Is Vitalik Buterin Planning to Introduce Harberger Tax on Ethereum Layer 2 Blockchains?

Vitalik Buterin, the co-founder of Ethereum, recently proposed the idea of implementing a Harberger tax on layer 2 blockchains. This suggestion arose in response to the growing calls for the Layer 1 network to introduce L2 fees to establish an economic equilibrium. These fees are intended to serve as payments to the L1 for the security and network benefits they receive from being connected to Ethereum.

Buterin emphasized that the Harberger tax could be a viable option due to its potential for capturing value that scales with economic activity and its minimal surveillance requirements. However, he acknowledged the challenges that such a tax could present for L2 networks, as it contradicts their goal of ensuring stability for users and applications. The Harberger tax model involves continuous payments based on the value of these Layer 2 crypto projects, which could disrupt the ecosystems of these networks, particularly when they attempt to undervalue themselves to avoid taxes.

In light of these concerns, Buterin proposed an alternative approach to address the issue of fees on Ethereum Layer 2 networks. He suggested the creation of a “maximally-neutral-L2 proof aggregation layer” that would be responsible for admitting Layer 2 networks that pay fees to the Layer 1 network. This mechanism would be optional, allowing Layer 2s to choose whether to join this aggregation layer and pay the required fees or continue paying the existing 500,000 gas per proof.

While Buterin expressed some uncertainty about the effectiveness of this plan, he viewed it as a necessary step in establishing a fee mechanism for layer 2 blockchains. He highlighted that this aggregation layer would be permissionless to build, providing flexibility for the networks involved.

Additionally, Buterin recently stated his criteria for publicly supporting Layer 2 projects, indicating that he would only endorse those that have reached stage 1 or higher in development. This support policy applies universally, irrespective of personal investments or associations.

At present, the price of Ethereum (ETH) stands at approximately $2,400, reflecting a 3% increase over the past 24 hours. Trading volume has also seen a notable uptick, rising by over 27% during this period. Concerns have been raised about the alleged selling of ETH by the Ethereum Foundation and Vitalik Buterin, contributing to the ongoing scrutiny surrounding Ethereum’s price performance.