Ethereum is establishing an "Economic Special Zone," and the island era is over.

Author: David, Deep Tide TechFlow

Are you still interested in Ethereum?

On February 3 of this year, Vitalik posted something on X.

No long-winded explanation—just one sentence: the original vision of L2 and its role in Ethereum are no longer reasonable. We need a new path.

Over the past five years, the entire Ethereum scaling roadmap has been built on L2. The mainnet handles security and settlement, while the execution layer’s workload is handed entirely to L2. Rollups, bridges, cross-chain messages… the whole architecture was designed with Vitalik personally leading it.

Now, the designers themselves say this road is wrong.

Less than two months later—at EthCC in Cannes the day before yesterday, March 29—Gnosis co-founder Friederike Ernst and zero-knowledge proof developer Jordi Baylina took the stage to unveil something called EEZ:

Full name: Ethereum Economic Zone, Ethereum Economic Zone.

Funded jointly by the Ethereum Foundation, with protocols like Aave joining as founding members. In one sentence, what EEZ wants to do can be made clear: make all L2 no longer isolated islands, but become a connected continent.

The direction is obviously correct.

But the problem is that these islands have been built for five years… they were once thriving, but now nobody can be found on them. Are we too late to start repairing tunnels now?

Make up for lost time?

From the name EEZ, you can actually tell what Ethereum wants to do.

Everyone understands the logic of an economic zone: unified rules within the zone, free capital flows, no checkpoints. In the past, Ethereum’s more than twenty L2s were like more than twenty small economic entities—each had its own customs, its own currency, its own clearance procedures. Moving money from Arbitrum to Base still required finding an intermediary to exchange and bridge it.

What EEZ will do is abolish tariffs, unify the currency, and dismantle customs. Actions on any chain can directly reach contracts on another chain; settlement returns to the Ethereum mainnet, and Gas is unified using ETH.

Sounds familiar, doesn’t it?

LayerZero and Wormhole’s stories back then were pretty similar. Connecting all chains, freeing asset circulation… all the same old playbook.

The difference here is that those cross-chain protocols are asynchronous. For example, if you initiate an operation on chain A, chain B executes it a while later. There’s a delay in between, and a risk of failure. Bridges themselves are still a favorite target of hackers.

But this EEZ is synchronous. In a single transaction, contracts on both chains execute at the same time—either they succeed together or roll back together. The technical prerequisite to achieve this is real-time proofs of Ethereum blocks.

This was impossible before. For two chains to perform synchronized operations, both sides must be able to verify each other’s ledgers in real time. But Ethereum produces a new block every 12 seconds; the time to verify the previous block’s computations has always lagged behind. The books aren’t reconciled yet, and the next block arrives.

This year, that speed has caught up technically. Synchronous operations finally move from theory to engineering reality for the first time—hence the EZZ proposal.

The direction is fine. But when you open Twitter to look around, who is still talking about Ethereum now?

It’s not just Ethereum that’s cold— the entire industry is quiet. Last year there was the meme coin frenzy, Solana’s comeback, the AI Agent boom, and from the start of this year until now, no narrative has really taken off.

Ethereum is colder, and more thoroughly. ETH fell from about $4,800 at the end of 2025 to just above $2,000 now, evaporating more than 60%. Even in the community, there isn’t much anger—more like a tired, silent resignation.

From islands to the vault era

But when you look at on-chain data, you see a completely different picture.

According to AMBCrypto, the stablecoin supply on the Ethereum mainnet is still around $163.3 billion. In the $16.5 billion on-chain real-world asset market, Ethereum accounts for 58%. Last year, Ethereum spot ETFs had net inflows of $9.9 billion. DeFi TVL is still the highest across the whole industry, at roughly $53 billion.

People may have left, but the money is still there. And it’s not retail money—it’s institutional money.

Actions by the Ethereum Foundation itself also point in the same direction. Around mid last year, it paused its public grant program, cutting the burn rate to below 5% per year. But last week it just completed the largest single staking in history—22,517 ETH, worth about $46.2 million—locking it into the Beacon Chain.

Cutting the budget while locking money in the treasury; at the same time, pulling funds to support an interoperability solution that came later than everyone else.

All these moves together point to one conclusion: Ethereum’s island era truly has ended. But what replaces it is not a lively continent.

It’s a vault.

Quiet, sturdy, filled with institutional assets. Not much living there, but it holds the most money across the entire industry.

And the vault has no taxes. Ethereum doesn’t make money.

Ethereum’s economic model has a very simple loop:

Users trade on the mainnet; those trades generate Gas fees. A portion of the ETH in the Gas fees is permanently burned. The more people use it, the more it burns, and the ETH supply keeps decreasing.

