s output to another’s input

Results:

• Became the foundation of modern OSes like Linux, macOS, and Android
• Created an ecosystem that developers could easily learn and expand: about 90% of today’s cloud infrastructure runs on Unix-based systems
• Philosophy remains relevant even after 50 years
• Since there was no Unix foundation or token, the developers of this innovative technology received no direct economic rewards

2. TCP/IP — The Simplest Eventually Became the Internet

In the early communications protocol wars of the 1970s, TCP/IP was chosen for its simplicity and flexibility. Designed by Vint Cerf and Bob Kahn, this protocol had fewer features than the OSI model but was easier to implement and more open.

Success Factors:

• “End-to-end” principle: keeping complexity at network endpoints and the network itself simple
• Layered design allowing each layer to evolve independently
• Openness not tied to specific hardware or operating systems

Results:

• Powers today’s global internet
• Forms the foundation for various services from email to streaming to cloud
• Won technically but developers received no economic rewards

3. HTML + HTTP (Early Web) — Simplicity Spread the Web Worldwide

The early web technologies HTML and HTTP, developed by Tim Berners-Lee in 1990, were simple enough for anyone to create and interpret, leading to explosive growth of the World Wide Web.

Success Factors:

• Text-based markup allowing anyone to create documents
• Hyperlink concept connecting distributed knowledge
• Forgiving parsing making it easy for beginners

Results:

• Powerful but complex alternatives like Flash, ActiveX, Java Applet all disappeared
• HTML still exists as the foundation of the web after 30 years
• Being an open standard, it had no direct revenue model

4. Git — Command-Line System that Simplified Distributed Development

Git, developed by Linus Torvalds in 2005, is a distributed version control system that was initially underappreciated due to its unfriendly CLI and local-centric workflow. However, its ability to enable code collaboration without complex central server structures made it the industry standard.

Success Factors:

• Distributed repository concept eliminating network dependency
• Efficiency of storing changes as diffs rather than snapshots
• Ease of branch creation and merging

Results:

• Platforms like GitHub and GitLab built business models on top of Git
• Became the standard for open-source development
• Git itself remains open source

5. Early Ethereum — Success as a Simple Smart Contract Platform

Ethereum’s early success was also due to its clear and powerful vision of a “world computer.” While it eventually became slow and expensive, its early momentum and clear paradigm concentrated the ecosystem around it.

Success Factors:

• Clear value proposition of Turing-complete smart contracts
• Developer-friendly Solidity language
• Standardization of token issuance (ERC-20) facilitating ecosystem expansion

Results:

• Created new financial paradigms like DeFi and NFTs
• Became the central infrastructure of Web3
• But faced scalability and complexity issues

Ethereum’s Current Situation: Challenges in High-Performance L1 Competition

Ethereum is currently facing serious challenges from the rapid growth of high-performance L1 blockchains like Solana, Sui, and Avalanche. In terms of performance, Ethereum significantly lags behind these competitors in transactions per second (TPS). Blockchains like Solana and Avalanche can process transactions tens to hundreds of times faster than Ethereum.

The challenge in the developer ecosystem is particularly serious. According to Electric Capital’s 2024 Developer Report, Solana attracted 7,625 new developers in 2024, which is over 1,000 more than Ethereum’s 6,456. This marks the first time since 2016 that Solana has surpassed Ethereum in developer attraction, showing an 83% year-over-year increase in Solana’s developer activity. Ethereum’s monthly active developers decreased by 17% to 6,244.

Regionally, there have been interesting shifts as well. Asia’s share of total developers increased from 12% in 2015 to 32% in 2024, surpassing North America (24%). India grew from 1% to 12% of developer share, becoming second only to the United States (19%), with Solana emerging as the more popular platform than Ethereum in India.

However, in terms of overall developer activity, Ethereum still maintains a leading position. Ethereum leads Solana in metrics such as monthly active developers and code contributions, and remains the blockchain with the most developers across all continents. Additionally, contributors with more than two years of experience are at an all-time high on Ethereum, accounting for 70% of all code contributions.

Yet Ethereum’s developer ecosystem is also evolving. 56% of Ethereum developers are active on Layer 2 networks like Base, Optimism, and Arbitrum, while restaking protocols like EigenLayer have emerged as the fastest-growing developer ecosystem in 2024 with a 167% increase in developers.

In terms of fees, Ethereum is also at a relative disadvantage. Ethereum’s gas fees remain significantly higher than competing blockchains, creating a financial burden for users and developers. In response, Ethereum is pursuing scalability improvements through Layer 2 solutions, but efforts continue to catch up with the efficiency that competitors offer at their base layer.

Simplicity as a Differentiation Strategy: Ethereum’s Unique Approach

Most blockchain projects promise more features, faster speeds, and lower fees to win in the competition. Ethereum is clearly at a disadvantage in the performance race. However, Vitalik Buterin’s proposed simplification strategy represents a different dimension of approach from this performance competition. It focuses on long-term survival rather than short-term performance improvements.

