Will The Ethereum Economic Zone (EEZ) Rebuild $ETH Dominance?

Transcript

Bankless Nation. I'm joined by Martin Cobbleman from Nosis. Martin, welcome back to Bankless. >> Thanks for having me. >> And we are also joined, first time on the podcast, long time coming, Frederri Ernst. Frederrique, welcome to Bankless. >> Thank you. >> We are uh talking to you guys because something cool is happening over in your guys' neck of the woods. This was a a presentation that Frederri um released at ETCC alongside Jordi Bolina from um from Zisk and I want to learn more about it. Uh because this has been kind of the the subject of Ethereum, the main arc of Ethereum and maybe this main quest line of Ethereum has a few next steps that you guys think we should take. Frederick, I I'll throw

this question to you since you were the one who presented this topic. We're talking about the what you guys have dubbed the Ethereum economic zone. Love the name. And I want to start the conversation here because Ethereum once upon a time had a dream of just a network of independent asynchronous chains that would compose together in a single unified synchronous experience that had boundless scale, you know, low fees and was just one unified united chains of Ethereum. It it kind of seems that this dream has been a little dead for a number of years now. Like we tried it, we made a little bit of progress, we tried some things, but ultimately it seems to have stalled out. Frederrique,

is this dream still alive? >> Um, I think it's become resurrected. Um, so kind of I I do agree that it's been pretty dead for a while. So kind of the idea that kind of you you should be able to compose from different domains of Ethereum seamlessly. Um this has been sidelined for the last couple of years. Um kind of just just as a reminder kind of it wasn't sidelined for no reason. It was sidelined so we could um solve scalability. So kind of like before we actually had any L2s and shards and whatsoever, Ethereum composed marvelously, right? Kind of like when there was just one Ethereum, we didn't

have these problems and we but we kind of we ended up in a place where transactions averaged $50 a piece. Um and obviously this is extremely unfeasible for majority of use cases. So um we ramped up scaling via L2s and that broke the compositability between those individual domains and until recently it also seemed unfeasible to do it from a technological um angle but this has very much changed with recent advances in real time proving. Now Martin, I remember two years ago, a year and a half ago at DevCon uh Bangkok, you

talked about native rollups and it seemed very uh parallel similar uh to what we are talking about with the Ethereum economic zone. uh talking about uh a a you know a number of different chains being able to talk to each other synchronously share a lot of the state of Ethereum is what we are talking about today what you guys uh release at ETC the Ethereum economic zone how is this like downstream of the effort of native roll-ups related how how does these two things couple together >> yeah I mean the first one is uh the term got a little bit overloaded so um so others are using it in a different Okay.

Saying native roll-ups are rollups that have some specific pre-ompile that kind of um proves the correctness or where where it's more natively proven the um where you don't have a separate proof system but kind of that is supported natively by uh by um by Ethereum. Um what I was trying to yeah I was already trying to describe this kind of vision uh one and a half years ago. Although then um yeah real time proving was not um wasn't clear that this uh would yeah would be poss or how how fast this would become um possible. So basically back then I still described it as something where you could do those transactions

that effect um stayed on L1 and L2 L2 in yeah in the same transaction but you couldn't directly read the result uh from an L2 transaction and you couldn't do kind of uh yeah fully complex interactions like you could do on one chain and all those things um are now possible. So yeah, essentially it's an extension or it's now um yeah, it's it's basically one step more than than what we described earlier. >> So there was a buried in there, you said real time proving is that why we're going to be talking about this subject today and not like a year ago or two years ago. There is a specific technology that has been unlocked. uh ZK technology has progressed incredibly

fast faster than most people I think in the industry really ever anticipated and that's why we are able to talk about the subject today the Ethereum economic zone because there was a tech unlock with with real-time proving is that correct >> for sure for sure so there was a tech unlock and and I think that unlock um yeah kind of also brought a brought a unlock in well in interest and in yeah to some extent um funding or commitment to to to build So previously it was just an idea but it was not clear is it is it worth actually building it or investing in it to some degree degree and now with with the promise of of of actually having um yeah all those nice things shared liquidity fully uh yeah fully

composibility. Um yeah, we decided it's now worth uh bu actually building it and quickly um yeah, gathered interest around this project and yeah, and the result was the defet at at ECC. Are you sitting on USDT or stable coins after taking profits and wondering where to deploy next? What if you could access stocks, gold, and ETFs without ever leaving crypto? That's what tokenized stocks on BitGet unlock. Traditional markets still run on limited hours, but capital is moving onchain 24/7. On Bit, you can trade tokenized stocks and ETFs 24/7 with up to 100x leverage, all settled directly in USDT or USDC. No brokerage accounts, no off-ramps, no platform switching. Bit has already

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What is the EEZ? What is the Ethereum economic zone? >> The Ethereum economic zone is the domain around Ethereum where transactions feel like you're on the same network. So kind of if you kind of if I mean that was somewhat um kind of techminded. If you look at it from an economics perspective, it's um it's kind of the group of people who who acknowledge that Ethereum is the most powerful um decentralized economic zone in the world and want to be able to settle on it natively.

