Cofounder, Ethereum
Vitalik Buterin on The Economic Zone (EEZ) Ep. 642
In this special episode, we revisit a fireside conversation between Vitalik Buterin and Friederike Ernst at DappCon 2026 in Berlin. They explore the Ethereum Economic Zone (EEZ), a new vision for Ethereum built around synchronous composability, app chains, and real-time proving.
Following the fireside, Sebastien and Friederike break down the ideas behind the EEZ and discuss what this new paradigm could mean for Ethereum's future.
Topics covered include:
• The Ethereum Economic Zone and synchronous composability
• App chains, privacy networks, and prediction markets
• Ethereum as an economic...
About Vitalik Buterin
Vitalik Buterin has been promoting the concept of the Ethereum Economic Zone (EEZ), which he described as a rethinking of layer-2 networks to achieve greater integration with Ethereum at lower cost. He stated that the EEZ allows chains to use Ethereum as an "ultimate economic operating system for the internet." Buterin also discussed the convergence of AI and crypto, arguing that Ethereum should serve as a public data layer and on-chain computation layer for multi-party coordination, rather than a traditional operating system. He emphasized the importance of CROPS (Censorship Resistant, Open Source, Private, Secure) AI, advocating for local models and privacy-preserving techniques such as ZK payments to protect user data when interacting with remote AI services. Buterin has also reflected on the evolution of his own philosophy, describing a shift from "autopilot" to active decision-making and a deeper understanding of crypto's role in preserving human agency. He contrasted the vision of safety offered by centralized powers with the decentralized, empowering safety he believes crypto can provide, stating that "crypto does not have the ability to fix the dollar" but can create alternatives that individuals are free to use. On the Ethereum protocol roadmap, Buterin outlined priorities including quantum safety, account abstraction via EIP-8141, and improvements to block building and privacy, with the goal of making Ethereum maximally robust and easy to verify.
Transcript (72 segments)
F
Fel Ernst0:00
The term Ethereum economic zone obviously does a lot of the heavy lifting here, but what makes it easy in your head? What's it take?
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Vitalik Buterin0:08
I think for me, the core is an effort to rethink what layer 2s are. You get more integration and more power at lower cost. So it's a win-win. The fact that we can allow all these chains to use Ethereum as the ultimate economic operating system for the internet is the most exciting part. This is a very bounded project, not far off in principle.
S
Sebastian Kuchio0:45
Welcome to Epicenter, the show about technologies, projects, and people driving decentralization. I'm Sebastian Kuchio, with co-host Fel Ernst. Today we're diving into EEZ, the Ethereum Economic Zone, a new vision to scale Ethereum and bring an app chain vision tightly coupled with Ethereum as an interoperability and proving layer. We'll get into details, but first a word from our sponsors. This episode is brought to you by Lido. As Ethereum staking evolves, Lido V3 changes the game with staking vaults offering modular staking infrastructure for builders and institutions. Also, Lido Earn offers curated DeFi strategies. Learn more at lido.fi/stvaults.
F
Fel Ernst2:29
I'm good, almost recovered from Berlin Blockchain Week last week.
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Sebastian Kuchio2:33
Berlin Blockchain Week is great, always a pleasure to see the more cypherpunk side of the space. This episode has two parts. First we'll play a fireside chat you did at Dapcon with Vitalik about his EEZ vision. Then we'll discuss it. By the magic of editing, let's go to your fireside with Vitalik.
F
Fel Ernst3:28
Fantastic, Vitalik, thank you for being here. This is the last talk in an easy themed block, so I'll ask for your take.
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Vitalik Buterin3:38
So the next talk will be in a hard block.
F
Fel Ernst3:42
Yeah, medium first then hard. I see, okay.
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Vitalik Buterin3:46
We're still cutting it on the easy side.
F
Fel Ernst3:49
I see. So we'll do a tutorial on circle starks after this.
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Vitalik Buterin3:52
Absolutely. We already heard Martin's, Jordi's, and Philip's take on easy.
F
Fel Ernst3:57
Mhm. The term Ethereum economic zone does a lot of heavy lifting. What makes it easy in your head? Is it an economic thing, a single market, or an economic operating system?
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Vitalik Buterin4:17
For me, the core is rethinking layer 2s to get more benefits and fewer drawbacks. It's about deeper integration with Ethereum, not just a separate EVM chain. Benefits include tight integration with the Ethereum market and user base, less infrastructure responsibility, like with based rollups you don't need your own nodes. You don't need to convince users to create new accounts. Synchronous composability between L2s and better bridging with ZK proofs. So more integration, more power, lower cost. It's a win-win.
