Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Vitalik Buterin on The Economic Zone (EEZ) Ep. 642

Episode Date: July 3, 2026

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 operating system for the internet• Sequencing, MEV, and shared liquidity across chains• Enterprise, government, and institutional use cases• Why this approach differs from Cosmos, Polkadot, and other ecosystem visions• The future of Ethereum beyond rollup fragmentationLinks:Lido: https://lido.fi/stvaults?mtm_campaign=epicenterSponsors: Lido V3 introduces stVaults: a modular staking infrastructure that lets builders and institutions deploy custom staking vaults, while staying anchored to stETH as a shared liquidity layer.Get started building with Lido V3 today: https://lido.fi/stvaults?mtm_campaign=epicenterBlock Space Forum: https://blockspace.forum/NEAR AI Cloud now lets developers deploy OpenClaw—the rapidly growing open-source AI agent platform—inside Trusted Execution Environments, providing hardware-level encryption with cryptographic attestations. With OpenClaw on NEAR AI Cloud, you can run agents with cloud convenience, but without traditional cloud data exposure. No hardware to manage. No trust assumptions required. Learn more at near.ai.

The term Ethereum Economic Zone obviously kind of does a lot of the heavy lifting here. But what makes the easy in your head? What to take? I think for me the core, right, is in effort to rethink, you know, what layer twos are. You get more integration and, you know, you get more power at the same time and, you know, like, at lower cost, right? So it's something that should be a win-win for everyone. The fact that we can now allow all of these chains to kind of use Ethereum as the ultimate, intimate economic operating system for the internet. I think that to me is the most exciting fact here.

This is not far off in principle. This is a very bounded project. Welcome to Epicenter, the show which talks about the technologies, projects, and people driving decentralization and the blockchain revolution. I'm Sebastian Kutio, and I'm here with my co-host, Fredike Ernst. Today we have a pretty special episode. We'll be diving into EEZ or Ethereum economic zone. It's a new vision for how to scale Ethereum and bring bring forth a vision that to me kind of looks like the app chain vision for Ethereum, but tightly coupled with Ethereum network in a way that chains can use Ethereum as an interoperability and proving layer. We're going to get into all the details of that. But first, here's a word from our sponsors

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Hey, Felika. How are you? I'm good. I'm good. Almost recovered from Berlin Blockchain Week Classic Week. Yeah. Berlin Blockchain moves is great. As always, it's always great to be in Berlin and see the more cypherpunky side of the space. I feel like, you know, in today's crypto world, there's a lot of suits and less and less hoodies. But definitely Berlin remains a place where, you know, the blockchain hoodies are hanging out. So this, this, we're going to, this episode is actually going to be in kind of two parts. So first, uh, we're going to play a fireside chat that you did at DapCon, uh, with Italic, where you, uh, went into detail about sort of his vision for EZ and what he would like to see

built, um, in this new sort of paradigm of Ethereum. And then we're going to come back and then we're going to talk about it and we're getting to see details of like what EZ is and what's the vision and who it benefits and how it works technically. So by the magic of editing, let's go to your far side with the Talik. Fantastic, Vitalik. Thank you for being here today. This is the last talk in an easy themed block.

So kind of I'll ask you for your take on. So the next talk will be in a hard block. Yeah, actually, it's kind of medium first and then hard. I see. Okay. We're still cutting it on the easy side. I see. So we're going to do like a tutorial of like Circle Stark's after this.

Yeah, absolutely. We already heard Martens. and Jody's and Phillips take of the EED. So kind of the term, Ethereum Economic Zone obviously kind of does a lot of the heavy lifting here. But kind of what makes the EZ in your head? Is it primarily kind of like an economic thing and kind of like a single market kind of sense?

Or is it kind of like an economic operating system? What to take? Yeah. I mean, I think for me the core, right, is basically it's an effort to rethink, you know, what layer or twos are in a way that kind of both gets a lot more of, there are a lot more of the benefits and at the same time, less of the drawbacks of all of the approaches that we've tried so far, right? And to make something which is much, much more integrated into Ethereum. And so it's not just basically a separate, I mean,

know, EVM chain where, like, it can be difficult to, like, see, you know, like, the connection beyond the branding level, right? And it's, like, actually very deeply integrated in a way that's, like, very visible to users and developers. And at the same time, to, like, actually get benefits from that integration, right? And, like, to me, the benefit of being in, benefits of being an L2 has always been, you know, the tight integration with the Ethereum market, and the Ethereum user base and also the the fact that you don't have to be responsible

for a lot of your own infrastructure, right? Like you don't have to be responsible for having your own set of nodes to the same level. I mean, if you have a base to roll up, you don't even need your own nodes. Basically, your infrastructure load on every level is just much, much lighter, right?

Potentially, if you do it right, you don't even need to convince, to convince users to create new accounts. That's also another thing we should work on, right? And the possibility of having this, like, synchronous composability between L2s and, like, having much better forms of bridging on top of that with better developer experience and also having ZK proofs securely enforcing that, like, it really does accomplish all of those goals, right?

And so, you know, you get more integration and, you know, you get kind of more power at the same time and, you know, like, at lower cost, right? So it's something that should be a win-win for everyone. Well, that fits in super nicely with what Martin said. He said kind of like, kind of the, it extends basically what the presence is. So kind of what the present is for Ethereum. and kind of like, are there's zones in the easy, essentially they kind of start living in the same now. And Jodie said, by having differently natured zones,

you can actually extend Ethereum rather than kind of just adding more block space. You can actually see specific, you can see use case specific chains or chains that are specific in some other way. So kind of if you think maybe five or 10 years in the future, If you sort everything that anchors to Ethereum into a few buckets, what are they? I think the projects that we've seen so far, right, that extend Ethereum in an interesting way, that's not just EVM with more TPS. One of them is privacy, right? So like Intmax and Aztec are very good examples there.