>> M you want to add something to that? >> Yeah, I do maybe one one more. So So yeah, in the EZ um you have shared liquidity. So for example um you can do a trade uh and you can in the same trade in the same transaction source liquidity from Ethereum and all other chains um that um are part of the EZ. Um so so in today's world you often see it that on different chains you have yeah significant significantly different uh liquidity even yeah different prices maybe different interest rates interest rates on on lending protocols and so on. um on the same chain you would not expect that because there's

can immediately be arbitrage and or basically then on the same chain you only should have one price for one token and in the EEZ you will also have only one let's say for example one price um per token >> and I think this is this is um super it's it's a good example to kind of dig into um because you will still have different liquidity pools on different parts of the network. It's just that they stop behaving like separate markets because you can access the liquidity from everywhere. They start behaving like a single market without any of the infrastructure actually having to move network at all. So everything stays where it is. It's just instantly

instantly accessible from wherever you are in the easy. >> Everything stays where it is. I think that is a very important line to underscore. So the EEZ this is not a new rollup standard. This is not like the OP stack or the the A layer you guys aren't introducing. It's like oh all the other layer twos are fragmented come to our layer 2. It's it's unfragment. This is this is not that. So technically let's go into the technical definition of what the EEZ is. Fri how how would you explain it technically?

Um technically um that's a fantastic question. So kind of if you look at any one network um a network has a perfect understanding of what its own status right. So kind of this is kind of how it knows um what what the what the current situation is like and kind of like what transactions are feasible and so on. Um it has zero visibility into anything that happens outside of it. So if you want two chains or two networks to interact with one another, you need to give them a way of understanding beyond doubt um the state of the other network so that they can work um so they can

operate on that state as if it was their own state. So kind of that has to be the level of assurance you have to have about the state of the other network. And with real time proving um we actually allow um the the networks to understand the state of the other networks so that they can act as one. I I would I would give a simpler or one simple answer is to say um layer 2 right now they process transactions and kind of once in a while maybe every 10 minutes uh they they commit to Ethereum or settle on Ethereum and then kind of

to finalize that it often takes even longer than up to a week uh with a dispute period. Uh chains that are part of the EEZ settle essentially every block so every 12 seconds. So every 12 seconds they make I mean they can make uh smaller blocks. they can be faster in between, but every 12 seconds they synchronize or settle um with Ethereum and uh so with every Ethereum block and they yeah settle with Ethereum and those settlements allow um for yeah for transactions between Ethereum and those chains >> and it's notable that it's a very thin layer right so kind of like as you said it's not kind of like like an entire OP

stack and it's kind of like come to our solution and kind of like everything is wonderful for here. It can be retrofitted onto existing L2s if you are willing kind of like the the main concession that kind of you have to make as an L2 is that you kind of have to acknowledge superior uh that you have to acknowledge Ethereum as your superior. Um so kind of if Ethereum reorgs, you have to be willing to potentially reorg. If you're willing to do that, you can become part of the Ethereum economic zone regardless of what kind of rollup you are.

>> I see. I see. Okay. So, maybe to just to zoom out a little bit, the the thing that separates the, you know, Ethereum network of networks, the network of chains, the network of L L2s, and a seamless united state that's synchronous and composable. The thing that separates those two things is all of the independent chains are slow to understand the state of other chains. So like the unis swap USDC ETH pool on arbitum is slow to understand the unis swap USDC ETH pool on base. And if we can get that timing down to real time an ethereum block then we start to look

like the Ethereum economic zone. And so it's not necess it sounds like it's not really like a binary, but it's like if we can get all networks, all Ethereum networks, layer 2s to update the state of its knowledge of other layer 2s inside of one single Ethereum block, then we produce this thing called the EZ. Is that an a fair interpretation of what you guys are saying or does something need to be amended? >> Yeah. And but but the good thing is also um it it's enough if one one chain starts so or or at least for that chain it already gives significant benefit and that is accessing Ethereum's liquidity.

So even if you are the first chain and the only chain but you are part of this or I mean you you have this um this yeah real time or every every block settlement with Ethereum. It allows you or your users of the chain already to um yeah to interact natively with Ethereum. So practical example you place an order on on let's say cow swap on on such anchain. um then the solvers or or the router would dynamically decide um is it is it worse or can I settle this or should I settle this locally with the liquidity um on my chain which would potentially mean uh even less gas costs because you don't need to touch um

Ethereum state um but if if it's worth it the extra gas costs of Ethereum let's say gas cost on Ethereum might cost 20 cents or something like that so if if those 20 cents are are well worth it to kind of the price improvement is big enough. Um then such a chain would decide to yeah create a transaction that both uses L1 and L2 state. Um yeah and and and that that means even a single chain benefits in my view significantly from joining EZ. Then of course it can go beyond. As soon as you have one chain joining then in a way the the aggregate liquidity is now Ethereum plus that chain and the chain the next chain

joining would would join both kind of in a way because they already it's a shared chain shared um zone and by that the EEZ overall could become yeah significantly bigger than than Ethereum today. So kind of just as a as a rough idea, if you just look at DEX trading volume, um then roughly 50% today are on Ethereum and 50% are on on them, yeah, on the layer 2 uh combined. Um so so yeah, by that metric, you would already double the uh kind of liquidity trading volume.

