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Ethereum’s EEZ and the attempt to rebuild one Ethereum

Ethereum builders are pushing a new way to unify the ecosystem after years of fragmentation caused by the very networks designed to scale it.

On Sunday, veteran Ethereum builder Gnosis and zero-knowledge virtual machine project Zisk unveiled the Ethereum Economic Zone (EEZ), a framework aimed at linking layer-2 rollups more tightly to the base network.

The proposal positions Ethereum as the central hub, with Ether (ETH) remaining the gas token and settlement layer. It also introduces a model where smart contracts can interact across mainnet and EEZ rollups with atomic execution.

The initiative comes as Ethereum reassesses its rollup-centric roadmap. After pushing activity to layer-2 networks, much of the economic value shifted away from the base layer. Rollups rely on Ethereum for security and final settlement, but in practice, end up capturing user fees and revenue, a relationship some critics have described as “parasitic.”

Similar attempts to unify fragmented blockchain ecosystems have been tried before, with mixed results.

The Ethereum Economic Zone is the latest to answer to the network’s liquidity fragmentation problem. Source: Ethereum Economic Zone

Ethereum’s fragmentation problem

In the latest crypto bull run, ETH performance disappointed many of its holders. It set a new all-time high near $5,000 last August, but it was only a marginal jump from its previous peak. It couldn’t keep up with Bitcoin (BTC), which flew higher than $120,000.

Many attributed Ethereum’s weaker performance to liquidity fragmentation and the overflow of layer-2 networks. On Tuesday, 23 rollups collectively secured $30.77 billion, according to L2BEAT.

Roughly a quarter of that value has been bridged from Ethereum’s base layer, while more than 45% originated from external blockchains. Source: L2BEAT

“Ethereum doesn't have a scaling problem. It has a fragmentation problem,” Friederike Ernst, co-founder of Gnosis, said in a statement shared with Cointelegraph. “Every new L2 that launches with its own liquidity pool and its own bridge is another walled garden.” 

She added:

The EEZ is designed to do the opposite. One Ethereum, not a hundred islands.”

In practice, that liquidity remains largely siloed on individual rollups, each with its own DeFi ecosystem. The result resembles a collection of parallel economies rather than a unified market. 

Bankless co-founder Ryan Sean Adams compared the current state of Ethereum and its L2s to the North Atlantic Treaty Organization (NATO), describing it as a “loose alliance of chains that opt in to shared security.”

The EEZ would shift that structure closer to a federated economic union of chains — similar to the US and its 50 states — without requiring a hard fork.

“I hadn't seen much movement on this vision until now,” said Adams.

Bankless co-founder said EEZ could allow Ethereum to deliver on its promise. Source: Ryan Sean Adams

The proposal mainly impacts three groups. First, for Ethereum, it could improve liquidity circulation across the ecosystem by reducing reliance on bridges, which remain a major attack surface as funds are locked in contracts and exposed to exploits. 

Second, for users, EEZ aims to enable seamless movement between Ethereum and its rollups by reducing friction and cost of moving assets. Users can do so without the need for constant bridging.

Finally, for protocols, it removes the need to manage bridges, wrapped assets and chain-specific deployments, simplifying operations across the ecosystem, according to the EEZ.

Ethereum isn’t first to try an “economic zone”

An example of an economic zone already exists. The “Atom Economic Zone,” or AEZ, was Cosmos’ attempt to link chains through a hub-and-spoke model built on “Interchain Security.” Chains could lease security from the Cosmos Hub in exchange for sharing fees and staking rewards with ATOM holders.

The concept drew renewed attention following the EEZ announcement, with early Cosmos contributor Zaki Manian noting that a similar idea introduced in 2023 didn’t find success.

“Most things fail and so the ecosystem inevitably [becomes] littered with corpses of failed projects and this inevitably leads to lack of confidence in the project as a whole,” Manian said.

Blockchain researcher Dankrad Feist questioned how that experience applies to Ethereum’s proposed economic zone. Manian responded that many projects building within the EEZ framework are also likely to “fail.”

“The Atom experience is that the broader public will interpret this as a failure of EEZ,” Manian added.

Cosmos is not as big as Ethereum. Source: Zaki Manian, Dankrad Feist

Cosmos is not quite Ethereum. It’s a framework and a networking layer, and the Cosmos ecosystem is a network of sovereign L1 chains.

Meanwhile, Ethereum is a layer-1 blockchain that has a clear hierarchy. Ethereum rollups are structurally dependent on Ethereum for settlement and security, aligning their incentives with the base layer.

Gnosis co-founder Martin Köppelmann pitched in to Feist and Manian’s discussion by pushing back at the comparison. He framed EEZ around synchronous composability and access to Ethereum’s state rather than shared security or revenue models.

The tradeoff is that rollups must follow Ethereum’s occasional chain reorganizations, adding complexity, but Köppelmann described those events as infrequent and manageable compared to the benefits.

“So yeah, I am happy to bet on the success of EEZ!” he added. 

EEZ gains traction as Ethereum rethinks its scaling strategy

Ethereum’s rollup-centric roadmap was widely viewed as necessary when it was first introduced and did achieve its goal of easing the network’s congestion. 

That may have come at a cost. Some market watchers argued it blunted a key price rally opportunity during the last bull cycle. They also warn that Ether risks losing its position as the second-largest cryptocurrency to Tether’s stablecoin, USDt (USDT).

Almost 60% of bettors expect Ether to lose its number-two spot, up from 17% in January. Source: Polymarket

It also follows criticism from Ethereum co-founder Vitalik Buterin, who said many L2s have not fully transitioned to a decentralized model.

“The original vision of L2s and their role in Ethereum no longer makes sense, and we need a new path,” Buterin said in a February X post.

Though Ethereum’s pivot back toward scaling the base layer is recent, the EEZ has been a long time coming. An early version of the idea was described as an “Ethereum 3.0 vision” by Bankless co-founder Adams after listening to Köppelmann’s presentation on native rollups in 2024.

The EEZ has gained widespread attention thanks to backing from the Ethereum Foundation and its development team, which includes Gnosis, known for building the Safe multisig wallet and early prediction market infrastructure.

The EEZ has yet to reveal key details such as its technical architecture and performance benchmarks, but said these will be published in the coming weeks.

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