And I know there's more and more projects trying to do this. I mean, I actually even think of things like Tornado Cash and Railgun and Privacy Pools as being L2s. Like they're L2s of privacy instead of L2s of scalability, but I also think of them as L2s. I mean, with Railgun, you can even do internal transactions. Those are, I think, great and underrated by a lot of people. then the second is like very high TPS for specialized use cases right so lighter would be a good example there and I think in general like having a mass scale prediction market or other type of like defy primitive but I mean I think ultimately you can sort of define every defy primitive as a special case of prediction markets in some sense

then having that run on an easy roll-up, I think feels ideal. Then if you want to kind of start going further, right, then I think privacy is a dimension we have to keep improving on, right? And I expect, I mean, as Aztec has already started doing, right, for, and especially as Ethereum 1, how it continues improving on privacy natively. like privacy focused L2 is connecting into Ethereum will have to get into

private programmability. And we're seeing that. I hope to see more of that. I hope we'll also keep getting better cryptography that helps us keep getting even more of that. Then I think there's like

interesting directions that are underrated and having an integrated Oracle I think is interesting. Like, you know, the whole, Oracle space I still think is one of the sort of skeletons in the closet of Ethereum,

right? Like if you compare the level of rigor that people like L2 Beat have brought to the, you know, like L2 space with things like stage one and stage two and just all of the, you know, like efforts that, you know, like optimism and Arbitrima

and Tyco and others have spent like actually getting there. And like if you compare that level of security to, like, what happens inside of many oracles, it's like night and day, right? And, you know, like, one of the things I always keep saying is that there's no point in giving reinforced steel doors to your house if the windows are like made of glass that breaks after one hammer hits it, right? And so, like, I think we might even be in that kind of situation, right? And so I've

always been thinking, like, actually, like, the thing that's even higher priority than a push to stage two is improving oracles. And, uh, you know, the push to stage two will happen naturally, especially with native roll-ups and ZKVM sort of giving us that for free. And with like integrating an Oracle into an L2, like I think, you know, oracles can't be perfectly economically secure, but you know, you want the security base to be as big and as diverse as possible. So I think that approach is interesting. then what other things for L2? I mean, just like there's the whole different kind of L2,

which is sort of ultra-specializing for like enterprise-type use cases, right? It's like basically you approach the problem from the other end. Instead of saying we have an Ethereum chain, how do we make it more scalable and user-friendly, you start from the other end and you say like, here is some enterprise thing that's, serving many millions of people on like helping a lot of economic activity happen, but it's like totally trust dependent and centralized.

And like how do you add proofs to that so that you give users better guarantees? And that could apply to supply chain things. It could apply to finance. It could apply to medicine. It could apply to voting systems, right? And, you know, like Orrin's interfold work, I think, is one of those great examples of that. So, no, I think, I know there's a lot of different. directions from which you can tackle this problem.

Do you think about chains that are run by nation states or so? Because, I mean, obviously, nation states are typically extremely hesitant to kind of put any kind of infrastructure onto Ethereum. Do you kind of see Ethereum becoming kind of the ultimate settlement layer, even between nations that don't speak anymore, as we kind of increasingly see? Yeah, it can happen, right? Like one of the patterns that we've seen historically is that, you know, there are these government blockchain projects that first try to make their own consortium chain

and like they go all their way out in the direction of like satisfying the more conservative people. And then that just never ends up actually getting any interesting properties. And so four years later everyone forgets about it and the thing spins down. And then another four years later, and you know the same country just quietly spins up a thing where they just like dump friggin' NFTs on main net right and like it's actually more useful um so i yeah i think it's uh it's use case dependence right i think uh you don't want to sort of attach like too many of these uh you know like philosophical connotations to the concept of like being on l1 or the concept of like being on

um l2 right it's it's kind of like attaching in too many philosophical connotations to like being in a house or being in an apartment building, right? It's like you want to kind of view it as a technical matter of like what are things that you want to be close to?

What are things that you want to have very easy ability to interoperate with? What are forms of scalability that you want to have? What are forms of privacy that you want to have? And I mean, I think sometimes, you know, easy, something like easy is a good solution,

sometimes, you know, just dumping a frigate NFT on Mainnet as a solution, sometimes dumping a frigate ERC20 on Mainnet and then letting that bridge into Easy as a solution, right? So, you know, you want to be open to all of those. Yeah, absolutely. So kind of if you look at Ethereum and kind of like how it's developed over the last couple of years, Ethereum made a very explicit choice that most,

or maybe all other chains didn't. Kind of like it put censorship resistance above, everything else. So kind of namely above speed, above cost, above recourse, if anything goes wrong, right? So once kind of the code's committed, it just runs. So that's a choice. And that's a choice with real losers to some extent, because most users, they don't wake up and say, oh, I want to be on the most neutral chain possible. Or they kind of, they want their payment to clear and they want their money back if they were scammed or something breaks, right? So should it be the base layer's job to serve users at all?

Or do you think it should be kind of more of a neutral ground that other networks then build user experiences on that users are happy with? It's a difficult trade-off, right? I think because there's a lot of attraction to kind of going all the way and basically saying like, well, the base layer does in the minimum possible. to ensure things like trust and security, and then everything else happens on top and people can choose.

One of the challenges is that often if the base layer provides too little, then you still get certain types of capture that happen at higher levels, right? And if you don't care about interoperability explicitly, for example, then interoperability gets captured by centralized providers,

and then like you get applications, that basically don't think of themselves as serving Ethereum users, but think of themselves as like creating identities for users fully inside of their application in a way that really maximizes lock-in.