>> I see. I see. So, so it sounds like that what the Ethereum economic zone is today to like kind of extend your guys' idea of it. The Ethereum economic zone starts at the layer 1. What is the EEZ right now? It's the Ethereum layer 1. >> And then with uh when one chain buys into the EEZ by adhering to the standards, well then the number of chains grows grows by one. Now there's two. Now there's two chains. The second layer two agrees to that standard. Well, now there's three chains and there is there's liquidity interoperability between the two layer 2s and also if necessary the Ethereum layer 1 if the output is more valuable than had it been just the layer twos and it sounds like

there's kind of just like a math problem of just if we're doing crosschain trades what's the most optimal trade accounting for all the gas fees across all the chains and then as more and more chains grow in the EEZ then the possibilities of what is the best outcome also grows for the users doing doing all of these trades. Both of you are nodding your head so it sounds like I'm on the right track here. >> Absolutely. But it kind of it actually extends beyond even that. So kind of so far we've kind of talked about trading in financial use cases and I mean those are definitely real. So kind of if you have um a perex on one chain and kind of your ethers on a different chain and kind of you you want the um you want to

borrow against it on a third chain that that becomes um that becomes completely seamless. So there's no bridging there's no failure risk. It's kind of it just becomes one atomic transaction. But beyond kind of the financial use cases um you also see that chains that are geared towards other use cases. So for instance, if you have a privacy first chain, um what what you could do is you could have your identity on there um and the this privacy chain would probably be very bad at compute because kind of private compute is expensive. So kind of chains like Aztec, they have one or two transactions per second um because of this. Um, but if you kind of if you have

your identity there and you want it private, you can um you can send a proof or kind of you can you can you can have a proof um from that chain that you're allowed to access a um specific say Fiverr document uh because of credentials or membership or reputation that you have and your identity always stays on the private chain. It's just the proof that kind of leaves the chain and kind of in that way you give individual chains um much more freedom about how how um how they kind of what they optimize for, what kind of use cases they target. You no longer kind of

have to endlessly replicate table stakes, which is what we're saying what we're seeing in the L2 landscape today. And um I think that will be a huge unlock. >> Yeah. So actually I think it was at also your bankless summit at well for one and a half years ago last last um defcon where um I think Eric Wall gave a talk about trying to build an application on Ethereum layer 2 and it was kind of impossible because he well he wanted NFTs and he wanted to use the NFT from one chain on on or on from one layer two on another layer two uh and basically that was more or less impossible to build and that is more or less

impossible to build today. Um but yeah so so so basic so basically just echoing that it goes beyond the financial use cases um everything where you need composibility um yeah those those things will become again much easier >> and it goes beyond even sorry sorry David it goes beyond even that so kind of if you if you look at um non-public chains um so kind of obviously kind of say you have a so this is a public chain um but you can even go to consortium chains or prividiums. So kind of as long as you're willing um to proof your state and reorg potentially if re if ethereum reorgs you can compose. So kind of as

kind of a banking consortium you can have a private chain um that uh with validators that are run by the banking consortium members but you can interact synchronously with everything that's on Ethereum. Um and if you if you kind of speak to these institutions then often kind of their they are in two minds of kind of what to do because obviously um the liquidity that's very interesting to them is on Ethereum but they do not want to give up um all of um um all of this administrative power they have from running their own infrastructure. they don't want to be at

the the mercy of kind of Ethereum validators and kind of you you you can kind of now have the best of both. I could even see this kind of extend to to nation states. So kind of if if kind of for instance you're a nation state and you want to issue someone um a um a form of identity on chain but you don't want to do it on Ethereum you can now do it on your own uh on your own chain um and have it composed with everything that's on Ethereum kind of it's also kind of if you want to issue T bills natively or CBDC kind of all of this kind of gives you a way of having

some amount of control but still allowing it to compose with everything that is already out there. >> Okay, let me let me uh that there's a lot in there that's definitely worth underscoring. So, let me trace over everything to make sure I listen I understood and and the listener is always keeping also keeping up with us. Uh it sounds like the in the in the current way of building where or maybe the 2023 2024 era of Ethereum rollups it was all about kind of Ethereum equivalents. Let's build arbitum. Let's build optimism. Let's build base. Let's deploy unis swap there. Let's deploy a there. Let's deploy all of the big apps that made the Ethereum layer 1 successful and deploy it on the layer

