Table of Contents
- Key Takeaways
- 1. Background – Ethereum R1 Launches as Rollups Are Clearly Not on the Same Page
- 2. Takeaway - The First Nonprofit Rollup Introduced, but Sustainability Remains a Concern
- 2.1 Ethereum R1: A Bold Challenge from a Non-Profit Rollup
- 2.2 Infrastructure Projects Are a Marathon, Not a Sprint
- 3. Resource
Researcher
Related Projects
Key Takeaways
Ethereum has been promoting a rollup-centric scaling strategy, leading to the emergence of various rollup projects. However, most of these projects pursue profit-driven goals and their own tokenomics, resulting in fragmentation and competition rather than collaboration. In this landscape, a nonprofit and neutral rollup project called "Ethereum R1" has emerged to uphold Ethereum’s philosophy.
R1 is funded solely through donations without its own token and operates with community-centered governance, excluding centralized control. Technically, it meets Stage 2 rollup standards from launch and differentiates itself from existing rollups by inheriting Ethereum’s security and neutrality through an open-source foundation.
However, the nonprofit model raises concerns about long-term sustainability. Passion and ideals alone may not be enough to overcome challenges in funding, staffing, and operations. Without substantial support, leadership, and a functioning operational structure, the project could falter. Nevertheless, it is worth watching how it continues to evolve.
1. Background – Ethereum R1 Launches as Rollups Are Clearly Not on the Same Page
“‘Not on the same page’ refers to a situation where people appear to share the same circumstances or goals on the surface, but in reality, they have different thoughts or intentions.”
The expression ‘Not on the Same Page’ is a fitting description of the current ‘Warring States era of rollups’ unfolding within the Ethereum ecosystem. Ethereum proposed a rollup-centric roadmap as a solution to scalability issues, and following that, numerous rollup projects emerged. On the surface, it appeared that Ethereum’s strategy was succeeding, with all parties seemingly united toward the shared goal of scaling Ethereum.
However, cracks began to form when it became clear that most rollup projects were led by for-profit companies. Today, many Ethereum rollups operate centralized sequencers and rely on rollup fees as a primary revenue source. Notably, projects like Optimism and Arbitrum have built their own rollup frameworks and generate revenue through profit-sharing models.
For instance, Optimism receives shared revenue from blockchains using its OP Stack. As of October 2024, 39 blockchains—including Base and Unichain—participate in the so-called "Superchain" ecosystem, which follows a standardized revenue-sharing model. This has funneled 15,673 ETH (over $40 million) into the Optimism Collective, which manages ecosystem governance. Arbitrum, too, shares revenue within its Orbit Chain ecosystem through the Arbitrum Expansion Program (AEP).
The issue lies with rollup projects that haven't developed their own rollup frameworks like Optimism or Arbitrum. Many of them must rely on Ethereum for settlement and data availability layers without a clear revenue model, incurring fixed operational costs. Since sustainability is unachievable without revenue, these rollups have started issuing their own tokens and designing independent tokenomics to establish income streams. Projects like zkSync and StarkNet have also joined this trend by launching their own tokens.
Thus, while Ethereum rollups emphasize their integration with Ethereum from a system standpoint, they are gradually pursuing economic independence. Though they appear to cooperate on the surface, in reality, they are building standalone profit models for survival.
This trend isn’t entirely negative. Rollup projects need financial autonomy to maintain development and ongoing operations. The problem, however, is that their focus seems to be shifting more toward revenue generation than on Ethereum’s scalability mission. For example, Optimism has granted significant subsidies to expand its ecosystem, and some emerging rollups have switched frameworks based on where they could earn more, such as Swell moving from Polygon to the OP Stack and Manta adjusting its strategy.
As this trend continues, rollup projects are increasingly diverging from Ethereum, and the original goal of scaling Ethereum is being deprioritized. Meanwhile, the rollup ecosystem has grown more fragmented and complex. This concern has also been raised within Ethereum itself. Some developers commented in a Cointelegraph interview that “most L2s today act more like new L1s than Ethereum scaling solutions — with token launches, distributions, opaque governance, and centralized control.” This criticism highlights how rollups, originally intended as tools to scale Ethereum, are now operating as independent platforms, drifting away from Ethereum’s core philosophy.
It is within this context of growing concern that Ethereum R1 has emerged. R1 was launched with a clear stance against relying on token distribution or opaque governance. Rather than being just another rollup, it represents a movement to re-center the original values and philosophy that Ethereum has long pursued at the heart of rollup development.