Like, doesn't really create the benefits of a user's accounts being able to be part of multiple applications at the same time. And so there's, like, there is a balance there, right, where if you

don't try to make sure that things like interoperability, censorship resistance, just like stronger pressures toward having a proper competitive market actually exist at the user layer then effectively what you get is like you get these

Waldgarden monopolies just to sort of wrap around the base layer and like use the base layer a little bit basically just so they can virtue signal and say that's you know, hey we're on Ethereum. But then actually the thing is not bringing freedom to people. And I mean, I actually, again, you know, I view easy as a quite helpful effort in that regard

because it's like really doing that work to make these higher levels of interoperability available, not just kind of in theory, but actually creating standards so that if L2s get built inside of it, that interoperability exists between them by default. Cool. Let me ask one last questions, and then I'll hand it out to you guys. So if I say I had an extremely specific crystal ball, and kind of it would allow me the answer to one question exactly. And that's kind of whether a specific kind of network exists in the Ethereum Economic Zone

in 2035. What network would you ask for to kind of see whether it's that kind of gauge the success? Huh. I mean, I guess one natural use case is like to have at least two, like, high performance, high GPS, defy type things, which, you know, again, you know, could be lighter style, could be a prediction market. I mean, could even be also something that provides privacy. and then, like, actually see the, like, easy deposit, easy withdraw and, like, cross-composability happening between them and, like, actually see the value provided by that.

So that would be one answer. I think another answer is, like, it would be interesting also to have seen some of these more non-financial altos and, like, the possibilities for having, like, say, dows that kind of integrate into that and like use one for their governance, you know, use another one for like managing their internal assets and so on. Cool. This episode is brought to you by Near AI Cloud. OpenCla is one of the biggest stories in AI right now.

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environments. These are hardware-level secure enclaves where your agent operates in encrypted memory that even Near AI can't inspect. It's not a promise that they won't look. It's cryptographic guarantees that they can't. With OpenClaw on Near AI cloud, you get cloud convenience without data exposure. There's no hardware to manage and no trust assumptions required. You can learn more at near.a.i. So what did you think at that conversation with him? Did you feel like he nailed the sort of things that, do you think that like he was articulate in in describing you know, how easy benefits Ethereum and sort of the vision for this new paradigm. Yeah, absolutely. So Vittredic is very supportive of the Ethereum Economic Zone. I think he hit

all the marks. Yeah. And just to kind of jump off on like one of the points that he made here. So this isn't technically something that's being actively built by the EF, but is supported by the EF. Can you talk a little bit about like who's leading this project and, what support you're getting from the E.A.F., whether financial or otherwise. Yeah, absolutely. So it's built by us, Nosis, and ZISC. ZISC is the proving team around Jodi Baileena, who is of ZK, Hermes, and Polygon fame, and has been in the ZK space for a pretty long time. The Ethereum Foundation is supporting this financially.

they're also endorsing it to which which is fantastic. I would have been happy for them to build it to, but somehow it wasn't in the cards. We thought it was important that it exists, not just for us, but for the wider Ethereum ecosystem. So we set out and build it. Yeah, I mean, it does, yeah, it's great that they're endorsing it,

but as you mentioned, you know, the EF is kind of focused on a lot, of things. And I think it's kind of cool that in this particular case, you know, they're sort of letting NOSIS, sort of lead this project and, and have, like, really high degree of autonomy and agency. Because I think, like, where you guys are coming from with having built Nosis chain, you bring a certain level of, like, experience and an insight into how to scale chains that, you know, perhaps, like, the team at the EF doesn't have directly. But you guys have done that sort of in practice. And so I think it's great that notices is leading the charge on this. So let's get straight into it.

So like, yeah, can you describe from your perspective, what is easy, what's the vision for this new scaling paradigm, this new vision for Ethereum? Yeah, absolutely. So if you think back to 2015, 2016, 2017, when Ethereum was new, maybe the most wonderful thing about Ethereum was that you could just build on whatever was there before you, right? So kind of you could build a stable protocol or lending market or an Oracle or what have you not, and have it interoperate with everything that was already there. And that gave you in some sense the magic of an infinitely expansive, programmable financial system in some sense.

That to me was the magic of Ethereum. Obviously, we all know kind of like how it played out. transaction fees skyrocketed kind of in 2020, 2021, we paid an average of $10 per 100,000 gas. Obviously, that doesn't work for almost all financial applications, even financial applications, not to speak of non-financial applications at all, right? So we set about to solve this via scaling with L2s. And this worked. So transaction fees have since come down extremely significantly. So kind of an average transaction on Ethereum now costs you way less than a dollar,

which looks a lot like 2016-2017 again. But this has come at the cost of outsourcing, most computations. from L1 to L2s. So kind of most compute now happens on various L2s. And we have in excess of 200 L2s today. And what we see is that these L2s, they don't interact as closely with each other as a single network would,

and they don't interact as closely with Ethereum as a single network. So kind of this composability that we had beforehand, kind of like this money Lego property that people loved, that's disappeared, unless you're on the same network, and then this still works. So the ephemaconomic zone is a way of leveraging real-time proving to enable two networks to synchronously compose.

And by synchronously compose, I mean talk to each other like they are the same network. So kind of have a smart contract on one network that calls into another smart contract on another network, get a response, use that response in the very same block, kind of like like you used to do when we only had one one network. This has not been technically feasible until very recently because it... What makes it technically feasible now? Yeah, basically it's predicated on the fact that you can see, that you can prove your state within the same block that you're building. So the kind of blockchains have a very long now and kind of like how long that you're depends on the chain, but on Ethereum, it's 12 seconds, right?