2s. And then what did we get? we got, you know, 15 different mini Ethereums on top of one big Ethereum and there wasn't that much differentiation there. And so we were all kind of like sucking up each other's oxygen. And ultimately ultimately we never solved the problem that needed to uh that we were trying to solve in the first place, which was scaling at the Ethereum layer 1. And so we ended up just like replicating the patterns without producing the the solutions here. And so now I think in in 2026 we have that re recent um state of layer 2 statement from the EF which I think Frederri kind of echoed what you just said which is we need layer 2s to be more unique and differentiate between themselves. And I think we can go even

further and say like there needs to be very narrow roles for specific L2s that they optimize strongly for. And the vision that you were kind of painting that I got in my head is like there is an identity layer 2. Maybe it's Aztec because I want my identity identity to be on the Aztec layer too. There's uni chain which might be optimized for unis swap. There's maybe there's a chain to optimize for for a. And if all of these things are in the e Ethereum economic zone, I might be able to keep like put my assets in the a chain and then I could also using the excess margin that I have because of the deposits. I could

swap it on the unis swap chain. that activity could be tied to my private identity on Aztec and I might need and then then in all one transaction I might be able to you know like buy access to this vile fileverse document which is on the which is somewhere else and there's a there's a separation of responsibilities here that we don't have to conflate and so in the old world we had all of the same responsibilities all replicated across 15 different chains and I think the image the idea that that you painted in my picture is actually chains can now focus on their individual responsibility, but all of that can be synchronized with real-time proving. And this is what we call the Ethereum economic zone. But

wait, there's more. It goes into the private consortium chains as well. And so you can still have some of the permissioned banking stuff that is very in vogue in 2026. They can also be a part of the Ethereum economic zone, access the same composability, liquidity, everything else that makes Ethereum Ethereum, but they still have all of their private, you know, permissioned networks. All of that is retained, but they can still access the zones for for what's relevant to them. That's what I that's what I just heard.

Is there again, is there anything that needs to be updated or amended? >> I think that was uh I wish I had said it like this. I'm sure I'm sure we as we all talk about the EEZ more, I think we're all going to get better at talking about this stuff. Uh Frederri, I want to go back to something that you said. You said it it's a very thin layer. Um the EEZ is a very thin layer. That means like the EEZ is actually something. It's not just like smart contracts that are spread across all the different chains. There's actually a thing that is the coordinating um substrate between. There's not. Okay.

Maybe you could actually talk about like what that thin layer is and what that role is and like where that actually lives >> kind of on on on a very high level. It it's basically a standard for how um different networks talk to each other. Um and that's that's all there is to it. So kind of there's there's >> this standard. >> Well kind of it yeah to some extent it is a standard. So kind of I mean um we kind of we have this unlock with kind of real time proving um and obviously kind of like with any technology there's different ways of architecting it. Um but kind of the obviously kind of like you have to kind of if there's multiple players you kind of have to agree on one

way. Um the easy is one way kind of uh we're aiming for kind of for for this coordination um layer. We're aiming for less than a thousand um lines of code. At least kind of like this is what what what uh Jordi kind of is uh has in his mind. Um but um kind of it it will be it's free open source software kind of it's published by um a new association in Switzerland. It's all it's yeah it's all free. it's in the public domain. It doesn't belong to anyone.

>> Yeah, I I I would say yes, that is correct. On the other hand, to make it work, there's still so there is there is the there is there will be some coordination effort needed. So essentially um let's start with one chain. So you are one chain and you want to have the synchronous composibility with Ethereum. then essentially you are doing a transaction that um yeah might affect Ethereum and your chain. So yeah again that needs to be tightly coupled and the way um Ethereum blocks are are produced nowadays is mainly through yeah builders. Um now there can be of course conflicting

transactions. So let's say there let's say there's an Ethereum kind of regular L1 transaction that touches specific liquidity pool and then there's this transaction coming from L from L2 that also wants to kind of go through EZ kind of into this specific liquidity pool. there needs to be some um yeah ordering um which well ultimately does the um ultimately the um yeah Ethereum validator or builder does um but here there needs to be some yeah if if you want to do this efficiently ideally you have some coordination between um the uh sequencer of the L2 um and and the builder of of of L1 and there are ways

to start um or we we will start the easy kind of uh with just submitting bundles. So kind of without additional required protocols or without additional required standards. But as soon as you want to have uh want to go beyond one chain and you have multiple chains, then it absolutely does make sense that this um yeah coordination layer which is implicitly already there uh through kind of block builders and and their protocols that that will become uh yeah more more important uh to actually build proper blocks that um yeah that that have all the aggregated proofs.