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Fel Ernst6:36
That fits super nicely with what Martin said—extending the present, so all zones live in the same now. Jordi said different natured zones extend Ethereum rather than just adding block space. If you think five or ten years in the future, sorting everything that anchors to Ethereum into a few buckets, what are they?
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Vitalik Buterin7:21
Mhm.
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Fel Ernst7:26
Um, what are they?
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Vitalik Buterin7:29
One is privacy, like Aztec and Railgun. I also consider tornado cash and privacy pools as L2s of privacy, not just scalability. Underrated. Second is high TPS for specialized use cases like prediction markets or DeFi. Then having integrated oracles is interesting—oracles are a skeleton in the closet. We need to improve their security. Then ultra-specializing for enterprise use cases, like using proofs to give users guarantees. So there are many directions.
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Fel Ernst11:59
Do you think about chains run by nation states? They're hesitant to put infrastructure on Ethereum. Do you see Ethereum becoming an ultimate settlement layer between nations?
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Vitalik Buterin12:24
It can happen. We've seen government blockchain projects try consortium chains that don't get interesting properties. Four years later they dump NFTs on mainnet, which is more useful. It's use case dependent. Don't attach too many philosophical connotations to being on L1 or L2. It's a technical matter of what you want to be close to, interoperability needs, scalability, privacy. Sometimes EEZ is good, sometimes just dumping NFTs or ERC20s on mainnet and bridging is the solution.
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Fel Ernst14:07
Yeah, absolutely. Looking at Ethereum's development, it chose censorship resistance over speed, cost, recourse. That creates losers because most users just want payments to clear and get money back if scammed. Should the base layer serve users at all, or be neutral ground for other networks to build user experiences?
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Vitalik Buterin15:10
It's a difficult trade-off. Attractive to do minimum on the base layer for trust and security, but if it provides too little, you get capture at higher levels. Interoperability gets captured by centralized providers, leading to walled gardens that don't bring freedom. EEZ is helpful because it creates standards for interoperability between L2s by default.
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Fel Ernst17:22
Cool. Let me ask one last question. If I had a crystal ball that could tell me if a specific network exists in the EEZ in 2035, what network would you ask about to gauge success?
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Vitalik Buterin17:52
Huh? I guess one natural use case is having at least two high-performance DeFi things, like a prediction market or privacy-focused, with easy deposit, easy withdraw, and cross composability between them. Also interesting to see non-financial L2s that integrate governance and asset management.
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Sponsor18:52
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Sebastian Kuchio19:58
Um, so what did you think of that conversation with him? Did you feel he articulated how EEZ benefits Ethereum and the vision well?
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Fel Ernst20:13
Yeah, absolutely. Vitalik is very supportive of the Ethereum economic zone. He hit all the marks.
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Sebastian Kuchio20:21
Yeah, and just to jump off on one point he made—this isn't being actively built by the EF but is supported. Can you talk about who's leading the project and what support you're getting from the EF?
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Fel Ernst20:42
Yes, it's built by us, Nosis and Zisk. Zisk is the proving team around Jordi Bina, who is of ZK Hermes and Polygon fame. The Ethereum Foundation is supporting this financially and endorsing it, which is fantastic. We wanted it to exist for the wider ecosystem, so we built it.
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Sebastian Kuchio21:28
Yeah, it's great they're endorsing it. The EF is focused on many things, so it's cool they're letting Nosis lead with autonomy. You bring experience from building Nosis chain. So let's get straight into it. From your perspective, what is EEZ and the vision?
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Fel Ernst22:19
Absolutely. Back in 2015-2017, the magic of Ethereum was building on what was there before, creating an infinitely expandable programmable financial system. Then fees skyrocketed. We scaled with L2s, fees came down, but composibility disappeared across networks. EEZ leverages real-time proving for synchronous composability, so two networks can talk to each other like the same network, within the same block. This wasn't technically feasible until now.
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Sebastian Kuchio25:07
What makes it technically feasible now?
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Fel Ernst25:11
You can prove your state within the same block. Ethereum's block time is 12 seconds, so if you can prove another chain's state within that, both chains can make a transaction touching both states simultaneously.
