Ethereum has long been the backbone of decentralized applications, but its success also brought challenges: network congestion, high gas fees, and scalability bottlenecks. This is where Layer 2 (L2) solutions step in, offering faster, cheaper, and more efficient transactions—while still anchored to Ethereum’s security.

Recently, Ethereum co-founder Vitalik Buterin praised the L2 platform Base for its approach to decentralization. His comments shed light on how modern rollups and sequencers work, and why regulators, developers, and users should pay close attention to this rapidly growing ecosystem.

What Are Layer 2 Solutions?

Layer 2s are protocols built on top of Ethereum that process transactions off-chain before settling them on the mainnet. By doing so, they:

• Reduce gas fees

• Increase transaction throughput

• Maintain security by leveraging Ethereum’s base layer

The most common type today is the rollup, where transactions are bundled (or “rolled up”) and submitted to Ethereum as a single batch. Optimistic rollups and zero-knowledge (ZK) rollups dominate the field, each with trade-offs in efficiency, finality, and complexity.

Base and the Debate Around Sequencers

Buterin highlighted that Base—an L2 backed by Coinbase—strikes the right balance between usability and decentralization:

“Base does everything right: it uses centralized functions to improve user experience while staying connected to Ethereum for security.”

Critics of L2 platforms often focus on sequencers, the components that order transactions before submitting them to the main chain. Because many sequencers are operated by a single entity, some argue they resemble centralized exchanges (CEXs).

This concern recently resurfaced when SEC Commissioner Hester Peirce warned that if a single operator fully controls transaction ordering, regulators may view such systems more like trading platforms than infrastructure.

However, Coinbase’s Chief Legal Officer Paul Grewal pushed back on this comparison. He argued that L2 sequencers simply process messages and smart contract calls, not order books or trade matching. Comparing them to exchanges, he said, is like calling Amazon Web Services (AWS) a stock exchange just because trading apps run on its servers.

Why Sequencers Are Different

Sequencers don’t match buyers and sellers. Instead, they act like traffic coordinators, ensuring transactions flow smoothly and efficiently. Users also retain the option to interact directly with Ethereum, bypassing sequencers altogether. This distinction is crucial for both decentralization and censorship resistance.

As Base’s Jesse Pollak explained:

“It’s like a traffic regulator who ensures a smooth flow in the fast lane—helping transactions get processed faster, without replacing Ethereum’s foundational rules.”

The Bigger Picture

The debate around sequencers is part of a broader conversation about how decentralized L2 solutions need to be to maintain Ethereum’s values while also delivering real-world usability.

• Developers see L2s as extensions of Ethereum, not replacements.

• Regulators are cautious, watching closely to ensure these systems don’t evolve into unregistered exchanges.

• Users, meanwhile, are voting with their wallets: in August, Base even surpassed Solana in the number of daily token deployments.

Conclusion

Layer 2 solutions are no longer experimental—they are becoming the backbone of Ethereum’s scalability. While questions remain about decentralization, governance, and regulation, projects like Base demonstrate that it is possible to combine user-friendly infrastructure with Ethereum’s security guarantees.

As Vitalik Buterin emphasized, L2 platforms are not custodial services: they don’t control or block user funds. Instead, they represent a critical step toward scaling Ethereum into the mainstream without sacrificing its core principles.

For developers and businesses looking to integrate with this growing ecosystem, services like NOWNodes already provide reliable API and node access to multiple Layer 2 networks, making it easier to build on the future of Ethereum.