Um there is there is you can have all the chains having separate proofs but of course it's also more efficient if they aggregate the proof. So long story short um it can be thin but to make it work well and to make it work efficient there will probably be um some layers. >> U so what I'm hearing is that there is a naive worse way of implementing the ee that still works. And with optimizations and coordinations uh between the different parts of the stack, there is a a central coordinating role that can make everything better and that takes this existence of like some level of

something doing some interparty coordination and then we can get even more benefits. Is that correct? >> Yes. >> Okay. The the good thing is that um all major block builders that's currently Titan, BeaverBuild, and Flashbots already opted into this. So kind of they will support >> the people. >> We we we have the people. So kind of they they very much see um the upside of this for Ethereum and also for themselves. Um so kind of they they are on board and they will support this from day one. So, um it's it's not this kind of Martin. It sound a little bit like an uphill battle, but kind of like it's it's um kind of the we're already kind

of uh pretty pretty high up on the on the peak. >> Yeah. I think what you're saying is the incentives kind of make sense for these players, Titan uh uh who are the two block builders, Titan and and uh >> the Beaver and Flashbots. >> Beaver and Flash. They they together they kind of build in excess of 90 90 95% of all blocks. >> Right. Okay. And Okay. And and you said that they see the upside for themselves. Maybe you could illustrate what that upside is because if the block builders of Ethereum are getting upside that means that people like me are transacting more on Ethereum, right?

Like illustrate what that upside actually looks like. >> Yeah. So kind of I mean obviously block builders are long ETH, right? kind of everything that kind of um pulls economic activity onto L1 or kind of um into the L1 adjacent domain is both good for um block builders and validators. Um and I think this is something that kind of we um we have deliberately not overemphasized but if you look at L2s today often the economic incentives are not well aligned with Ethereum. Um and I think I think

this is a way of um remedying that situation. H I think if you are a classic Ethereum bull, you'll see the Ethereum economic zone and you'll say, "Okay, synchronous composability, synchronous states, uh better DEX executions, uh you know, composable apps, I'm seeing Ether as the money of the internet." Uh and if you're more in like kind of the Black Works camp and you're like fees are everything, well, I think the EEZ has an answer for that, too. Because if we can have composable networks, we can have this like festival of the commons, this synchronized United State chains of Ethereum where all the independent value

of independent chains all are composed into one ecosystem. That ecosystem is going to incur a lot of demand because you're aggregating bespoke value into the same place. And so there's going to be fee demand. That's probably why the the block builders are it on this. So depending on your flavor of bullishness, I feel like there's something here for for both parties. Martin, what do you think? >> Yeah, for sure. No, basically on the second one, so right now L2s essentially create relatively little um L1 demand. So kind of they I mean, yeah, they use blobs, but but they sometimes only settle every 10 minutes. So So basically just a couple of transactions every every now and then, every few few

minutes. um in in this world essentially every L2 user has the option at any time to to do a transaction that also um uses uh L1 uh liquidity and and if there's enough interesting things on L1 which they usually are or still are um then then the expectation would be that let's say um let's say there are 200 L2 transactions in a 12 um in a 12 second uh time then at least a couple of those three four 5 10 uh will actually also want to access um L at one state. So definitely much more uh yeah much more um but ultimately transaction fees uh and yeah MEV or kind of just economic

relevance of of building those um L1 blocks. Certainly, certainly. Um, I want to go to this metaphor that my co-host Ryan uses a lot that we've used a lot on on the show, which is, uh, you know, we have this United Chains of Ethereum, but one of the reasons why this kind of model broke down in past eras was that the coordinating power, the authority of the layer 1 was just not that strong. It's like we had these very, you know, fishing lines, loose, weak ropes that are tying together Ethereum's layer 2s to the layer ones. They're just not that strong. Uh, and while, you know, we all kind of share the EVM, there's nothing really strongly uniting these

independent faction. It's kind of like NATO, you know, it's like the coordinating might isn't that strong. Like people do their own things. Members of NATO kind of still do their own thing no matter what. Uh Frederica, you said something where in order for this EEZ to work, you have to give up some power to Ethereum. You emphasize the reorg. Uh if Ethereum reorgs, then any chain in the EEZ in order to be a part of the EEZ must also reorg. And it sounds like we're just elevating Ethereum as like the canonical source of truth. And so long as all of the chains in the EEZ see Ethereum as the source of truth, not a source of truth, but the source of truth, that

means that they're a part of the EEZ. Maybe you could just go into that a little bit more. Like why is that important? Why must that be the case? And is that the complete story about um uh the chains in the EEZ giving up power to the Ethereum layer 1 or is there anything else we should talk about as well? >> Um yeah, I mean this is this is correct. So kind of you need to give up some um power to the Ethereum layer 1. In practice, this probably is not going to change a lot for you. So kind of if you look at um if you look at how many reorgs there are on a daily basis on Ethereum, there's about 10 one block reorgs. Um, and then kind of as an L2, you only have to um adjust your chain if

kind of anything that touched your state kind of gets reoked out. Um, so kind of if it's just sending sabers from one place to another, probably not that important. If you kind of touched upon um an automated market maker whose state was altered, then yes, it's possible. um it's um it's it's more of it's more of a principled thing. So kind of in order to kind of all be able to kind of orchestrate you need um one conductor, right? and kind of acknowledging Ethereum as the conductor explicitly. Um to actually not just kind of like have