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Sebastian Kuchio25:50
So it creates a network of applications independent but composable if they can prove state within a block, like money Legos across chains?
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Fel Ernst26:03
Yes. Disjunct networks of money legos become one big network again. To the user it looks like one network.
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Sebastian Kuchio26:34
We have two dozen rollups with $40 billion TVL and interoperability protocols like LayerZero. Why isn't that good enough? Why do we need EEZ?
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Fel Ernst26:51
Those protocols work asynchronously. Bridging today is like sending a postcard—you send funds, wait, then claim. It doesn't allow synchronous conversation. EEZ allows atomic, synchronous interoperability within one block, collapsing bridging into a single transaction.
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Sebastian Kuchio29:40
Let's take an example: USD and ETH on Nosis chain, depositing into an AMM pool on Uni Chain. How does the transaction flow?
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Fel Ernst30:02
You create a transction on Nosis, Nosis sends proof to Ethereum, Uni Chain reads it and executes the deposit. In the synchronous version, blocks on both chains are created in parallel at the same block height, so everything lands together. You can do arbitrarily complex multi-chain transactions.
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Sebastian Kuchio31:57
It sounds like Ethereum becomes a decentralized sequencer for the EEZ rollups.
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Fel Ernst32:11
For intra-chain transactions, the sequencer is still in charge. For inter-chain, Ethereum provides the proving and ordering layer. It's nuanced.
It says this is the order of transactions. If you look at transactions that are interconnect calls into Ethereum or another L2, once they are committed to Ethereum, they can no longer be reorged out of the L2. So yes, in that sense, everything committed to Ethereum is final. That's the one significant trade-off that participating networks need to make. When you're in the EEZ, you acknowledge that Ethereum is the lead chain. If you look at two chains where none gets the final say, you can't make them synchronously compose because you have no assurance that if one reorgs the other has to reorg too. You have transactions touching the state of multiple chains, and if one disappears, the others need to disappear too. For example, if I'm sending you Ether from mainnet to Base and my transaction disappears, you can't be credited with Ether on Base. If Ethereum reorgs and my part of the transaction disappears, your orphaned part also has to disappear. So you need to designate one chain as the lead chain, and the Ethereum economic zone posits that this should be Ethereum proper. Because of the recent crops announcement, we also think Ethereum is the best chain for this because censorship resistance is what Ethereum prioritizes above everything else.
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Sebastian Kuchio36:57
Okay. So there's still sequencers on the rollup chains, but those sequencers are primarily concerned with ordering the transactions as it relates to their own state. And then Ethereum acts as the sequencer for anything that has an interconnect call, essentially where multiple chains are involved. So it splits sequencing into two distinct roles: on-chain sequencing and lead chain sequencing.
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Fel Ernst37:33
Absolutely.
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Sebastian Kuchio37:35
Okay. And what's the role of validators on Ethereum mainnet in this? Is it expected that each chain has its own validators and how do they interact with Ethereum validators?
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Fel Ernst37:57
Yeah. In the most vanilla implementation, you have a so-called base rollup that builds a block every 12 seconds in full synchronicity with Ethereum, and those blocks are built by L1 validators. This already exists. For instance, Psycho has built a stack for this, but it hasn't found wide adoption. Most L2s today are significantly faster in committing blocks than Ethereum because many applications need assurances of landing transactions faster than 12 seconds. In this case, you can still synchronously compose with Ethereum. You build your own blocks, so L1 validators have nothing to do with most of your blocks. Every 12 seconds you have a block that synchronously composes with Ethereum and you commit to having certain transactions included. You can also constrict what transactions you allow, so you don't have to accept everything from Ethereum. For example, you could run a protocol on an app chain with a matching engine and allow liquidity to flow from anywhere in the EEZ, but only allow specific contract calls.
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Sebastian Kuchio40:01
Okay. One of the things you and Vitalik talked about during the fireside was the types of applications this would enable. Vitalik mentioned privacy-focused L2s with private programmability, high-performance chains like prediction markets, oracles, and enterprise use cases like supply chain and voting. Of those, which are you most excited about and which are best suited for EEZ?