When this mechanism first started running in 2022, the community gave it a name: ultrasonic money. The idea was that ETH not only resists inflation, but is deflationary—harder than Bitcoin.

That narrative lasted two years. Then L2 dismantled it.

After a large number of transactions moved from the mainnet to L2, Ethereum mainnet Gas fee revenue collapsed immediately. According to BitKE, Ethereum mainnet revenue dropped by about 75% over the past two years. In one week, the blob fees generated by L2 submissions to the mainnet added up to only 3.18 ETH.

3.18 ETH—at the price back then—that’s only about $5,000.

For a network with $53 billion in TVL, a week’s blob revenue is enough to host a decent New Year’s dinner in Shanghai.

If it can’t burn, then supply can’t be pressured. This year in February, ETH’s supply officially turned into net growth, with an annualized inflation rate of roughly 0.74%. “Ultrasonic money” became an expired marketing slogan.

That’s the cost of the L2 roadmap. When users and transactions move to L2, L2 absorbs the fee revenue, and the mainnet is left only with settlement. Settlement is important, but settlement doesn’t make money.

To put it another way: Ethereum created an economic zone, moving the factories and shops inside. The zone is bustling. But tax revenue belongs to the economic zone itself, while the central government’s revenue keeps getting smaller. The EEZ方案 mentioned in the previous chapter wants to reconnect the economic zone back to the center—but what comes back is liquidity, not taxes.

Institutional money is locked in the vault—safe. But the vault itself, the asset called ETH, is becoming harder to tell a story about because it has no income.

From $4,800 down to $2,000 isn’t just about sentiment. When an asset’s core narrative shifts from “deflationary” to “actually still inflationary,” the market will reprice it.

Ethereum’s situation right now is this:

The strongest infrastructure in the industry, the most institutional capital in the industry—but an economic model that’s leaking. What EEZ fixes is fragmentation. It can’t fix this.

Does a house nobody lives in have value?

Back to the question at the beginning: Are you still interested in Ethereum?

Most people’s real answers might be: not really. If ETH isn’t going up, the narrative is outdated, and it’s also inconvenient to use—then it’s not as good as the neighboring Solana.

But ask a different question: do you care about the water pipes under your building?

No. If you turn on the faucet and there’s water, that’s enough. You don’t research what purification technology the water plant uses. You don’t care what material the pipes are made of. And you definitely don’t go post on social media about a pipe brand.

Ethereum is turning into that water pipe.

With $53 billion TVL, $163.3 billion in stablecoins, real-world assets accounting for 58% of the industry, ETF inflows of nearly ten billion dollars a year… these numbers say one thing: for global crypto finance, the on-chain base-layer settlement is still mostly being completed on Ethereum.

Not because users like Ethereum, but because institutions can’t find another pipe of the same thickness.

What the EEZ economic zone is doing is, in essence, to widen the opening of this pipe—so institutional funds flow faster between L2s and settlement friction is lower. This is useful, even necessary.

But a pipe has a particular trait: nobody is willing to pay a premium for a pipe.

A water utility company is one of the most important pieces of urban infrastructure, but have you ever seen its price-to-earnings ratio being higher than that of internet companies? DTCC, the world’s clearing giant, processes more than $200 trillion in transactions every year, yet almost nobody discusses its stock price.

If Ethereum truly goes toward vault-ification and pipe-ification, it will become extremely important—and extremely boring. Important enough that all institutional money passes through here, boring enough that no retail participants are willing to hold ETH waiting for it to rise.

But the people holding ETH today still mostly price it according to the “city” logic: will user growth continue, will the ecosystem flourish, will L2 feed back into the mainnet, will the coin price hit new highs? Those are the stories the Ethereum community has told itself over the past five years.

The reality is: Ethereum is becoming SWIFT, not becoming New York.

SWIFT handles $150 trillion worth of cross-border payments every year, and the global financial system can’t do without it. But nobody speculates on SWIFT stocks, because the valuation logic for infrastructure is stable.

ETH fell from $4,800 to $2,000. What fell wasn’t just sentiment— the market is re-understanding what this asset actually is.

If Ethereum’s future is a vault, then ETH’s fair valuation shouldn’t be based on user counts or ecosystem buzz. Instead, it should be based on how much value it can capture each year as a settlement layer. At the current level of about $5,000 per week in blob revenue on the mainnet, that answer doesn’t look good.

The island era is over. EEZ is here, and the institutional money is still here. But for the people holding ETH, there’s only one thing that truly needs to be figured out:

Are you buying a house in a city, or a right to use a pipeline.