the woodwinds on kind of like one one one side and then kind of the percussionists on the others and kind of the violinists kind of like in the middle somewhere. You kind of you need the conductor, right? And kind of like acknowledging Ethereum as the conductor is very much implicit um in in the easy >> Yeah. Maybe maybe you you had this metaphor of um Yeah. what what is tying it together. So here it's really the interest of um being able to access this yeah state of of of Ethereum. So for example the liquidity. So if you want to allow your users to do a yeah trade on your layer 2 that in that trade also accesses um yeah Ethereum liquidity and

touch state then you need to have this the settlement kind of with Ethereum in in in the next block or yeah or essentially every block. Um so the again the big benefit is that that yeah also kind of for bridging. So, so essentially you send tokens from Ethereum um to your chain and they are immediately available. You can immediately um in that in that sense there is no bridging the the um um of course again the where where where does practically this Rio thing comes comes from. So if now um something comes out of Ethereum, let's say tokens are sent to your chain and you're immediately using them uh on on on your layer 2 sending them forward

using them in index and then it turns out this Ethereum transaction never happens because um Ethereum gets rearched. Yeah. Then you have a well then you have to deal with this and the easiest way to deal with this is to reorg your um chain to this uh level as well. So I would say this is the only downside essentially uh coming from EZ. And I would also say uh I would say well if I had a wish for an Ethereum road map I would say um single slot finality um would would essentially uh solves that problem. Um but yeah >> right that was that was exactly my next question is like what does the EEZ ask of the capacity of the Ethereum layer 1

protocol single slot finality seems to just >> what Frederri said while you know there is potentially a problem it's it's not it's not really the biggest problem it's a very infrequent problem a problem nonetheless but an infrequent problem and I think Martin what you're saying is that if the Ethereum layer 1 introduces single slot finality then the small remaining of the reorg problem actually just gets eliminated. Is that correct? >> Yeah, I I I would say it's largely a complexity problem. So in practice, reorgs happen very rarely. So couple of times a day um and only for one block.

So deep reox basically never happened in the in the history of Ethereum. Uh so let's say five 10 uh blocks that never happened. uh but but theoretically it is is there and then you theoretic or kind of if you want to build it properly you have to deal with this theoretical case. So it does add yeah bit of well fair chunk of developer complexity but uh once you handled it practically yeah will not have big relevance. If you're already holding soul here's something you may want to pay attention to. Galaxy 1's just launched Salana staking and you can earn up to an estimated 6.5% in variable staking rewards on your soul with no platform commission fee charged throughout December 31st, 2026. While

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better than institution services but from a self-custodial wallet. And this is what we've been talking about for years. Money that's open and is happening. So give MetaMask trading features a look at the link below. >> What will it take to get a lot of the layer 2 as we know it today, the big ones? because it would it's it'll be great if we can get you know some uh chains to adopt the EEZ but the EEZ as a vision won't be successful until we get like the dominant layer 2s the arbitrums the bases the world chains uh is it reasonable to assume that these parties will be interested in joining the EEZ and will it be difficult for them to join the EEZ >> yeah so I I think to some extent um

will probably be the somewhat smaller ones that start first because they have uh more to gain um because to some extent the bases and or base and and yeah I think it's really just maybe maybe arbitum and um polygon that really have um their own ecosystem that's still smaller than Ethereum but but they have basically they have dexes they have lending protocols they have oracles they have essentially the full stack all all other chains, smaller chains, um are trying to do this as well, but but are somewhat struggling. So, they usually have their niche and then they have other things where they basically can't at all compete um uh with with

Ethereum. So um so for them it will be the initial incentive will be much bigger because finally they don't have to I don't know kind of incentivize liquidity for this pair that where naturally liquidity would just not be there or kind of get an oracle protocol for those things they could basically just say fine we have here our niche and if you need anything else you can easily um get it from uh from from Ethereum. So that's essentially the first wave I would expect um to happen. Yeah. Then I do think um those once once they are successful or or that works successfully I think then the time will come um that the arbitums

and and um basis of this world will yeah kind of face this decision and uh yeah probably probably um uh yeah will consider whether it's worth uh giving up this to some extent they're giving up the guarantee of fast um fast block time. So, so currently again because they don't they don't essentially have reox they can uh say after a second or half a second you your transaction is final with this reorg possibility there's still this additional complexity yeah it's kind of final but theoretically Ethereum might reorg and then your transaction might still be replayed um I think that will

be possible to also give here strong guarantees that that even if it's rearched um You can have protocols on top that still guarantee that the transaction will be executed nonetheless. And then it depends on if if it's a simple payment then it should not in no way be affected by a riarch but if it's a trade that touches liquidity that might uh change its state then yeah it gets a bit complicated. So long story short uh eventually I do expect them to join but maybe not first.

