Ethereum EEZ and the attempt to rebuild an Ethereum
Ethereum developers are pushing a new path to unify the ecosystem after years of fragmentation due to networks designed to expand it.
On Sunday, veteran Ethereum developer Gnosis and zero-knowledge virtual machine project Zisk announced Ethereum's Economic Zone (EEZ), which aims to further connect Layer-2 blockchains to the core network.
The proposal places 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 with atomic execution on the mainnet and EEZ packages.
The move comes as Ethereum reevaluates its package-oriented roadmap. After moving traffic to layer-2 networks, most of the economic value has moved away from the base layer. Rollups rely on Ethereum for security and final settlement, but in practice it also handles user payments and revenues, a relationship some critics have called “dependent.”
Similar attempts to unify fragmented blockchain ecosystems have been attempted in the past, with mixed results.
Ethereum split problem
During the last crypto bull run, ETH's performance disappointed many of its holders. It set a new all-time high of nearly $5,000 last August, but it was a slight jump from the previous peak. It couldn't keep up with Bitcoin (BTC), which soared above $120,000.
Many attributed Ethereum's poor performance to liquidity fragmentation and the proliferation of layer-2 networks. On Tuesday, 23 stocks earned a combined $30.77 billion, L2BEAT reported.
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“Ethereum doesn't have elasticity. It has fragmentation,” said Friedrich Ernst, co-founder of Gnosis, in a statement with Cointelegraph. “Each new L2 is another enclosure starting with its own liquid pool and its own bridge.”
she added.
The EEZ was designed to do the opposite. One Ethereum, not a hundred islands.
In practice, that level of liquidity is maintained silently on individual coils, each with its own dedicated Diffie ecosystem. The result appears to be a collection of parallel economies rather than a unified market.
Bankless founder Ryan Sean Adams compared the current state of Ethereum and its L2s to the North Atlantic Treaty Organization (NATO), describing it as a “coalition of chains that choose common security.”
The EEZ would transform that structure into a federal economic chain similar to the US and its 50 states without the need for a hard fork.
“I haven't seen much movement on this vision yet,” Adams said.
The proposal will mainly affect three groups. First, for Ethereum, it can improve liquidity across the ecosystem by reducing reliance on bridges as funds are locked up in contracts and exposed to exploitation.
Second, for users, the EEZ aims to enable seamless movement between Ethereum and its bundles by reducing friction and the cost of moving assets. Users can do so without the need for constant bridging.
Finally, it eliminates the need to manage bridges, encapsulated assets and on-chain deployments for protocols, simplifying operations across the ecosystem, according to EEZ.
Ethereum is not the first to try an “economic zone”.
An example of an economic zone already exists. The “Atom Economic Zone,” or AEZ, was Kosmos' attempt to connect chains through a hub-and-spoke model built on Interchain Security. Chains can rent security from Cosmos Hub to share payments and exchange rewards with ATOM owners.
The concept has attracted renewed attention following the EEZ announcement, with early Cosmos contributor Zaki Manian saying that a similar proposal introduced in 2023 had not met with success.
“Most things fail and so the ecosystem is inevitable. [becomes] The corpses of failed projects are littered and this leads to a general lack of confidence in the project,” Manian said.
Blockchain researcher Dankrad Fest questions how that experience applies to Ethereum's proposed economic zone. Manya responded that many projects to be built within the framework of the EEZ “could fail”.
“Atom's experience is that the general public will interpret this as a failure of the EEZ,” Manian added.
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Cosmos is not very ethereum. It is the framework and network 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 packages align their incentives with the base layer and are structurally dependent on Ethereum for settlement and security.
Gnosis co-founder Martin Kopelman pushed back on the comparison and entered the discussion of Fest and Mania. Rather than shared security or revenue models, he designed the EEZ around synchronous integration and access to the Ethereum realm.
Rewards add complexity following Ethereum's occasional chain reorganization, but Kopelman notes that those events are infrequent and manageable compared to the benefits.
“So yes, I'm happy to bet on EEZ's success!” He added.
EEZ also finds congestion
When Ethereum's packet-based roadmap was first introduced, it was widely seen as necessary and achieved its goal of easing network congestion.
This may have come at a cost. Some market watchers have argued that the opportunity for a key price rally during the last bull cycle has been delayed. They also warn that Ether may lose its position to the second largest cryptocurrency from Tether (USDT).
It also follows criticism from Ethereum founder Vitalik Buterin, who said that many L2s have not fully transitioned to a decentralized model.
“The first vision of L2s and its role in Ethereum no longer makes sense, and we need a new way,” Buterin said in a February X post.
Although Ethereum's push to scale back its base layer is recent, EEZ has been a long time coming. An early version of the idea was described as the “Ethereum 3.0 vision” by Bankless co-founder Adams after listening to Kopelman's presentation about indigenous collections in 2024.
EEZ has gained widespread attention thanks to support from the Ethereum Foundation and its development team, including Gnosis, known for building a secure multisig wallet and early prediction market infrastructure.
EEZ has not yet released key details such as technical architecture and performance parameters, but said these will be published in the coming weeks.
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