Ethereum's ENS identity system scraps planned rollup amid Vitalik's warning about layer-2 networks

ENS$5,7745 has decided not to move forward with Namechain, a planned layer-2 rollup, marking another high-profile shift away from the once-dominant narrative that Ethereum’s future would be built primarily on L2s.

Instead of launching its own rollup, ENS will now deploy its long-awaited ENSv2 upgrade exclusively on the Ethereum mainnet, citing dramatically lower gas costs and a broader change in Ethereum’s scaling philosophy. According to ENS founder and lead developer Nick Johnson, the original rationale for launching a bespoke rollup no longer holds.

“The landscape has changed between when we first decided to pursue an L2,” Johnson said in an interview with CoinDesk. Two years ago, high gas prices made rollups the “official trajectory,” but Ethereum’s base layer has since scaled to the point where transaction costs are sustainable.

ENS is a blockchain-based naming system that replaces long Ethereum wallet addresses with human-readable names ending in “.eth.” Instead of sending funds to an address like 0x4cbe58c50480, users can send crypto to a name such as alice.eth, which can also be linked to wallets and social profiles. ENS gained popularity as Ethereum usage grew, becoming a core piece of Web3 infrastructure for users seeking simpler identity and payments.

The move comes after Ethereum’s renewed emphasis on scaling layer 1 itself, a pivot championed by Ethereum co-founder Vitalik Buterin. Johnson described the moment Ethereum committed more to L1 scaling and less to an L2 trajectory as the real inflection point, adding that while L2s still make sense in some contexts, their cost-saving advantage is now “a lot less compelling than it used to be.”

Read more: 'You are not scaling Ethereum': Vitalik Buterin issues a blunt reality check to the biggest crypto networks

'Trajectory change'

ENS’s own architecture further complicated the case for a rollup.

Unlike decentralized exchanges or games that can deploy across multiple chains, ENS requires a single registry for names. “Building that cross-chain adds complexity and sort of reduces the effectiveness of a chain,” Johnson said, making the simplicity of staying on Ethereum increasingly attractive.

The move comes amid a broader reassessment of the L2 ecosystem, which exploded over the past two years as dozens of Ethereum-aligned networks launched.

Johnson expects that space to contract. “This trajectory change… does mean that the L2 space is going to be a lot smaller than we thought it was going to be,” he said, predicting a split between commodity, Ethereum-like rollups competing on fees and throughput, and more specialized L2s with fundamentally different execution models.

ENSv2 itself, the bulk of what the team has been building, will still move forward. The upgrade is a ground-up rewrite of ENS’s contracts and architecture, designed to improve usability, flexibility and developer tooling, and will roll out directly on Ethereum mainnet rather than Namechain. Part of that will include making it easier to manage multiple .eth names.

Read more: Ethereum's ENS Identity System Set to Launch Own Layer-2 Blockchain