The Paradoxical Competitiveness of Simplification

Ethereum’s simplification strategy differentiates itself from competing blockchains in the following ways:

• Minimizing Validation Costs: Complex consensus mechanisms and execution environments place a heavy burden on validators and node operators. By simplifying Ethereum, more participants can operate full nodes, contributing to true decentralization. While Solana imposes high hardware requirements on validators for high performance, a simplified Ethereum would allow network participation with fewer resources.
• Long-term Security Enhancement: The more complex a system, the higher the likelihood of bugs and vulnerabilities. Ethereum’s simplification makes the codebase easier to understand and audit, strengthening security in the long run. Unlike Solana, which has experienced several network outages since 2021, a simplified Ethereum can provide a more stable infrastructure.
• Creating Cultural Value: Simplicity acts not just as a technical characteristic but as a cultural value. Bitcoin’s reliability as ‘digital gold’ stems from its simple and unchanging protocol. Ethereum’s pursuit of simplification creates this cultural value, providing long-term vision and stability to investors and developers.
• Ease of Normative Consensus Building: The simpler the protocol, the easier it is to achieve social consensus on upgrades and changes. This is because all stakeholders can easily understand the necessity and direction of change. Governance coordination may be more difficult in complex systems like Avalanche or Solana.

Infrastructure-Centered Approach

Ethereum’s simplification strategy essentially aims to become the ‘best infrastructure’ rather than the ‘best application’, enabling the following differentiation:

• Layer Separation Philosophy: Ethereum maintains a simple and stable base layer (L1) while delegating innovation and performance optimization to Layer 2 (L2) solutions. This is similar to the role of TCP/IP in internet architecture, keeping the basic protocol simple while allowing various applications to develop on top of it.
• Role as an Open Standard: Simplified Ethereum provides clear open standards that all L2 solutions and DApps must comply with. This gives consistency and interoperability to the entire ecosystem, maximizing network effects.
• Time-Tested Value: Launched in 2015, Ethereum has been tested in the market for much longer than Solana (2020) or Sui (2022). Through simplification, Ethereum can further strengthen this temporal advantage. Simpler systems tend to maintain their essential value better over time.

Synergy with Value Capture Mechanisms

Ethereum’s simplification also synergizes with its economic model:

• Strengthening ETH’s Monetary Properties: A simple protocol strengthens ETH’s monetary properties, similar to Bitcoin’s appeal, making it more attractive as a digital asset. This clarity and predictability significantly enhances institutional investor confidence, as they favor systems they can thoroughly understand and evaluate.
• Optimizing Fee Burning Mechanism: The fee burning mechanism introduced after EIP-1559 operates more efficiently in a simplified environment, making the ETH supply reduction effect more apparent.
• Efficiency of MEV Redistribution: A simplified consensus mechanism enables fair distribution of MEV (Maximal Extractable Value), optimizing network security incentives.

Thus, Ethereum’s simplification strategy can serve as an essential differentiating factor beyond the performance competition.

Challenges on the Path to Simplicity: Implementation Issues and Solutions

1. Backward Compatibility Challenge

Ethereum already has an active ecosystem with an economy worth hundreds of billions of dollars built on it. The simplification process must maintain the functionality of existing applications and smart contracts.

Recommendations:

• Introduce an architecture that separates the simplified core from the backward compatibility layer
• Gradually transition legacy features to an opt-in approach
• Provide developers with a clear migration path and sufficient preparation time

2. Building Community Consensus

Ethereum is not a centralized organization but an ecosystem composed of diverse stakeholders. Broad consensus on the simplification strategy is necessary.

Recommendations:

• Spread educational content about the long-term value of simplification
• Make decisions through transparent governance processes
• Encourage participation from various stakeholders, not just core developers but also DApp developers, users, and validators

3. Balancing Innovation and Simplicity

There are concerns that an overly simple system may limit innovation. Finding the right balance between simplicity and functionality is important.

Recommendations:

• Maintain the philosophy of “keep the core simple, extensions flexible”
• Encourage implementation of innovative features on L2 solutions
• Include only proven core features in the core protocol

4. Security Verification Mechanisms

A simplified codebase allows more people to understand and review it, but this alone does not guarantee security.

Recommendations:

• Develop and apply formal verification tools
• Expand continuous security audits and bug bounty programs
• Extend open testnets and public verification periods

Conclusion: Ethereum’s Paradoxical Strategy, Survival Through Simplicity

The history of technology offers a clear lesson — ultimately, what survives is not the most flashy but the simplest. While Solana shows impressive results in transaction volume and developer attraction today, Ethereum’s chosen path of simplification may seem anachronistic. However, this is a strategy aimed at secular survival rather than short-term growth.

Ethereum is building the first infrastructure in history that combines the power of simplicity with value capture mechanisms. Just as the technological miracle we call the internet started with a simple protocol called TCP/IP, Ethereum is creating a solid foundation upon which all future Web3 innovations will be built.

If Vitalik Buterin’s vision becomes reality, Ethereum will not simply win in a cryptocurrency competition but open a new chapter in the digital age. This complex journey toward simplicity faces numerous challenges from maintaining backward compatibility to building community consensus, but the result will be the paradoxical victory of simplified Ethereum — proving that the most powerful digital infrastructure is built on the simplest foundation.

Disclosure: Hashed has established, maintained, and enforced strict internal policies and procedures designed to identify and effectively manage conflicts of interest related to its investment activities. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. Furthermore, references to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services.