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Fel Ernst41:38
They're all very well suited, and that's what I'm most excited about: the fact that we can now allow all these chains to use Ethereum as the ultimate economic operating system. I'll walk you through each. Consider banking consortium chains or nation-state CBDCs. They typically don't want permissionless infrastructure; they want their own cluster of nodes they can influence. Now you can allow these permissioned chains to compose synchronously with Ethereum. That's beautiful because you no longer make people choose between the most radically decentralized solution and something they're comfortable with. For privacy, it's an easy unlock. Chains like Aztec allow private compute but with low throughput. You wouldn't do all compute on Aztec, but you might want your identity there. Every time you authenticate, you can export a proof. Oracle chains are also beneficial. Currently oracles post data to Ethereum, but they don't need every data point. With a synchronous oracle chain, you can forgo posting every data point to Ethereum while still allowing synchronous composition. That makes providing oracle services cheaper.
Yeah, there is a huge design space. The Ethereum economic zone is extremely permissive. Participating networks need a well-defined state transition function, which is a given for any blockchain. They must be able to prove their state in real time, an engineering challenge we're improving at. Currently it takes two to three seconds to prove an Ethereum block. They must be willing to reorg and follow Ethereum if Ethereum reorgs. Ethereum reorgs between three and ten times per day and hasn't had a reorg deeper than a single block in many years. When a transaction lands in a block that reorgs, it'll likely land in the next block. For example, Sebastian's transaction gets included, then Ethereum forgets that block and builds on the previous one. The transaction remains valid and will likely be included in the next block, unless it touched changed state. So edge cases are rare. What are the implications here for me?
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Sebastian Kuchio47:42
Oh yeah, fantastic question. MEV becomes much more powerful. Currently MEV is the amount of money you can make by ordering transactions within a block. With more networks to order across, you can extract more MEV. In my eyes, MEV has always been a design flaw. It's not the economic defense mechanism that Flashbots and others position it as. It should be on apps to make sure users are protected from MEV efficiently.
Right. So MEV protection then falls upon the apps, and the apps can decide how they order their own blocks, making MEV less parasitic. I think a lot of these ideas have been explored in Cosmos. I'd love to get your thoughts on that too. For a while, there was talk about Skip having a module for the Cosmos SDK called Slinky, which allowed you to create custom blocks where onboarding transactions could be free and included at the top, governance transactions next, etc. I suppose that can also be achieved with EEZ since individual chains decide how their blocks get constructed.
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Fel Ernst50:14
Exactly. As an individual chain, you only outsource block production to the extent that there are interconnect calls; everything else you can include wherever you want.
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Sebastian Kuchio51:07
I think I would reframe this. If you look at the networks around Ethereum today and consider a liquid market for something like USDC or Ether, you'll find slightly different prices on each network. That's because bridging between them isn't instant and risk-free. If an arbitrageur sees a 50 basis point opportunity, they have to factor in price changes during execution and technical risk. With tightly coupled networks, arbitrage becomes a single risk-free transaction. So average execution price for users should be better. There is more MEV opportunity at the Ethereum layer potentially, but it makes the market much more efficient, which benefits users most.
Yeah, makes sense. So of all the rollups out there, from Base to Arbitrum to Scroll, is there a case for them to transition to EEZ? What's the complexity and cost involved? Does it apply to only certain types based on whether they are base rollups or native rollups? And for new chains, is it considerably easier to launch an EEZ rollup than to spin up your own infrastructure?
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Fel Ernst54:02
Yes, absolutely. You can separate these into engineering and economic challenges. On the engineering side, retrofitting an existing network always involves overhead depending on its design. Does it already allow reorgs? Do you have proving infrastructure? On the economic side, because networks are so fragmented, we've seen the emergence of mini Ethereums like Base and Arbitrum that replicate everything on Ethereum. Many networks struggle to keep table stakes: stable deployments, compliance infrastructure, lending markets, etc. 80% of their business development is maintaining the status quo. Once you join the EEZ, you no longer have to endlessly replicate. You can add new things and let users use what's already on other networks. So you can build a much more differentiated offering. I wager the first networks to join will be smaller ones, like Gnosis. We'll be our own guinea pigs. I expect smaller networks to follow soon.
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Sebastian Kuchio57:33
Do you expect that the sort of general purpose rollups are least likely? Like Base or Arbitrum?
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Fel Ernst57:42
Successful general purpose rollups, yes. Because they are ecosystems onto themselves and have an economic case. Base makes around $60 million a year in sequencer fees. That's not the case for almost all other rollups.
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Sebastian Kuchio58:13
Like it makes...
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Fel Ernst58:15
Absolutely 100%. So like Aztec, Unichain, Gnosis chain. Gnosis is general purpose but has canonical apps like CowSwap and Circles. Is there a case for those? When does it make sense for an app like CowSwap to be its own EEZ chain instead of part of Gnosis?