Because every block is 12 seconds long. You don't have continuous time. You have discrete time. So if you can prove within those 12 seconds the state of another chain, Ethereum and that chain can make a transaction that touches the state of both networks at the same time. Right. So is it, so essentially what this is What this vision aims to build is a network of applications that are independent,

wherein they have their own state, and that state doesn't live on Ethereum. However, as long as those chains can prove their state to Ethereum within a block, then they can become composable in the same way that you can wrap a contract on, say, amorpho in another contract and then you can build, you can create essentially money Legos in the way that we all know Ethereum works. That's in a nutshell how people should be thinking about this. Yes, absolutely. So kind of it takes disjunct networks of money Legos and makes them one big network again. And kind of how this happens, kind of behind the scenes, we can go into this, but kind of to the users, it kind of, it looks again like you're on one big network.

right now if we just take the the kind of current state where we have you know two dozen roll-ups last I checked and those roll-ups share you know I think like 40 billion dollars worth of TBL you know we have however we have like interoperability protocols that like layer zero and and then you know like lots of different interoperability protocols that allow people to send transactions and also compose transactions between those. Why is it not good enough? What's the counterpoint to this? Why do we need EZ where we already have,

lots of great startups have fixed the kind of interoperability problem and made it such that we can very easily operate across different roll-ups? Yeah, so kind of you can operate across different roll-ups, but it always comes at the cost of asynchronicity, right? Kind of like when you bridge funds today, And what happens is you go to a bridge, you send your funds there. They are kind of, then kind of chain processing happens.

So kind of this is the state is, it's waited until the state is final. Then the message is created. The message is passed, kind of. And then eventually on another network, there's a contract that owes your token. So you go to that contract and you say, hey, it's me, Seb, please give me my tokens. And then hopefully that contract gives you your tokens. That's kind of what bridging currently is. And this is for sending tokens only.

So kind of if you use the first party bridge, the canonical bridge for most networks, the bridging times are really long. So kind of on arbitrament base, it's one week. On noses, it's still half an hour. On polygon, it's an hour. So kind of like it varies widely. But, yeah, bridging is not a great user experience. and it lets you send funds across different chains.

It's a lot like sending a postcard to some extent, but it doesn't let you have a conversation like on the phone. And kind of like the synchronous interoperability, what that allows you to do is to kind of speak with another network as if it were your own network. So kind of let's kind of look at the case of bridging. Say, I want to send you funds from my network to your network. What kind of this then collapses to is a single transaction.

in a single block where my balance is decreased and your balance is increased, okay? And because kind of we say it happens atomically, which means kind of either both happen together or none of them happen, you no longer need the bridge itself, right? Kind of like you can now compose across different networks kind of within the same block.

Okay, so let's take an example here. Let's say we have US dollar, like USD on like, nosis chain and we want to, like, actually, let's say we have like USD and ETH on Nosis chain and we want to deposit that into an AMM pool on Unichain. We would create a transaction on Nosis chain. That transaction would be included in a block on Nosis chain. Nosis chain sends proof of all the transactions that are minted in that block to Ethereum. And then Unis. chain picks it up and is able to read that proof and then execute the transaction on its side

depositing the USD and ETH into the lending pool and presumably sends back some confirmation to the person to the to the to the to the issuing chain or the the the sending chain such that you know that person's wallet or interfaces can get updated and of course like balances get updated on on the sending chain. Is that kind of the way to think about that transaction flow or is there something else here missing? So to some extent, it's the right way of thinking about it. That's kind of like how it would work in the asynchronous way,

kind of in the synchronous way, what would be slightly different is that the block on nosis chain and on unichain would be created in parallel by someone who actually understands that there's a, interconnect call coming up and they will make sure that that kind of both sides of the transaction are included at the same block height. So kind of there's no before and after kind of the blocks. The block is included on both L2 networks and Ethereum at the same block height.

And so you kind of construct the entire transaction in, one go and you place them and it only lands if all necessary parts are there. And you can actually do this in an arbitrarily complex way. So you can bridge tokens from A to B, then use it in a liquidity pool, then use whatever you took out of the liquidity pool to stake somewhere and borrow against that again and use that liquidity on a fifth chain. So in principle, you can do as many levels as you want. and obviously that can become very complex,

but you build the block, you build the various blocks such that they land at the same time. So there is no consecutiveness here. Okay, interesting. Right. Okay. So I think like for a lot of, you know, the way you described bridging earlier

where you have this asynchronousity and, you know, coming also from the sort of IBC perspective where you have a transaction that gets acknowledged by another chain and there's like an act that gets sent back and everything in this kind of almost TCPIP-like data flow. Here there's like the block is getting built and written to all of the participating chains

and the Ethereum mainnet at the same time as like kind of all landing at once. And if one of those doesn't land, then like the entire thing gets reverted. Exactly. And so then who are the participants here? So I presume block builders are going to be looking at all the different chains in the EEZ. And like a block builder will pick up all these different blocks and sort of write those proposed blocks for each of the chains in the Ethereum mainnet at the same time.

Yes. Almost. So kind of on most chains, block builders don't actually build blocks. The block builder is typically a sequencer. So kind of if you had two. decentralized networks, yes, then it would be the block builders. In most cases with L2, you have a centralized sequencer who can be passed messages to. And the block builder builds the block for Ethereum and is kind of, yeah, and kind of on the

other networks, kind of whoever's in charge of block building does it there, but kind of the block builder can talk to that party. Okay, so let's talk about sequencing here because it sounds like essentially Ethereum is becoming the sequencing layer. Is that so is Ethereum then becoming a sort of decentralized sequencer for all of the roll-ups that are in EZ? Yes and no. So kind of it depends on what transactions you're looking at. So kind of if you're looking at the transactions that are within a single. L2, then the sequencer is still very much in charge of

ordering that, because that's kind of the only thing that the sequencer does, right? Kind of like it says, this is the order of transactions. If you look at transactions that are interconnect calls, so kind of into Ethereum or another L2,

then once they are committed to Ethereum, they can no longer be re-auged out of the L2. So yes, in that sense, everything that's been committed to Ethereum is final. That's kind of the one significant trade-off that participating networks need to make. You, when you're in the EZ, you acknowledge that Ethereum is the lead chain.