2. Takeaway - The First Nonprofit Rollup Introduced, but Sustainability Remains a Concern
2.1 Ethereum R1: A Bold Challenge from a Non-Profit Rollup
“General purpose L2 should be commodity — simple, replaceable, and free from risky governance or centralized dependencies.”
Ethereum R1 is a new rollup project that aligns closely with Ethereum’s core principles. It is designed and operated solely by the community, without any foundation or investors. It avoids centralized governance and dependence on specific brands, aiming instead to create a true public good for Ethereum.
2.1.1 Donation-Based Funding
Source: ethereumr1.org
R1’s most defining feature is its 100% donation-based funding model. It will not issue a token in the future, and it raises funds solely through public $ETH contributions—without VC investment or any related token sales. All donations are conditional: if R1 fails to raise at least 1,000 $ETH by September 1, 2025, or fails to deliver development milestones according to its roadmap, the full amount will be refunded.
2.1.2 A Distinct Technical Starting Point
Technically, R1 starts from Stage 2 of rollup development. The concept of dividing rollups into stages was proposed by Vitalik Buterin, and each stage has the following characteristics:
Stage 0: The ‘full training wheels’ stage, where the rollup operates independently and posts transaction data to Ethereum, but state validation is conducted by a centralized operator. Without a proof system, user asset protection is limited, and there is a risk of asset loss in case of operator mistakes or malicious actions.
Stage 1: In the ‘limited training wheels’ stage, smart contract-based governance is introduced to reduce the operator’s authority, and either fraud proofs or validity proofs are enabled. A Security Council exists to intervene in emergencies, and user protection mechanisms like withdrawal delays are enhanced.
Stage 2: The ‘no training wheels’ stage signifies full decentralization, where all operations are automated via smart contracts and anyone can submit proofs in a permissionless environment. The Security Council only intervenes in case of critical failures, and users are guaranteed strong asset security.
Source: L2beat | Base
To reach each stage, rollups must complete specific development milestones, which can be reviewed on L2beat.
Ethereum R1 starts off by meeting the criteria for Stage 2 and adopts a based sequencing structure to maximize censorship resistance and survivability. This method delegates transaction ordering to Ethereum block producers and validators, allowing the rollup to leverage Ethereum's security and neutrality without relying on a centralized sequencer. Currently, Taiko and Puffer Unifi are also using this approach.
Source: Nethermind
The technical design of Ethereum R1 is based on the open-source stack from Taiko and Surge by Nethermind. Surge Rollup is a rollup template built on the Nethermind client, designed from the outset to be decentralized and capable of demonstrating high-performance throughput at the gigagas level. It provides a trustless scalability framework that aligns with Ethereum’s principles and is also designed as open-source infrastructure for experimentation and research.
Source: Taiko Mirror
Surge is built by modifying and extending Taiko Alethia stack. While it retains key components from Taiko—such as based sequencing and multi-proof logic—it is customized to meet specific performance and architectural goals. Surge integrates tightly with the Nethermind client to achieve gigagas-level performance, implements a Stage 2 security model, enforces 100% base fee burning, and includes features like multi-prover consensus. The Surge Taiko Mono repository on GitHub illustrates this technical alignment and design philosophy.
Built on Taiko’s open-source stack, Surge includes the following key features:
Based Sequencing Implementation
Unlike conventional rollups that rely on centralized L2 sequencers, Surge employs a based sequencing model where transaction ordering is directly determined on Ethereum L1. This leverages the Proposer-Builder Separation (PBS) pipeline, enabling Ethereum validators and block builders to order transactions, thereby inheriting Ethereum’s decentralization and censorship resistance.
Stage 2 Rollup at Launch
Surge achieves Stage 2 rollup architecture (as defined by L2BEAT) from the launch of its testnet. This includes a fully functional proof system and state validation without the need for a security council. While most rollups progress gradually through Stage 0 or 1, Surge sets itself apart with a trust-minimized model grounded in the “Code is Law” philosophy from the beginning.
$ETH-Only Fees and 100% Base Fee Burning
Surge uses only $ETH for rollup fees, ensuring the system operates without issuing its own token. To preserve Ethereum’s economic model and deflationary mechanism (EIP-1559), 100% of base fees are burned. This eliminates governance issues and incentive distortions (e.g., speculation, power concentration) often tied to token-based models. It strengthens the rollup’s alignment with Ethereum and positions Surge as public infrastructure rather than a profit-seeking entity.