Yeah, a very good question. For any dApp that isn't extremely computationally involved, it's easiest to stay on an existing network. Spinning up a new EEZ zone is much easier than upgrading an existing rollup because there's a well-defined stack. You can deploy a regular L2 at the click of a button, but there's still significant overhead for an EEZ rollup: sequencer, data availability, provers. So if you're a big dApp like Robinhood or Polymarket, it may be worth it. CowSwap is thin because it outsources to solvers, so it makes sense to be colocated with users. Solvers understand that for a $5,000 trade they can route on Gnosis for the best price, but for a $5 million trade they will reroute to mainnet due to slippage. They can do this risk-free by placing a transaction across Ethereum mainnet and Gnosis chain in the same block.
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Sebastian Kuchio1:01:15
It seems to me like the future here, if we take this vision to its most extreme outcome, Ethereum just becomes a proving layer and no real applications live on it. They live on fast, cheap L2s or become their own L2s. Do you think that's where Ethereum should be heading? Can we have a Morpho chain that is synchronously composable with any other application without the complex bridging infrastructure we have now?
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Fel Ernst1:02:14
Yeah, super interesting question. There are two levels of answers. First, should end users have any business being on Ethereum? In the long run, probably not. If you take censorship resistance to its natural conclusion, it also means you can't protect customers. If you engage in a protocol and get scammed, you have no recourse on Ethereum because censorship resistance comes first. Currently the user base is small, but will this work for eight billion people? Probably not. Most people will not want to trade off censorship for security. There will always be some people who run their own node and want credible neutrality, but that's a small minority. Then the question is how dApps will be divided across networks. The app chain hypothesis has merit. In terms of gas, consider an L2 where intra-L2 transaction costs 1 unit, cross-L2 costs 10 units, and a transaction involving Ethereum costs 100. So it's still cheaper to be colocated. Cross-chain calls may become cheaper over time. It also depends on the value of the trade.
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Sebastian Kuchio1:05:36
Yeah. I think about this as I've been thinking about it the last couple days. The vision is one where Ethereum becomes sort of dumb pipes – we can borrow the net neutrality narrative. Ethereum just becomes dumb pipes.
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Fel Ernst1:05:55
Yes. And the application layer is where everything really happens. Ethereum should stay neutral, inheriting these CRISP properties. Applications can have different philosophies around handling scams or access. A bank or government may whitelist and KYC addresses, while Aztec or Uniswap can live there too. One last question: you're making a lot of the same noises that people in the Cosmos ecosystem have been making for a long time: shared security, application-specific blockchains, sovereignty, interoperability. Cosmos has the Atom economic zone. None of these attempts have been successful. What is different here? Why will the Ethereum ecosystem succeed where others didn't?
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Sebastian Kuchio1:08:59
I say this with all love for Cosmos. I have deepest respect for the technology built in Cosmos. But at the end of the day, it's economically much more relevant whether you're connected to Ethereum mainnet than to a central zone in Cosmos. That's the main differentiator. You access Ethereum liquidity by joining this zone. That wasn't the case for the Atom economic zone.
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Fel Ernst1:10:17
Absolutely. The mainnet contracts are currently under review. I hope to deploy them end of August.
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Sebastian Kuchio1:10:26
Will you be deploying them? Are you clicking the button?
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Fel Ernst1:10:29
I think it'll be a ceremony of some kind. Probably one of the devs will deploy them.
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Sebastian Kuchio1:10:35
It'll be Claude. Yeah, it'll be Claude.
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Fel Ernst1:10:37
No, no, no. Claude doesn't have production access. He's not involved. We'll be deploying them at the end of August. There's already a DevNet at e.io. Click on the GitHub logo. There's a Telegram group. We'd be happy to give updates. Gnosis chain will move into the Ethereum economic zone in a limited fashion by end of year, with full shared liquidity but no infinite nested calls – one return call per block. That should be good enough for 80% of use cases. This is happening this year. It'll probably take another nine months to be feature complete, but it's a very bounded project.
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Sebastian Kuchio1:11:45
Awesome. Thanks so much.
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Fel Ernst1:11:48
Thank you for having me on the other side of this. It's been weird but also a pleasure.
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Sebastian Kuchio1:11:54
Cool. All right. See you later. Cheers.