Vitalik Buterin Suggests Major Overhaul To Improve Ethereum's Network Efficiency As Transaction Fees Plunge To 5-Year Lows

Ethereum ETH/USD co-founder Vitalik Buterin proposed a long-term solution Sunday to improve the scalability and efficiency of the network’s execution layer, one that handles smart contracts and transactions.

What Happened: In a blog post, Buterin suggested replacing the Ethereum Virtual Machine contract language with the open-source RISC-V instruction set architecture. This, he argued, would address long-term scaling bottlenecks like keeping block production competitive and enhancing the efficiency of zero-knowledge EVM proving—a vital feature that enables off-chain computation and verification of transactions.

Buterin theorized that implementing the said proposal could, in limited cases, generate efficiency gains of over 100x.

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Why It Matters: Buterin’s proposal comes at a time when the Ethereum base layer was battling a sharp dip in transaction activity and fees.

According to Etherscan, ETH’s average transaction fees have slipped to levels not seen since May 2020. Typically, this happens due to low network demand.

Since a portion of the transaction fees is burned to add deflationary pressure to ETH, the drop in fees resulted in a lower number of ETH removed from circulation and, subsequently, inflation, according to Ultrasound Money.

Analysts interviewed by Benzinga attributed this to the rise of Layer-2 blockchains and the Dencun Upgrade, which significantly reduced transaction costs on L2s. This resulted in on-chain activity being diverted away from the Ethereum foundation chain.

Price Action: At the time of writing, Ethereum was exchanging hands at $1,644.66, up 3.28% in the last 24 hours, according to data from Benzinga Pro. Year-to-date, the coin has plunged more than 50%.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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