Gnosis Chain to Abandon Its Validator Set and Settle to Ethereum

Gnosis Chain is transitioning from a standalone Layer 1 to an Ethereum-settled rollup and retiring its independent validator set, according to an announcement from Gnosis Chain and a proposal published on GnosisDAO’s governance forum.

For $GNO stakers, the approved direction would unlock roughly 350,000 $GNO when the validator set is sunset and end the treasury-funded staking subsidy. For users and developers, xDAI would remain the gas token, while addresses, balances and contract state would continue without migration to a new chain.

The proposal’s main technical promise is atomic access from Gnosis to Ethereum contracts and liquidity. But that synchronous composability will be one-directional at launch, with calls from Ethereum into Gnosis and broader cross-instance composability deferred to later development.

The change would make Gnosis Chain a Gnosis-operated instance of the Ethereum Economic Zone framework. The proposal says the network would produce blocks every two seconds, prove its state every Ethereum block and settle to Ethereum Layer 1.

The vote approved a strategic direction rather than a final technical design and requested no funding. Gnosis Ltd will initially operate a centralized composer that orders transactions, builds blocks and submits them for proving and settlement.

Proof-of-Stake Chain With Large Validator Set

Gnosis Chain began as xDai, a stablecoin-denominated Ethereum sidechain that GnosisDAO absorbed in a November 2021 merger, and switched to proof-of-stake in December 2022 in an upgrade modeled on Ethereum’s Merge, with a deposit of one $GNO per validator against Ethereum’s 32 ETH.

The low threshold produced one of the largest validator sets in crypto, above 100,000 at the time of the merge, but not the fee revenue to pay for it. GIP-153 says fees cover “only a small fraction of even the minimal cost of security,” leaving the DAO treasury to fund the rest through $GNO issuance that dilutes non-stakers by about 2.3% a year, against sub-1% on Ethereum. The chain holds about $96.4 million in total value locked, according to DefiLlama.

The validator set was already contracting before the vote. GnosisDAO’s July community summary put active validators at roughly 52,000, down from about 76,000 a month earlier, with approximately 295,000 $GNO staked. GnosisDAO also cut Gnosis Ltd’s annual funding to $15 million from a $30 million request in GIP-154, and in May approved a one-time, pro-rata treasury redemption in GIP-151 after tokenholders spent months arguing $GNO traded below the DAO’s net asset value.

Validator Security Gives Way to Ethereum Settlement

GIP-153 says Ethereum validators will replace Gnosis Chain’s validator set as the source of settlement security. Existing bridge validators are intended to move into a new role operating the instance’s proof systems.

The proposal explicitly describes becoming less decentralized as a deliberate choice. It says a misbehaving composer would be able to delay or exclude transactions, although it could not forge state or reverse finalized history. A forced-inclusion route through Ethereum is listed as an option to evaluate later, not a launch feature.

The end of staking also leaves $GNO’s replacement economic role unfinished. The proposal intends to connect $GNO to fee revenue from network activity, but does not select a mechanism. Fee sharing and buybacks are listed as possibilities for a later GIP after prover economics can be observed in production.

Full Composability Is a Later Step

Gnosis Chain said the transition would deliver “synchronous composability with mainnet,” something it said no existing Layer 2 offers. GIP-153 defines the initial capability more narrowly: a contract on Gnosis could call an Ethereum contract and use the result in the same atomic transaction, with the entire operation succeeding or reverting together.

At launch, composability would only run from Gnosis to Ethereum. An intents-based bridge is intended to cover the period before bidirectional and cross-instance calls become available.

The initial version would also use an interim proving setup, likely based on trusted execution environments, before moving to real-time zero-knowledge proving. The proposal targets the first Ethereum Economic Zone block for December 2026 or January 2027, with bidirectional composability and real-time proving expected during 2027.