GnosisDAO has approved a plan to sunset Gnosis Chain's Layer 1 blockchain, unlocking 350,000 GNO tokens and shifting the network to an Ethereum rollup, raising new questions about token utility and network security
GnosisDAO has voted to phase out Gnosis Chain's standalone Layer 1 blockchain, setting the stage for a major technical and economic shift. The approved proposal, known as GIP-153, will see Gnosis Chain transition to a zero-knowledge rollup that settles directly to Ethereum, ending its reliance on an independent validator set and instead inheriting security from Ethereum validators. This move will unlock approximately 350,000 GNO tokens-about 27% of the circulating supply-that are currently staked to secure the network, making them liquid once again.
Rollup Transition and Token Unlock
Under the new plan, Gnosis Chain will become part of the Ethereum Economic Zone, with every block settling to Ethereum using zero-knowledge proofs. The network's independent validator set will be retired, and the staked GNO tokens will no longer be required for network security. While these tokens are already counted as circulating, their release from staking will increase the liquid supply and could affect market dynamics. The governance vote led to a 10% rally in GNO's price, which reached its highest level since May, according to CryptoSlate data. The approval is a directional mandate, not a final launch decision-no funding or technical design has been finalized, and the first version of the new rollup is targeted for late 2026 or early 2027, depending on infrastructure readiness.
Changing Token Economics
The end of staking on Gnosis Chain will force a rethinking of GNO's role and value proposition. Currently, validator rewards are paid from the Gnosis treasury, as network fees cover only a fraction of security costs. This model dilutes non-staking holders by about 2.3% annually, according to GIP-153. Once staking ends, the subsidy will stop, and GnosisDAO intends to link GNO's utility to revenue generated by the rollup. Options under consideration include fee sharing or buybacks tied to network revenue, but the exact mechanism remains undecided. A separate governance proposal is expected once the economics of the new rollup are clearer.
Integration and Decentralization Trade-Offs
The transition aims to give applications on Gnosis direct access to Ethereum's liquidity and composability, allowing contracts on both networks to interact within a single transaction. This could reduce the need for bridges and improve user experience. Several DeFi projects-including Aave, Spark, Fluid, CoW Swap, Safe, and Centrifuge-have signaled plans to build consumer products in the new environment. However, the move comes with a decentralization trade-off: Gnosis Ltd. is expected to operate the sequencer that orders transactions and produces blocks, while proofs and settlement are handled by Ethereum. GIP-153 describes this as a deliberate shift toward a less decentralized execution layer, replacing the established staking-based security model with a new, still-unfinished revenue structure for GNO holders.
Market and Security Implications
The release of 350,000 previously staked GNO tokens could have a significant impact on liquidity and price dynamics, especially given the token's relatively concentrated supply. The governance decision has drawn attention to the risks and trade-offs involved in major protocol transitions. As seen in other crypto projects, changes to token utility and network security can have unpredictable effects on both user participation and market value. For context, recent coverage of token unlocks and protocol changes-such as the Greenlane Holdings' altcoin treasury losses-highlights how shifts in tokenomics and liquidity can create new challenges for investors and users alike.
As of the latest available data, Gnosis Chain's circulating supply of GNO stands at roughly 1.3 million tokens, with the 350,000 staked tokens representing a substantial portion of liquid supply once unlocked. GNO's price reached approximately $136 following the governance vote, marking a notable increase from previous months. The timeline for the rollup transition remains uncertain, with the first version targeted for late 2026 or early 2027, pending infrastructure development and further governance decisions.
Transitioning a blockchain from a standalone Layer 1 to a rollup on Ethereum involves complex trade-offs between security, decentralization, and user experience. While inheriting Ethereum's validator security can reduce operational costs and potentially improve composability, it also introduces new dependencies and centralization risks-especially if a single entity operates the sequencer. The shift away from staking as a core token utility means GNO holders will need to evaluate the evolving revenue model and its impact on long-term value. As more networks consider similar transitions, understanding the practical consequences for token holders, validators, and application developers will be critical for navigating the next phase of blockchain infrastructure evolution.
