On September 23, Vitalik Buterin suddenly intervened in the controversy surrounding the Base network incubated by Coinbase, clearly supporting the non-custodial security of this Layer 2 solution. He pointed out, "Base’s approach is correct: as an L2 on Ethereum, it utilizes centralized features to provide a better user experience while still relying on Ethereum’s decentralized base layer for security."
However, the market did not respond positively to this. Just two days later, on September 25, Ethereum price Fell below the key support level of 4000 dollars, with a drop of more than 4% during the day, marking the first time since August 8.
01 Buterin’s Layer 2 security theory
Vitalik Buterin’s involvement in the Layer 2 debate is not coincidental. With the rapid development of solutions like Base, concerns about their level of centralization are growing in the community.
Buterin clearly stated on the X platform that Base and other true Layer 2 solutions are "non-custodial," meaning they cannot steal or prevent users from withdrawing funds.
He emphasized that even if Layer 2 operators fail, the contract logic of Ethereum can ensure a smooth exit path. This is fundamentally different from merely "glorified servers that happen to submit hashes."
Practical verification of security mechanisms
Buterin’s views have been validated in real events. He mentioned the evaluation framework of the L2Beat platform, which is not an "ideological purity test," but rather concrete user protection measures.
In dYdX During the v3 shutdown, users accessed over 70 million USD of trapped funds through StarkEx’s built-in "Escape Hatch" system, with 30 million USD successfully withdrawn via L2Beat’s open-source interface.
Another example is Sony’s Soneium network, where the company attempted to mask "unapproved" tokens at the RPC layer, and developers bypassed the sorter by directly forcing transactions to the Ethereum main chain.
These cases show that even if Layer 2 operators behave improperly, users still have reliable ways to protect their assets.
02 The market response is lukewarm, ETH falls below key support.
Despite Buterin’s technical assurances, the market still shows great uncertainty. According to CoinMarketCap data, as of September 25, the price of Ethereum has fallen below $4000, down over 4% on the day.
This fall is not an isolated event. As early as September 23, ETH showed signs of decline, with a price of $4195.92, down 3.34% within 24 hours. Market data shows that the high point for ETH at that time was $4643.97, with a low of $4130.17.
Chain Reaction and Market Volatility
The fall in prices triggered a series of chain reactions. In the past 24 hours, $492 million worth of Ether has been liquidated, reflecting the increasing volatility of the market.
At the same time, the total market capitalization of Ethereum has fallen to approximately 506.464 billion USD, a decrease of 17.48 billion USD compared to the previous day.
From a technical analysis perspective, the $4000 level is an important support level. A break below this level may trigger further declines. The cost price for some large holding institutions is close to $3950, which could become a potential support level.
03 The symbiotic relationship between Layer 2 and the Ethereum ecosystem
Buterin’s defense of Layer 2 is not just about technical details, but also about the overall development roadmap of Ethereum. The rollup decentralization model he proposed divides development into multiple stages, with Base currently in stage 1.
At this stage, the security committee can overturn the on-chain code with a 75% voting result. But importantly, Stage 1 requires that at least 26% of the committee members are from organizations outside of the management of L1.
This means that the organization cannot conduct unilateral reviews or steal funds through the security committee vote, so they are not custodians. Buterin also emphasized that the path to Stage 2 is already clear and achievable.
The development trend of the ecosystem
Despite the price fall, the fundamentals of the Ethereum ecosystem remain strong. The total holdings of 68 Ethereum treasury entities have exceeded 5.25 million ETH, accounting for 4.34% of the circulating supply of Ethereum, valued at $22.09 billion.
Large institutions continue to increase their holdings of ETH, indicating confidence in the long-term development of Ethereum. At the same time, Buterin also mentioned the upcoming Fusaka upgrade, which will enable blockchain operations without the need to download complete data from a single node through PeerDAS.
These developments indicate that, despite short-term fluctuations in market prices, the infrastructure construction of Ethereum is still advancing rapidly.
04 Investment Strategies Under Price Volatility
In the face of market fluctuations, investors need to pay more attention to risk management. The price of Ethereum fluctuates in sync with weekly random indicators, and extreme highs should be treated with caution regarding risks.
The main buyers are the treasury companies, but due to the depreciation of asset values, subsequent purchasing power may be limited. Investors should enhance risk management and be vigilant about potential risks during periods of rapid price increases.
Low-risk DeFi stable income strategy
However, Erin suggested in a recent blog post that low-risk DeFi protocols can serve as a stable source of income for the network.
He compared this to Google Search, which generates continuous advertising revenue to support the company’s broader operations.
Basic DeFi services such as stablecoin lending currently offer about 5% yield. Unlike speculative trading or the NFT market, low-risk lending aligns with the decentralized principles of the network while generating continuous fees.
The DeFi ecosystem of Ethereum has shown signs of recovery, with the total value locked in protocols exceeding 100 billion dollars for the first time since early 2022.
Future Outlook
With the upcoming Fusaka upgrade, the Ethereum network will achieve new scalability capabilities. However, in the short term Price trend It still depends on market sentiment and institutional trends. Although the $4000 level has been breached, the $3950 level near the institutional cost price may form new support.
In the coming weeks, investors should closely monitor two key factors: the growth trend of Layer 2 locked assets, and whether the low-risk DeFi advocated by Buterin can provide stable returns for the ecosystem. These fundamental factors may reveal Ethereum’s long-term value more than short-term price fluctuations.
