Gnosis Chain is moving away from operating as a standalone Layer 1 and toward becoming an Ethereum-settled rollup, while retiring its independent validator set. The shift was outlined in an announcement from Gnosis Chain and in a proposal published on the GnosisDAO governance forum.
Under the approved direction, GNO stakers would see roughly 350,000 GNO unlocked once the validator set is sunset, and the treasury-funded staking subsidy would end. For users and developers, xDAI would remain the gas token, and addresses, balances, and contract state would continue without any migration to a new chain.
Ethereum settlement becomes the core design choice
The proposal’s main technical pitch is atomic access from Gnosis to Ethereum contracts and liquidity. At launch, though, that synchronous composability would be narrower than the headline suggests. It would initially work only from Gnosis into Ethereum, while calls from Ethereum into Gnosis and broader cross-instance composability are left for later development.
If carried through, the change would turn Gnosis Chain into a Gnosis-operated instance within the Ethereum Economic Zone framework. The proposal says the network would produce blocks every two seconds, prove its state on every Ethereum block, and settle to Ethereum Layer 1.
The governance vote approved a strategic direction, not a finished technical design, and it did not ask for funding. Gnosis Ltd is expected to begin by operating a centralized composer that orders transactions, builds blocks, and submits them for proving and settlement.
A proof-of-stake chain built around an unusually large validator set
Gnosis Chain started as xDai, a stablecoin-denominated Ethereum sidechain that GnosisDAO absorbed in a merger in November 2021. In December 2022, it switched to proof of stake through an upgrade modeled on Ethereum’s Merge, but with a much lower validator deposit requirement: 1 GNO per validator instead of Ethereum’s 32 ETH.
That low threshold created one of the largest validator sets in crypto, with more than 100,000 validators at the time of the merge. What it did not create was enough fee revenue to support the system. According to GIP-153, fees cover “only a small fraction of even the minimal cost of security,” leaving the DAO treasury to finance the rest through GNO issuance. The proposal says that issuance dilutes non-stakers by about 2.3% a year, compared with less than 1% on Ethereum. DefiLlama puts the chain’s total value locked at about $96.4 million.
The validator set had already been shrinking before the vote. In GnosisDAO’s July community summary, active validators were listed at roughly 52,000, down from about 76,000 a month earlier, with around 295,000 GNO staked. GnosisDAO also reduced Gnosis Ltd’s annual funding to $15 million in GIP-154, down from a $30 million request. Earlier, in May, tokenholders approved a one-time pro-rata treasury redemption through GIP-151 after months of debate over GNO trading below the DAO’s net asset value.
Settlement security shifts from Gnosis validators to Ethereum validators
GIP-153 states that Ethereum validators would replace Gnosis Chain’s validator set as the source of settlement security. Existing bridge validators are expected to move into a different role, operating the instance’s proof systems.
The proposal is explicit that this means accepting less decentralization by design. It says a misbehaving composer could delay transactions or exclude them, but could not forge state or reverse finalized history. A forced-inclusion path through Ethereum is mentioned as something to evaluate later rather than a feature available at launch.
Ending staking also leaves GNO’s next economic role unresolved. The proposal says GNO should be tied to fee revenue generated by network activity, but it does not choose a mechanism. Fee sharing and buybacks are both listed as possible subjects for a future GIP, once prover economics can be observed in production.
Full composability is not part of the initial rollout
Gnosis Chain said the transition would bring “synchronous composability with mainnet,” which it said no existing Layer 2 currently offers. GIP-153 defines the initial capability in more limited terms: a contract on Gnosis would be able to call an Ethereum contract and use the result in the same atomic transaction, with the full operation either succeeding or reverting together.
At launch, that composability would run only from Gnosis to Ethereum. Before bidirectional and cross-instance calls are introduced, an intents-based bridge is meant to cover the interim period.
The first version would also rely on 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, while bidirectional composability and real-time proving are expected during 2027.