Ethereum’s creators are pushing a modern way to unify the ecosystem after years of fragmentation caused by networks designed to scale it.
On Sunday, veteran Ethereum developer Gnosis and zero-knowledge virtual machine project Zisk unveiled the Ethereum Economic Zone (EEZ), a platform aimed at tying Layer 2 rollups more closely to the core network.
The proposal positions Ethereum as the central hub, with Ether (ETH) remaining the gas token and settlement layer. It also introduces a model in which clever contracts can interact between mainnet and EEZ collections with atomic execution.
The initiative comes as Ethereum re-evaluates its rollup-centric roadmap. As operations moved to a Tier 2 network, much of the economic value shifted away from the Core Tier. Rollups rely on Ethereum for security and final settlement, but in practice they end up capturing user fees and revenue, which some critics have in mind described as “parasitic”.
Similar attempts to unify fragmented blockchain ecosystems have been made before, with varying degrees of success.
Ethereum fragmentation problem
In the latest bull trend in the cryptocurrency market, ETH’s performance has disappointed many of its holders. Last August, it set a modern all-time high near $5,000, but that was only a marginal jump from its previous peak. It failed to keep pace with Bitcoin (BTC), which soared above $120,000.
Many attributed Ethereum’s weaker performance to liquidity fragmentation and a congested Layer 2 network. According to L2BEAT, 23 rollups contributed a total of $30.77 billion on Tuesday, according to L2BEAT.
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“Ethereum doesn’t have a scaling problem. It has a fragmentation problem,” said Friederike Ernst, co-founder of Gnosis, 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 supposed to do the opposite. One Ethereum, not a hundred islands.”
In practice, this liquidity remains largely muted within individual collective holdings, each of which has its own DeFi ecosystem. The result resembles a collection of parallel economies rather than a single market.
Bankless co-founder Ryan Sean Adams compared the current state of Ethereum and its L2 to the North Atlantic Treaty Organization (NATO), describing it as “a loose alliance of chains that advocate for shared security.”
An EEZ would shift this structure towards a federal chain economic union – similar to the United States and its 50 states – without the need for a strenuous fork.
“I haven’t seen much movement on this vision so far,” Adams said.
The proposal mainly affects three groups. First, in the case of Ethereum, it could improve the flow of liquidity in the ecosystem by reducing the reliance on bridges, which remain a major attack surface as funds are locked in contracts and vulnerable to exploits.
Secondly, for users, EEZ aims to enable seamless movement between Ethereum and its collective holdings by reducing friction and the cost of moving assets. Users can do this without the need for constant bridging.
Finally, for protocols, it eliminates the need to manage bridges, wrapped assets, and chain-specific implementations, simplifying operations across the ecosystem. According to to the FEZ.
Ethereum isn’t the first company to try out an ‘economic zone’
An example of an economic zone already exists. It was the “Atomic Economic Zone” (AEZ). An attempt to connect chains through space through a hub-and-spoke model based on “Interchain Security”. Networks could lease security from Cosmos Hub in exchange for sharing fees and reward staking with ATOM holders.
The concept gained attention again after the announcement of the exclusive economic zone, which involved the first Cosmos collaborator, Zaki Manian noticing that a similar idea introduced in 2023 was not successful.
“Most things fail and the ecosystem inevitably fails [becomes] littered with the corpses of failed projects, which inevitably leads to a lack of trust in the project as a whole” – Manian he said.
Blockchain researcher Dankrad Feist questioned how this experience applies to the economic zone proposed by Ethereum. Manian responded that many projects within the EEZ are also likely to “fail.”
“Atom’s experience is that the wider society will interpret this as a failure of the EEZ,” Manian added.
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Space is not exactly Ethereum. It is a framework and a 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 rollups are structurally dependent on Ethereum for settlement and security, aligning their incentives with the underlying layer.
Gnosis co-founder Martin Köppelmann weighed in on Feist and Manian’s discussion, refuting the comparison. It developed EEZ based on synchronous composition and access to Ethereum state, rather than shared security or revenue models.
The trade-off is that rollups must follow occasional reorganizations of the Ethereum chain, which adds complexity, but Köppelmann described these events as sporadic and manageable compared to the benefits.
“So yes, I’m happy to bet on EEZ’s success!” he added.
EEZ is gaining popularity as Ethereum rethinks its scaling strategy
Ethereum’s rollup-centric roadmap was widely seen as necessary when it was first introduced, and it has indeed achieved its goal of reducing network congestion.
This could come at a price. Some market watchers argued that this dampened a key opportunity for price gains 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).
This also follows criticism from Ethereum co-founder Vitalik Buterin, who stated that many L2s have not fully transitioned to a decentralized model.
“The original vision of L2 and their role in Ethereum no longer makes sense and we need a new path” – Buterin he said in February post X.
While Ethereum’s shift towards base layer scaling has been recent, it has been a long time coming in the FEZ. An early version of this idea was described by Bankless co-founder Adams as the “Ethereum 3.0 vision” after listening for Köppelmann’s presentation on native rollups in 2024.
WSE has gained widespread attention thanks to the support of the Ethereum Foundation and its development team, which includes Gnosis, known for building a secure multisig wallet and early prediction market infrastructure.
EEZ has not yet revealed key details such as technical architecture and performance benchmarks, but says these will be released in the coming weeks.
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