So if you kind of look at two chains, the example of two chains and none of them kind of gets the final say, you can't make them asynchronously compose. sorry, so you can't make them synchronously compose because you have no assurance that if one reorgs, the other has to reorg too, right? Because kind of like what you now have is you have transactions that touch the state of multiple chains. And if one of them disappears,

the others need to disappear too. So kind of if kind of my transaction sending, kind of I'm sending you ether from main net, to base and kind of my transaction disappears. You can't be credited with ether on base, right? Because kind of like that would be disastrous. So if Ethereum reorgs and somehow my part of the transaction disappears, you are now orphaned part of the transaction also has to disappear.

So you need to designate one chain, the lead chain, and the Ethereum Economic Zone posits that. this should be Ethereum proper. And because of the recent crops announcement, we also think that Ethereum is the best chain to possibly do this on because censorship resistance is the one thing that Ethereum is prioritizing above everything else.

Okay. So there's still sequencers on the roll-up chains, but those sequencers are primarily concerned with ordering the transactions as it relates to their state. And then Ethereum acts as the sequencer for anything that has an interconnect call, I guess, which is what you call it. So essentially where multiple chains are involved.

So it kind of like splits sequencing into two distinct roles where you have like on-chain sequencing and then the kind of the lead chain sequencing. Absolutely. Okay. And, yeah, what's the role of validators on Ethereum Mainnet in this? So it is expected that each chain has their own validators and how do they interact, if at all, with Ethereum validators? Yeah, so in the most vanilla implementation of this, you have a so-called based roll-up, which is a roll-up that builds a block every 12 seconds in full synchronicity with Ethereum.

And those blocks are also built by L1 validators. This is something that already exists. So for instance, Tycho has built a very nice stack for this. It hasn't found wide adoption. So kind of if you look at L2s today, most of them are significantly faster in committing blocks than Ethereum, because for many applications, you need assurances that you can make a transaction land faster than 12 seconds. And in this case, you can still synchronously compose with Ethereum.

You build your own blocks. So validators on L1 have nothing to do with transactions in most of your blocks. And every now and then, every 12 seconds, to be precise, you have a block that synchronously composes with Ethereum. And there you commit to having certain. transactions included in your block. You can also constrict what kind of transactions you want to let land on your network. So you don't have to say, I'll take anything good or bad from Ethereum. You can have a very granular list of transactions that you allow with Ethereum.

So for instance, you could say, okay, I have this, I have, for instance, a PURP protocol. that I run on an app chain with a matching engine. But I allow liquidity to flow in from anywhere within the Ethereum Economic Zone. And I also allow liquidity to flow out to anywhere in the Ethereum Economic Zone. So you don't allow arbitrary contract calls, but you need to specify what you allow in advance. Okay. Okay. So one of the things that you and Vitalik talked about during this fireside was the types of applications that this would enable. And Vitalik mentioned a few. So he mentioned like privacy focused, L2s, possibly also with private programmability, which I think is kind of interesting. He talked about high performance chains, so things like prediction markets. or market structure like things.

Also oracles, which I thought was interesting. And I'd love to chat a little bit about, you know, why an integrated Oracle chain might be useful. And then a bunch of other use cases that, you know, frankly have been kind of kept out of the permissionless Ethereum space, which is enterprise use cases, things like supply chain, voting, you know, I'm sure those of you who have been around the space for long enough will remember in 2017 when people were trying to build permission blockchains with things

like Hyperlogicorta, etc. And none of that really got like created much of anything. And then in that same vein, government chains, nation state chains, possibly stable coins or CBDCs. So of those, which are you most excited about and which are like kind of best suited for for easy? They're all very well suited and that's what I'm most excited about. The fact that we can now allow all of these chains to kind of use Ethereum as the ultimate economic operating system for the internet.

I think that to me is the most exciting fact here. I mean, I can walk you through each of them just for a little bit. So, for instance, if you think about other chains that we used to have on Hyperledger and so on, like the banking consortium chains, the nation state POCs and so on, what people found is that nation states and banking consortiums and so on, Typically, they don't want to build on permissionless and radically open infrastructure. They want their own cluster of nodes that they have some influence over. And you can now allow these permission chains to compose synchronously with things on Ethereum or a subset of things on Ethereum.

And I think that is beautiful because you no longer make people, you know, longer make people choose between the most radically decentralized solution or whatever they're comfortable with, but without friends, you can now kind of have the best of both. With privacy, I see it as a very easy unlock. So kind of if you look at chains like Aztec, they are fantastic in that they allow you private compute, but the throughput is, pretty low. So kind of they have like two or three transactions per second. Obviously, you don't want to do audio view compute on Aztec, but would you want to have your identity on Aztec? Absolutely. So kind of if you could have your identity on Aztec and every time you want to authenticate against

the protocol for kind of, kind of to check whether you're a member or something or whether your reputation school allows or whatever, you have. Or they have the ZK passport too thing, right, where you can also authenticate that you're, you know, exactly. Like an individual that has like a proper government identity. Exactly. And only that piece of information will ever leave the chain, right? So kind of like your identity stays perfectly private.