I actually um I I I think this is correct, but I would also predict um the um these L2s to become much less important in the grand scheme of things because so far kind of having having kind of this full set of table stakes, this gave you a very significant leg up. But as soon as kind of you no longer have to be a mini Ethereum, as soon as it's completely fine to be different and just compose with whatever else is out there, um kind of the the the gra the gravitational pull of a base um is going to become much smaller and I think we

will see a lot of different um sex chains um in kind of the EEZ. I think we will see um app chains. I think kind of the the kind of like this this generalist chain. Um I see on the way down >> h one thing we have learned by now I think in this industry is that we are no longer in the era of building it and then they will come. I think it in order for the EEZ to be successful, somebody has to do the job of pushing it forward like taking ownership of growing the EEZ. Uh with the announcement of the EECC, there was uh the you know inside

of the announcement was uh something called the EE alliance. Uh who is that? What is that entity? Who is composing it? Is this the entity that its job is to grow the EEZ? What's what's going on over there? >> Yeah. So the easy alliance is not a formal entity. It's more group of projects. I mean there is an association that kind of owns the IP kind of it's it's it's free open-source software. Um so kind of that entity is doesn't matter at all. Um for the alliance it's an informal group of projects who have said we will support this from day one. We will leverage this from day one. So kind of as we kind of um uh explained earlier

kind of it's it's important that block builders kind of execute to this standard ASAP. Um it's also important that DAPs um know of this possibility. So for instance, say um you you are an a um and what what you can now do is kind of you can look at the user deposits across all EZ chains have one global balance that um you can borrow against rather than having um different aiations on different chains where kind of the relevant collateral is the collateral that is on that chain with kind of the parameters that kind of um are set for for that chain. Um but in order to do

that a actually has to know to look right kind of they have to know to look this these are the chains in the easy and this is the collateral and has to understand that logic from a business perspective and um this is exactly what um the deps who are in the alliance will do. So kind of a is one of them spark is one of them um safe and cow obviously monarium xtox centrifuge. So kind of there's a whole host of well-loved um uh applications also outside of the financial realm. So for instance, Fiverr also um will will adopt this from day one. So um from the um from the perspective of depth, this is this is

fantastic new primitive uh because you no longer you now no longer kind of have to maintain 15 different instances of your protocol. can just act across um all easy chains and um that that makes operations easier and user experience better and um they very much see that. So um so far um yeah that we've we've had only great feedback from DAPs and the good thing is on the DAP side um integrations are not that heavy. So, kind of if you want to retrofit your chain, um it it it can be um a larger lift depending on what your situation is

like today. Um but for depths, it's a minor upgrade. There I want to emphasize I think the point that you're making, Frique, is that um this changes what it means to be a builder. Uh it changes how apps need to be built. Uh and there is it's a just a kind of just like a perspective shift a philosophy shift of just like what makes an app an app when one app is built that instantaneously has seamless access to the state of all other apps on different chains there needs to be a kind of you know under this success scenario of the EEZ which we all want I definitely want you guys absolutely want builders are going

to have to think differently about what resources are aail available to them because all of a sudden the state of other chains is something that's at their fingertips. That's been the whole vision of the United Chains of Ethereum. You know, since from Genesis, we've never been living under that context. But in the context of the EEZ, being a builder is going to have to be a little bit different. There's going to be more more resources, more tools, more powers that an application has because it can access state on other chains. And this kind of brings I guess this goes back actually maybe we were living under this context. It was the Ethereum layer 1 back back in like the pre2020 era where you know the state of all

things was available to the fingertips of all other app builders and I I don't think there's been a a generation of app builders that has been used to that kind of paradigm. Martin what what do you want to say here? >> No ex exactly that. So, so people people or at least the previous generation was used to that state that that kind of everything was available and composable and yeah we are trying to get as close as possible to that feeling uh back. So so essentially there will just be a um that there will just be a translation. So if you have an address on on another chain there will just be a translation of how you convert this address to a proxy address. So kind of an a representation on on the chain you are

at. And then the promise is you can just call this um um this yeah this proxy representation this um as if it would live on your chain and kind of everything um uh behind the scenes is kind of then abstracted from you or from from from the app. So yeah, ideally uh it will not be yeah that that complicated and it works uh it it doesn't require apps to build um uh or to to build from from scratch on you. I think that would be a terrible mistake.

We have 10 years of smart contracts that are available and we want we want all of this to work with those contracts um that are already out there >> and and to be fair kind of like it it fully does. So kind of like even if you kind of if you want to do something on one chain, you want to um kind of deposit something in a borrow against it, use that liquidity on a on a third chain, that still works even if a does nothing. Okay. So kind of the the kind of but what kind of what brings it to the next level is if a understands that kind of it has all of this at its fingertips. Um and kind of that can make it even better. But even if DAPs do not adapt to this at all, which which I mean

they will, but kind of even if they wouldn't, um it would still make the um the the state of affairs immeasurably better than it is today. Yeah, I think may maybe there's one illustration that we can make to really like drive this point home is like you know say there's a chain uh you know the A the app is now a chain there is no A app and I want to you know put I want to deposit like $1,000 into the A app and withdraw something but my assets are on like a different chain. They're on the Ethereum layer 1. Uh, I think in, correct me if I'm wrong, in the EEZ context, A can lock my assets on the Ethereum layer 1.

