Vitalik Buterin on The Economic Zone (EEZ) Ep. 642

Vitalik Buterin describes the Ethereum Economic Zone as an effort to rethink what layer 2s are, delivering more integration, more power, and lower cost simultaneously. He argues that current L2s feel like separate EVM chains where the connection to Ethereum is only visible at the branding level, and that the composability property of early Ethereum has effectively disappeared across L2s unless applications happen to sit on the same network. There are now over 200 L2s on Ethereum collectively holding roughly 40 billion dollars in TVL, but fragmentation of liquidity and composability across those networks is the central problem the EEZ is designed to address.

The EEZ uses real-time proofing to enable synchronous composability, meaning smart contracts on different networks can call each other and receive responses within the same 12-second Ethereum block. Existing interoperability solutions such as LayerZero only enable asynchronous cross-chain interaction. Under EEZ synchronous composability, a cross-chain token transfer collapses to a single atomic transaction where the sender's balance decreases and the receiver's balance increases in the same block, eliminating the need for a bridge entirely. A single EEZ transaction can chain arbitrarily complex operations across multiple networks atomically. EEZ blocks on participating networks and Ethereum are created in parallel at the same block height, and if any one chain fails to land its portion, the entire transaction reverts.

Ethereum acts as the lead chain, meaning anything committed to Ethereum is final and cannot be re-orged out of participating L2s. Designating one lead chain is a prerequisite for synchronous composability because if one chain re-orgs, all chains touching that transaction state must also re-org. Censorship resistance is the primary reason Ethereum is considered the best candidate for that role. Ethereum currently re-orgs between three and ten times per day but has not had a re-org deeper than a single block in many years, and a transaction caught in a re-org is likely included in the next block unless it touched state that changed. Proving an Ethereum block currently takes around two to three seconds. Participating networks must have a well-defined state transition function, prove their state in real time, and be willing to re-org if Ethereum re-orgs.

The EEZ project is built by Nosus and Zisk, with Zisk being the proving team led by Jordy Bailina of ZK Hermes and Polygon. The Ethereum Foundation is providing financial support and endorsement but is not the technical builder. Nosus will be the first network to join the EEZ, serving as a guinea pig. Gnosis Chain will move into the EEZ in a limited fashion by end of year, supporting full shared liquidity with Ethereum but only one return call per block rather than infinite nested calls, which is expected to cover approximately 80 percent of use cases. Mainnet contracts are expected to be deployed by end of August, with the project expected to be feature complete approximately nine months after initial deployment.

MEV becomes more powerful in the EEZ because searchers can order transactions across multiple networks simultaneously, though individual chains control their own block construction except for interconnect calls. Interconnect calls represent the primary MEV opportunity on Ethereum mainnet within the EEZ framework. Tightly coupled networks in the EEZ would make arbitrage a single atomic transaction, eliminating bridging risk, and tighter coupling should improve average execution prices for users even if it creates more MEV opportunity at the Ethereum layer. A rough cost hierarchy places a transaction within an L2 at approximately 1 unit, a cross-L2 transaction at approximately 10 units, and any transaction involving Ethereum mainnet at approximately 100 units.

Buterin identifies oracle security as a skeleton in the closet of Ethereum, arguing it lags far behind the rigor applied to L2 security stages. He uses the analogy of reinforced steel doors alongside windows that break after one hammer hit to describe the mismatch between strong L2 security and weak oracle security. He considers improving oracles a higher priority than pushing L2s to stage two, and expects the push to stage two to happen naturally as native rollups and ZKVMs provide it effectively for free. Cosmos, Polkadot, and Avalanche have all attempted similar economic zone or app-chain models without meaningful success, and the main differentiator for the EEZ is that joining gives access to Ethereum liquidity, which is economically much more relevant.

Buterin argues that if the base layer provides too little, interoperability gets captured by centralized providers creating walled garden monopolies. Successful general-purpose rollups like Base, which earns approximately 60 million dollars per year in sequencer fees, are least likely to join the EEZ because they are ecosystems unto themselves. App-chain style rollups like Aztec and Unichain are considered better candidates. The most extreme outcome of the EEZ vision is that Ethereum becomes primarily a proving layer with no real applications living on mainnet. Buterin offers two measures of EEZ success by 2035: at least two high-performance DeFi systems with working deposit, withdrawal, and cross-composability between them, and non-financial L2s with DAOs using one for governance and another for managing internal assets.