It just kind of checks that you're allowed to access whatever you're trying to access and it exports the proof of that. And I think that is a really low-hanging fruit right there. With Oracle chains, what Vittalik was talking about is that currently oracles post data to Ethereum. Obviously, a lot of this data isn't actually needed. But kind of like it kind of, you don't need every single data point that an Oracle posts. But kind of if you now do it on your own Oracle chain and then kind of you let, you also don't want a time lack, right? Because you don't want to be able to front run an Oracle that kind of like defeats the purpose.

So kind of if you can synchronously compose with an arc chain, you can, you can forego the cost of posting into Ethereum for every data point that you're posting, but still letting people synchronously compose with the data that you're providing. It's kind of more of a pay-as-you-go sort of arrangement then, which is going to be pretty beneficial for, allowing a wider range of oracles to exist because currently providing oracle services is pretty expensive in terms of gas and that constricts the subset of participants who are willing to partake in this game. Yeah, so kind of there is a huge design space.

The Ethereum Economic Zone is extremely permissive in what it allows, participating networks do. You have to have a well-defined state transition function that is a given for any blockchain. You have to be able to prove your state in real time. That's an engineering challenge and we're rapidly getting better at this. So currently it takes us around two to three seconds to prove an Ethereum block and the limit of that isn't, hasn't been reached yet. And then you have to be willing to re-react. and follow Ethereum if Ethereum reorgs?

Ethium doesn't re-oak a lot. So kind of it re-oaks between three and ten times per day. And it hasn't had re-org deeper than a single block in many years. But you still have to engineer for the complexity this entails. And even when you have a transaction that lands in a block that reorgs, it's likely that your transaction will just land in the next block. So kind of it's kind of like what happens, kind of like on an next. network level is Sebastian's transaction gets included in some block and somehow Ethereum

kind of forgets about this block. And then instead of building on this block that includes your transaction, kind of Ethereum bills on the block before that. Okay. But your transaction remains valid, right? So kind of, it's kind of more than likely that your transaction would just be included in the next block that's then coming up. And unless, unless that is your transaction touched on a state that was changed. So for instance, if you trade against an automated market maker and the state of that has changed so that kind of your transaction in the next block will no longer be valid, then then kind of your legitimately re-oaked out.

But this should be a very small number of edge cases. What are the implications here for MEV? Oh, yeah. Fantastic question. So kind of MEV becomes much more powerful. So kind of MEV currently I would just define as the amount of money you can make by ordering transactions with ordering transactions within a block and introducing additional transactions between them if needed. And obviously now if you have more transactions to order, because you can also order part of them on other nations. networks, you can extract more MEV.

MEVs, in my eyes, has always been a design flaw. So I don't think kind of like this is the economic defense mechanism that flashboards and some other projects kind of position it as. And I think it should be on depths to make sure their users are protected from MEV efficiency. Right. But that I guess was the next part of my question is that MEV protection then falls upon the apps.

And the apps can decide how they order transactions in their own blocks, for example, such that MEV becomes less parasitic to its users. And I can probably also, I think, like, so it's funny because like a lot of the ideas here, I think, like, are things that we've explored it, that have been explored in, And actually, I would love to kind of get your thoughts on that too. But, you know, one of the things that, you know, for a while was being talked about in cosmos and cosmos change is that you can essentially, so Skip had this, this module for the Cosmos SDK, which I believe was called Slinky and essentially allowed you to kind of create your own custom block where, you know, for example, you could have, say, like onboarding transactions.

would be, say, free, and those would be included at the top of the block. So those will always get included. And then you may have, like, governance transactions and things like that. And, like, you know, you can kind of construct your block in a way where types of transactions get included in the block. And then, like, maybe other types of transactions fall at a lower priority. I suppose here, this is also something that can be achieved with EZ, since, you know, individual chains will decide on how their blocks get constructed. Exactly. So kind of of as an individual chain, you only outsource block production to the extent that kind of their interconnect calls included.

Everything else, you can kind of just include wherever you want. And even those, so the interconnect calls, so is the biggest kind of, I mean, depending who you're talking about, but like risk or opportunity for MEP on Ethereum. mainnet in these interconnect calls, if the individual chains have a good grasp on how their blocks are constructed and kind of minimizing MED at that level, or perhaps even, you know, is tracking MED themselves and like putting it in some pool or redistiving it back users or something, is the risk then mostly at the Ethereum mainnet layer? I think I would reframe this. If you look at the networks around Ethereum today,

and you look at, say, the same market, so say something liquid, U.S.CC ether or something, then you will find that all of these networks have slightly different prices, okay? So kind of you can ask yourself then, why don't they have the same price if they're kind of, if they're trading the same asset pair? And the answer is because bridging between them isn't instant and isn't risk-free, right? So kind of if you're an abl treasurer and you see, okay, I could make 50 basis points by bridging over ether to whatever chain and selling it there, you have to factor into your calculation that the price could change from under you. So kind of like while you're executing that trade, you carry inventory risk. And then you also have a small amount of technical risk, right?

because it's not incident, it's not atomic. And once you have these tightly coupled networks, this should disappear because arbitraging is now a single transaction and is risk-free. So I would expect the average execution price for users to be better than what they have today. So yes, there is more opportunity for extracting, M-EV on

Ethereum level, potentially. I mean, we'll have to see how this plays out. But there are, there, it also makes the market so much more efficient. And that typically should benefit the users most. Yeah. Okay. That makes sense. So of all the, you know, the two dozen roll-ups that I mentioned earlier, you know,

everything from like base to arbitram and like scroll etc which you know is there a case to be made where roll-ups should transition to easy i guess like what is the process is it is it what's the level of complexity and cost involved in making an existing roll-up an easy roll-up does it apply to only certain types of roll-ups depending on how they it's like a base roll-up neighbor roll-up etc and are the cases where it just doesn't make sense, like let's say base, you know, like a massive, massive chain like base. And yeah, and also I guess like for new chains, you know, is it considerably easier to launch an easy roll-up

than it is to like sort of spin up your own infrastructure and your own chain? Yeah, absolutely. So I think kind of you can separate these out into engineering and economic challenges and benefits, right? So if you look at the on the engineering side, retrofitting an existing network that's running with any sort of standard

is always overhead. So how much overhead it is depends on what your network is like. So kind of do you already allow reorg? So some networks actually prohibit reorgs. Then obviously this is going to be a much heavier engineering lift. Then kind of do you already have some sort of proving infrastructure?

