In a June 9, 2023 post on his website, Ethereum co-founder, Vitalik Buterin outlined the three major technical transitions that the Ethereum protocol must undergo to offer an open, global, and permissionless experience to the average user.

According to Buterin, the three simultaneous transitions for Ethereum are; the Layer 2 (L2) scaling transition, the wallet security transition, and the privacy transition. Buterin says that intense coordination requiring deep changes from applications and wallets is required to achieve these transitions.

Buterin points out that smart contract wallets make the keeping of one address more difficult since some L2 blockchains are not compatible with Ethereum Virtual Machines (EVM), yet privacy may require each user to have even more addresses. The EVM is software that executes smart contracts and updates Ethereum Network after a new block is added to the chain.

Buterin says that since many users’ funds are stored in the same smart contract and hence at the same address, apps that rely on the assumption that address ownership is immutable will have to find alternative ways to achieve this goal.

For key recovery, Buterin proposes that instead of running the recovery procedure on each address separately, the wallet can include software to execute the recovery procedure across all of a user’s addresses at the same time.

However, considerations still need to be made on gas cost implications and privacy concerns over publicly linking all addresses by recovering them at the same time and hence proposes the use of an architecture that separates verification logic and asset holdings.

Buterin says that overcoming the above challenges requires lots of secondary infrastructure to be updated and wallets interacting with spending and encryption keys will have to be improved.

Buterin gives an example of the Ethereum Name Service (ENS) that makes it a lot easier for regular users to minimize the possibility of using a wrong wallet address mistake considerably but is expensive. To enhance its use, Buterin says that ENS subdomains are now automatically verifiable on L2 blockchains.

Buterin says that although wallets are essential for securing assets, they also hold user data. Holding a single encryption key could resolve the protection of user data, however losing your encryption key, still results in loss of assets.

However, to avoid users having multiple recovery paths, Buterin proposes that wallets will likely need to manage both the recovery of assets and encryption keys.

Buterin further proposes that any chosen design should maintain decentralization while at the same time offering easy access to users’ assets using open and not proprietary solutions.

Buterin says that achieving the three technical transitions is crucial and Ethereum must rise to the challenge for improved user experience and to attain a sustainable future.