Zilliqa, Gnosis, Ronin Shift From Independent L1s to Ethereum

Three blockchain projects that once ran their own independent Layer 1 networks are converging on Ethereum, as the costs of running a standalone chain grow. According to Cointelegraph Magazine, Zilliqa announced plans last week to move away from its L1 architecture and become an Ethereum-based Layer 2 instead, Gnosis is transitioning Gnosis Chain into an Ethereum-based network through its Ethereum Economic Zone (EEZ) initiative, and gaming-focused Ronin blockchain completed its own move back to Ethereum as an L2 in May.

Event: Three L1s Head for Ethereum's Orbit

Zilliqa's own announcement, cited by Cointelegraph, was blunt about why it is giving up its independent chain: "Usage never reached what a standalone chain needs," the project said. "Funding and liquidity for standalone L1s dried up. The recent hacks showed how much it takes to secure a chain alone. The data is onchain for everyone to see." That statement frames the decision around usage, funding and the cost of securing a chain alone.

Gnosis, which Cointelegraph describes as having "always been Ethereum-adjacent," is pursuing a more structural version of the same move. Its Ethereum Economic Zone initiative is built around a test network called RollupX, intended to demonstrate how participating chains can share Ethereum settlement and "synchronous composability" as native rollups. Gnosis has targeted spring 2027 to complete the transition, a shift that will see it abandon its independent validator-based consensus in favor of Ethereum settlement. Gnosis co-founder Martin Köppelmann, quoted in the report, framed RollupX as exceeding his own earlier expectations: "Two years ago I gave a talk about 'native Rollups' that would truly extend Ethereum instead of being isolated chains," he said, adding that RollupX "even goes beyond what I had imagined back then!"

Ronin, a gaming-focused blockchain, completed its move back to Ethereum as an L2 in May, according to the report.

CoinHours analysis: Why the Economics Favor Ethereum Settlement

Independent L1s generally have to keep several core functions going — execution, consensus, data availability and settlement — and must also fund the token incentives used to secure their networks through staking, the magazine notes. "It comes down to a chain's profitability," Max Shannon, senior research analyst at Bitwise, told Cointelegraph Magazine. L2s, by contrast, "only need to maintain execution and do not necessarily need a token, which makes them a more attractive financial and operational proposition," Shannon said.

The revenue data Shannon cited to Cointelegraph illustrates just how concentrated fee revenue is at the top of the L2 pack. Coinbase and Robinhood's L2 networks generated $48 million and $52 million in fees respectively over the last 365 days, Shannon said, with margins above 90%. The next eight largest chains each generated more than $1 million annually, according to his figures. From 11th place onward, however, annual fees collectively amounted to less than $1 million, according to the report. Shannon also cautioned that simply becoming an Ethereum L2 doesn't automatically solve the profitability problem: he pointed to Optimism, Katana and Linea as examples of networks whose expenses outweigh their fee revenue, and noted that projects like Blast have already been forced to shut down, per the report.

CoinHours analysis: Cointelegraph notes that Ethereum is often criticized for giving away too much of its revenue to L2s, but that is precisely what makes it attractive to set up projects there. On Shannon's figures, the benefit is uneven: a few large L2s earn substantial fees, while most chains outside the top ten earn very little, so moving to Ethereum lowers costs without guaranteeing revenue.

Implications: Consolidation Is Not One-Way

Not everyone framing this trend treats it as a one-way street toward Ethereum dominance. Alex Gluchowski, co-founder and chief executive of Matter Labs — the company behind Ethereum L2 ZKsync — told Cointelegraph Magazine that he expects more L1 teams to keep maintaining their own chains while still using Ethereum for settlement, rather than fully abandoning sovereignty. "Running an independent L1 means maintaining its security as well as building something people want to use," Gluchowski said, arguing that sovereignty and Ethereum integration are not mutually exclusive, since chains can retain control over their rules and operations while still settling on Ethereum. He added that for applications handling sensitive financial information, maintaining a private environment under their own control can remain essential, and that shared settlement does not have to mean exposing confidential transaction data.

Gluchowski also flagged a practical obstacle that complicates any narrative of smooth consolidation: "Fragmentation is already happening," he told the magazine, pointing to the difficulty of connecting networks when transactions involve privacy. He said interoperability between private environments will become more important as more applications seek to combine confidential activity with access to public blockchain liquidity. The magazine notes that L2s today are effectively isolated from each other and from Ethereum, and moving between them is far from seamless.

Shannon also cautioned, telling the magazine that describing the market as undergoing straightforward consolidation around Ethereum oversimplifies the picture. He pointed out that some large institutions are launching their own L2 networks — including Coinbase and Robinhood — while others are still choosing to build independent L1s entirely, citing Circle's Arc, Stripe's Tempo, and Hyperliquid's purpose-specific perpetual futures blockchain as examples. "So there is no clear conclusion to the L1 versus L2 debate as yet," Shannon said.

What to Watch

The next concrete milestone is Gnosis's targeted spring 2027 completion of its EEZ transition, the network's planned relaunch as an Ethereum Economic Zone. One commentator cited in the Cointelegraph report, an ETH bull known as materkel, described the EEZ as a potential "black hole for liquidity" that could let participating networks tap into Ethereum's total value locked and reinforce its position as a liquidity hub — though that remains a forward-looking claim rather than a confirmed outcome. Zilliqa's progress as an Ethereum L2, and whether more chains follow, will show how far the shift actually extends.

Further reading / context