What kind of what are your clients? What's your client landscape like and so on? So not every client is equally easy to prove in a ZK fashion and so on. So kind of bunch of engineering questions. On the economic side, because the networks were so fragmented and doing anything across multiple of them was basically precluded from happening

we've seen the emergence of what I call mini-etheriums so kind of if you see if you look at base or arbitram basically they replicate everything that's already on Ethereum right so kind of users who live on base or arbitram they don't really have to

leave for a lot of things obviously there are sometimes niche protocols that don't exist on on them, but by and large, Basin Arbitrum have just replicated what was already on Ethereum. Many networks haven't, and this is also a constant struggle for many L2s. And there's not actually 20 L2s, there's 200 L2s. Most of them you don't even know. So kind of like there's hundreds of L2s, and most of them are struggling to keep,

table stakes on the table. So kind of stable deployments on and off ramps, then compliance infrastructure, a lending market, whatever else users take for granted, safe deployment. Kind of all of these things cost you. And 80% of what these networks do in terms of business development is for keeping the status quo. It's a rat race to some extent. So once you decide to join the Ethereum Economic Zone, you no longer have to partake in this, because now you don't have to endlessly replicate things that are already there on Ethereum or other networks. You can just genuinely add new things.

And whenever a user needs something that you don't have, you just let them use the version on Ethereum or another network in the EEZ. So you can build a much more differentiated offering. because you don't have to replicate kind of the 80% of the table six that people have come to expect. So I would also wager that the first networks to join the Ethereum Economic zones are smaller networks. So NOS is the first one. So we will be our own guinea pigs here. But I expect the smaller networks to follow suit sooner rather than later.

Do you expect that the general purpose roll-ups are least likely? It's like, you know, base or arbitrar? Yeah, successful general-purpose roll-ups, yes, because they are kind of an ecosystem onto themselves, and kind of they have kind of an economic case that you can make for them. So kind of base makes, I think, around 60 million a year in sequencer fees and so on. So they are kind of economically. Bible. This is not the case for almost all

other roll-ups. Right. But it kind of makes most sense for those things that are more app chain-y, right? More app-chainee. Yeah. Absolutely. 100%. So like Aztec and like unichane and

you know, nosis chain, I guess like is general purpose, but it has like a lot of sort of canonical apps there like like cowswap and you know, circles, et cetera, and like Euro E, et cetera. Is there a case for those two?

Like, I guess when does it make sense? In the case of Nosis, for instance, for like, cow swap to be its own easy chain and graduate from like the Nosis chain to be its own thing as opposed to being part of like Nosis chain that has all this other stuff on it? Yeah, very good question. So for any depth that isn't extremely computationally involved, I would assume it's easiest to stay on an existing network. Because there's still kind of spinning up a new zone in the Ethereum Economic Zone is much easier than kind of upgrading an existing roll-up because there is a well-defined stack. And kind of just like kind of you can deploy a regular L2 at the click of a button, more or less.

you can do the same for an easy roll-up. But there's still a significant amount of overhead. So kind of you need to make sure you have a sequencer. You need to think about what to do with data availability in terms of solutions. And you basically, you need a prover. Probably need several approvers. So there are definitely infrastructure challenges ahead of you. So if you are a big, DAP,

then this may be good for you. So kind of if you're Robin Hood, for instance, or Polymarket or so, those are good candidates for DAP chains. If you are a fairly thin protocol and kind of cowswap at the COVID is very thin because it outsources everything to the servers, right? It makes most sense to kind of be co-located with your users. And kind of the cowswop solvers in the background, they will understand that if I have a $5,000 trade,

they can probably very well route me on NOSUS and give me the best price. If I have a $5 million trade, they will understand that on Noses, this will incur a lot of slippage because there aren't as many pools as on Mainnet. So they will reroute most of all of my trade to Mainnet and do this in a risk-free manner

because the solvers can now place a transaction across Ethereum Mainet and Nosis chain in the same block that gets me the side of the trade that I want at the lowest possible cost. 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 or have an incentive to live on Ethereum. They just have an incentive to live on these really fast and cheap L2s or become their own L2s.

And do you think that that is where Ethereum should or can be heading where we can have like AVE chain, we can have morpho chain? And then like it doesn't make sense for, you know, AVE to be deployed across all these L2s, they just have like AVE chain and it's just like synchronously composable at all times with any other application. And you'll have to manage all these different deployments and the bridging and this whole like complex infrastructure, composable infrastructure that we have now.