I can dep on the Ethereum layer 1 and deposit it into the A contract on the Ethereum layer 1. The A chain registers the state of $1,000 of deposited money and I can get a withdraw from the A chain which is on a different chain. And I think that's the uh illustration of like this is a a new way to build for builders of recent generations where nothing all has to be in the same place. It can be spread out across the ecosystem yet composable nonetheless. Am I is this correct?

>> Absolutely. Yeah. And first this is correct also saying kind of even in this uh in or in in this setup also even if you would have to kind of move tokens or that would also work within one transaction. So kind of theoretically both setups are possible that you keep your tokens there but still kind of borrow against them uh on this other chain or just within the same transaction you move the tokens lock them there borrow against them and again but do it all in one transaction. >> Very cool. Very cool. It feels like this unlocks a bunch of possibility.

I I hope that's the case. Frederick A. Martin. Uh I want this to work. Uh, this feels like not this doesn't feel like um a side quest. This feels like the main quest line of Ethereum. Uh, and so I I I'm behind you guys. I I want to support you guys. What can the listeners do to help move this effort forward? Uh, you know, we have listeners across the Ethereum ecosystem as I'm sure you guys know. Chains listen to this. Application builders listen to bank list. Users listen to bank list. who do we need uh support and help and buyin from to help grow the EEZ? Who do you want to hear from?

>> Yeah, absolutely. So, kind of if you have a DAP that can profit from this, be in touch with us. So, kind of our the website is ez.io. Um if you're an L2, same. If you're a user and you want to feedback on this or you just want to look at our GitHub, easy.io, this is where everything is at. Um you can also if you are a wellresourced project um you can also contribute funding. So kind of um we as Nosis have contributed funding so has the Ethereum foundation octant um Titan is considering um contributing funding. So kind of it's it's it's very much a community project. So kind of we

initiated this as noises together with um the group around Jodi um who does uh who builds ZISK but um it's um it's for everyone. It's kind of we we're building it um because it needs to exist. So if you want to contribute to it in whichever way um we appreciate it. >> How does the EEC actually roll out? So when would I when would it impact me? Is this I don't feel like there's a go live date. That doesn't doesn't seem like that makes sense. How does it actually come to be?

>> No, to some extent there is. So, so, so we will um or we will we will work on a on a new rollup um that um that uh is yeah kind of maximally um um kind of Ethereum um or in a way is is is very similar to this native native rollup talk. So kind of um it will have there will be no um no sequencers or no no no no one has a special role in this new rollup other than kind of Ethereum validators and Ethereum um um so so that is at least meant to be a a proof of con

or or kind of a first one chain that fully supports this easy but then in parallel um other chains and Nosis will be one of them um will uh yeah will will will join. So essentially there will be a moment when a chain um in some form needs to upgrade and in some form needs to upgrade their um yeah settlement mechanism or bridge mechanisms um to enable those uh synchronous um uh yeah synchronous composible um uh transactions and I would say the first chain that that um that enables that um that will be kind of the launch of um easy

>> and that's in the So, it's it's not it's not kind of a multi-year project. Um, kind of we're well underway and it's it's coming it's coming very soon. >> Great, great, great, great. Yeah. Um, there's a an an old meme, an old uh gif that me and Ryan used to reference a lot where there was just like one guy at a concert dancing in a grassy field all by himself for a really long time and then a second person comes and starts dancing and there then there's two people dancing and then and then a third person comes and now there's three people dancing and then everyone else looks around and starts to kind of get it and then a fourth, a fifth, 10 more people, 20 more people come and everyone's is

dancing and that's kind of what I want the future of the EEZ to be is like you know first a few chains buy in and then everyone else just understands that this is what we need to do in a way the the the analogy here is that was always one of my criticisms of the of the previous or or the this L2 road map so far that it wouldn't really uh create network effects so kind of this effect of well more people dancing makes it more attractive to to dance with them that wasn't really the So kind of if there's yet another L2 launched somewhere um that doesn't make has not necessarily immediate uh impact on on all other L2s in a positive way and that equation

changes here because yeah well the more people dance the more fun it is to join. >> That's right. That's right. That's right. Martin Frederick thank you so much for joining me on the show today. >> Thank you. >> Thank you for having us. >> Bankloation, you guys know the deal. Crypto is risky. You can lose what you put in. But nonetheless, we are headed west. This is Frontier. It's not for everyone, but we are glad you were with us on the bankless journey. Thanks a lot.