Gigagas Throughput
Surge targets processing performance exceeding one billion gas units per second—referred to as gigagas-level throughput. This is made possible through optimizations in the Nethermind execution client, including flat database layout, tuning of cache and buffer sizes, disabling compression/checksums, memory-mapped reads, peer count adjustments, increased threading, and more. Running Surge requires high-performance hardware with over 350GB of RAM and advanced SSDs.
Source: ethereum R1 X
Although Ethereum R1 uses Surge—which aims to burn 100% of base fees—the project adopts a model where 1% of base fees are allocated to the Taiko DAO as open-source contribution rewards until 2030, with the remaining 99% being burned.
2.1.3 R1 Roadmap and Project Execution Approach
Governance, often cited as a problem in existing rollup projects, is being designed for composability and neutrality. Ethereum L1 participants are given real upgrade authority, and developers, app teams, and $ETH holders can all participate in their own ways. All meetings and discussions are made public, and weekly meetings are open to anyone via the official Telegram. Early contributors are driving the roadmap by assuming various roles within the community.
Currently, R1 is in ‘Stage 0: Formation & Specification’ of its self-declared roadmap. In this phase, three key deliverables are released each week:
A specification for Ethereum-aligned rollup governance
A complete specification of the R1 technical stack
A detailed development timeline and budget plan
Once Stage 0 is successfully completed, the project will move into ‘Stage 1: Active Development,’ where implementation begins in earnest, including the launch of a development rollup network.
2.2 Infrastructure Projects Are a Marathon, Not a Sprint
One concern is that this project is being run 100% non-profit. While it began with a clear mission to resist profit-driven models and address the problems they cause, sustainability remains the key issue.
Open-source software or nonprofit projects often attract passionate contributors early on with clear ideals and goals, leading to rapid growth. However, over time, they face challenges with funding, manpower, and operations, which can weaken momentum and sometimes lead to downsizing or dissolution. The gap between ideal goals like social value or technological innovation and practical needs like securing funding or managing an organization isn’t easily bridged. Passion alone can’t ensure long-term maintenance, personnel management, or financial stability.
Source: openoffice.org
For instance, OpenOffice.org was once seen as a strong alternative to Microsoft Office. But after Oracle acquired it, financial support declined and tensions with the community escalated. As a result, key developers left to start LibreOffice. Although the project later moved to the Apache Foundation, it lost momentum due to a lack of resources, reduced contributions, and licensing issues, and it eventually fell behind newer cloud-based tools. This example shows that even the most idealistic open-source projects can’t survive without a practical foundation.
Ethereum R1 has chosen to operate entirely on donations, without issuing a token, grounded in a philosophy of treating Ethereum as a public good. However, contributions with no reward often lose momentum over time. Support from the Ethereum Foundation or other rollup projects would be ideal, but as of now, there is no official announcement. Operational risks also remain.
In addition, without effective leadership, work can become scattered, decision-making inconsistent, and the project may stall. In fact, on May 6, Taiko founder Daniel Wang publicly expressed frustration over a move to revoke the 1% base fee contribution R1 had pledged to the Taiko DAO. This was driven by a vote held in the official Ethereum R1 Telegram channel. Wang emphasized that Taiko doesn’t depend on this fee to survive but argued that revoking it undermines R1’s credibility and commitments. He also noted that Taiko itself donates 1% of its own revenue to the Protocol Guild to support the Ethereum ecosystem.
A related concern was raised about the legitimacy of Telegram-based decision-making, since the platform is vulnerable to Sybil attacks—where a single entity creates multiple fake identities to manipulate votes. This raises questions about whether Telegram is an appropriate protocol for formal governance decisions.
In this context, at minimum, clear coordination and defined operational protocols are essential. No matter how idealistic a project’s goals may be, without a practical operational base, it may eventually fail to deliver results and simply refund its collected $ETH. Fortunately, contributions from key figures and communities like Vitalik Buterin, Taiko, and Nethermind are planned, and internal coordination between core contributors and general participants is in place, offering a degree of stability.
At a time when many new rollups are arguably posing a threat to Ethereum itself, Ethereum R1 represents a rare idealistic initiative within the community. Whether it can strike a balance between idealism and realism and sustain itself as a true public good will be something worth watching—especially for those of us in the crypto and blockchain space.
3. Resource
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