Like, yeah. Yeah. It's super interesting question. So I think there's two levels of answers here. The first one is should end users have any business being on Ethereum? And I know this is somewhat of a contentious take, but I would say in the long run, probably no. So kind of if you take censorship resistance to its natural conclusion,

it also means you can't protect customers, right? Kind of like any sort of customer protection that we are used to. So for instance, you engage in some protocol and you were scammed or you send it the wrong address or kind of you kind of you feel kind of they misrepresented um what they were offering you have absolutely no recourse on ethereum right because because they put censorship resistance first and for some of i mean currently the user base of ethereum is really small but will this work for eight billion people probably not right kind of the most people will not want to make this trade-off, that they cannot be censored, but at the same time, the scammers can

also not be censors. So, I think there'll always be some people who kind of run their own node and to kind of, who are willing to kind of trade that credible neutrality for security they could have elsewhere. But I would assume it is a small minority sliver of the global population. And then the question is kind of like how will depths kind of be divvied out across different networks? So kind of yes, I think the app chain hypothesis has merit. I can see that play out. In terms of gas, I should add that the exact numbers don't nail me on them, but kind of that I'm just giving you kind of ballpark numbers here, but say I have an L2 and a transaction within my L2 costs one unit. then a transaction from my L2 to a different L2 costs 10 units

and a transaction from my L2 to Ethereum or from Ethereum to my L2 or any kind of transaction that involves Ethereum costs 100. So kind of it's still cheaper to be co-located with things on the same network and kind of calling across networks should be, I would make the case that in many, in many, in many cases it makes sense to be co-located with your users or debts you use frequently in tandem. But you can always call kind of whatever there is in the larger ethereum economic zone. I can also see a future where kind of cross-chain calls become cheaper in comparison to same network calls

or kind of the entire cost goes down so much that it doesn't end up mattering much. And then kind of the app chain hypothesis obviously is also, super valid. I mean, all of this also depends on the value that your transaction, that you're transacting in every, in every, in every trade, right? So kind of like if your average trade size is $1,000, then it doesn't really matter whether you pay half a cent or kind of five basis points, kind of like for transaction. Yeah. Yeah, I think that the way that I think about this one, you know, as I've been thinking about it last couple of days, like, I think the vision is one where Ethereum, we can kind of borrow the net neutrality kind of narrative here

where like Ethereum just becomes sort of dumb pipes. Yes. And the application layer is where everything really happens. And Ethereum should stay neutral, you know, should inherit these crop properties, which is an acronym that I learned today. And then the applications themselves can have you know, so different philosophies around how they manage things like scans or who has access to the network. So if it's like a bank or if it's a government, you know, they may have like, you know, white list addresses and KYC addresses. But then at the same time, you can have things like Aztec or, you know, Uniswap or any other application live there. Just one last question. And, and I think we can wrap this up, but you know, you're making a lot of the same noises that,

like, people in the cosmos ecosystem, uh, have been making for a long time. So, you know, having a shared security layer, uh, application specific blockchains can are sovereign and can have their own rules, um, can build their own oracles if they wish, can decide, you know, how their blocks are, are constructed, uh, interoperability between different chains. And then like, you know, uh, chains can decide. how much or how close or how far they are from the sort of like main chain. And not only Cosmos, but like we've heard these noises in Pocod and like Avalanche and all these other ecosystems. I love the word.

I love Ethereum Economic Zone because like literally in Cosmos, you know, we have the atom economic zone. And like none of these other attempts, I think, to do something similar have really been successful, I think, we could say by any, by any metric. what is different here? Like, why is it technically different? And sort of what does the Ethereum ecosystem, you know, NOSIS and the EF have? And that, you know, those other organizations that tried to implement this don't. You know, it's sort of like point to this being the one attempt to do an economic zone, a non-chain economic zone that might succeed.

I say this with all the love in my heart for cosmos. And cosmos, I have the deepest respect for the technology that's been built within the cosmos of us. Love cosmos. But at the end of the day, it is economically much more relevant, whether you're connected to Ethereum Mainnet or kind of a central zone in Cosmos. And I think that to me is the main differentiator here. So kind of you access Ethereum liquidity at kind of with the action of kind of joining this Ethereum Economic Network. That's your upside right there.

And that wasn't the case for the atom economic zone. Yeah. And I asked this to, it wasn't in a recording, but I asked this to Vitalik in the Q&A. And another thing that he brought up was, I think this is true. I think even though the Ethereum ecosystem is much larger, I think the EF has been, well, let's put it this way. In Cosmos, there was a real issue with the proverbial cat hurting and getting people aligned. And I think in Ethereum, there's, you know, things take longer, things are on a much longer time horizon. but in the end I think we end up getting better social cohesion and, you know, the sort of human aspect of it tends to work itself out better than it has in some of these other ecosystems.

So that might also be something that's going forward that, yeah, look, this is really, this is really cool. I'm really quite excited about this as well. And yeah, really, really glad that you guys at Nosis are leading this. I think so, yeah, what's the timeline here? and like what is the call to action for people listening to this who, you know, are interested in EZ, may want to build there? Like, what are the opportunities for people to do in this new, this new economic zone that is Ethereum? Absolutely. So the main net contracts are currently under review. I hope to deploy them end of August.

So then... Will you be deploying them? Are you clicking the button? I think it'll be some money of some kind. It'll probably be one of the deaths to kind of deploy them. It'll be clod. Yeah. It'll be clod. No, no, no, no.

God does I have production access? Not that he's not involved. She's not involved. But yeah. So we'll be deploying them at the end of August. There's currently already a deaf net app. So kind of if you go to easy.io and click on the GitHub logo, you can see what's already there. There's a telegram group.

You can join us. And we'll, we'd be happy to kind of give. view updates whenever we have them. Nosis chain is going to move into the Ethereum economic zone in a limited fashion by end of year. So in a fashion that kind of gives us full shared liquidity with Ethereum, but no infinite nested calls. But kind of one return call per block.

And I mean, that should be good enough for 80% of use cases right now. So this is not far off. This is happening this year. kind of it'll probably take another nine months or so until it's feature complete. But in principle, this is a very bounded project. Awesome. Flika, thanks so much. Thank you for having me on on the other side of this.

It's been weird, but it's also a pleasure. Cool. All right. See you later. Cheers.