diff --git a/bootstrap_sdk b/bootstrap_sdk
index bf094e28a79..8a36665b64d 100755
--- a/bootstrap_sdk
+++ b/bootstrap_sdk
@@ -59,12 +59,6 @@ TYPE="flatcar-sdk"
 . "${BUILD_LIBRARY_DIR}/release_util.sh" || exit 1
 
 
-DEFINE_string stage1_portage_path "" \
-  "Path to custom portage ebuilds tree to use in stage 1 (DANGEROUS; USE WITH CAUTION)"
-DEFINE_string stage1_overlay_path "" \
-  "Path to custom overlay ebuilds tree to use in stage 1 (DANGEROUS; USE WITH CAUTION)"
-
-
 ## Define the stage4 config template
 catalyst_stage4() {
 cat <<EOF
@@ -142,90 +136,6 @@ cp "${BUILD_LIBRARY_DIR}/toolchain_util.sh" "${ROOT_OVERLAY}/tmp"
 #  by stage one. Therefore, these binaries will cease to work in stage 2 when linked against
 #  outdated "seed tarball" libraries which have been updated to newer versions in stage 1.
 
-stage_repo() {
-    local repo=${1}
-    local path=${2}
-    local dest=${3}
-    local update_seed_file=${4}
-
-    mkdir "$dest/$repo"
-
-    if [ -z "$path" ]; then
-        case "$repo" in
-            portage-stable) path=gentoo ;;
-            *) path=${repo} ;;
-        esac
-        cp -R --reflink=auto "/var/gentoo/repos/${path}/"* "$dest/${repo}/"
-        info "Using local SDK's ebuild repo '$repo' in stage 1."
-    else
-        cp -R --reflink=auto "${path}/"* "$dest/${repo}/"
-        info "Using custom path '$path' for ebuild repo '$repo' in stage 1."
-        info "This may break stage 2. YOU HAVE BEEN WARNED. You break it, you keep it."
-    fi
-    (
-        set -euo pipefail
-        local repo_var hook name
-
-        # FLAGS_coreos_overlay for coreos-overlay
-        repo_var="FLAGS_${repo//-/_}"
-        shopt -s nullglob
-        for hook in "${FLAGS_coreos_overlay}/coreos/stage1_hooks/"*"-${repo}.sh"; do
-            name=${hook##*/}
-            name=${name%"-${repo}.sh"}
-            info "Invoking stage1 ${repo} hook ${name} on ${dest}/${repo}"
-            "${hook}" "${dest}/${repo}" "${!repo_var}" "${update_seed_file}"
-        done
-    )
-}
-
-build_stage1() {
-    # First, write out the default catalyst configuration files
-    write_configs
-
-    # Prepare local copies of both the "known-good" portage-stable and the
-    #  "known-good" coreos-overlay ebuild repos
-    local stage1_repos="$TEMPDIR/stage1-ebuild-repos"
-    info "Creating stage 1 ebuild repos and stage 1 snapshot in '$stage1_repos'"
-    rm -rf "$stage1_repos"
-    mkdir "$stage1_repos"
-
-    # If the file exists and is not empty, seed will be updated.
-    # Stage1 hooks may decide that the seed SDK needs updating.
-    local update_seed_file="${TEMPDIR}/update_seed"
-
-    # prepare ebuild repos for stage 1, either from the local SDK (default)
-    #  or from custom paths specified via command line flags
-    stage_repo "portage-stable" "${FLAGS_stage1_portage_path}" "$stage1_repos" "${update_seed_file}"
-    stage_repo "coreos-overlay" "${FLAGS_stage1_overlay_path}" "$stage1_repos" "${update_seed_file}"
-
-    # take the "portage directory" (portage-stable copy) snapshot
-    build_snapshot "$stage1_repos/portage-stable" "${FLAGS_version}-stage1"
-
-    # Update the stage 1 spec to use the "known-good" portage-stable snapshot
-    #  and coreos-overlay copy repository versions from above.
-    sed -i -e "s/^snapshot_treeish:.*/snapshot_treeish: $FLAGS_version-stage1/" \
-           -e "s,^repos:.*,repos: $stage1_repos/coreos-overlay," \
-        "$TEMPDIR/stage1.spec"
-
-    # If we are to use a custom path for either ebuild repo we want to update the stage1 seed SDK
-    if [[ -n ${FLAGS_stage1_portage_path} ]] || [[ -n ${FLAGS_stage1_overlay_path} ]] || [[ -s ${update_seed_file} ]]; then
-        sed -i 's/^update_seed: no/update_seed: yes/' "$TEMPDIR/stage1.spec"
-        echo "update_seed_command: --update --deep --newuse --complete-graph --rebuild-if-new-ver --rebuild-exclude cross-*-cros-linux-gnu/* sys-devel/gcc " \
-            >>"$TEMPDIR/stage1.spec"
-    fi
-
-    rm -f "${update_seed_file}"
-
-    # Finally, build stage 1
-    build_stage stage1
-}
-
-if [[ "$STAGES" =~ stage1 ]]; then
-    build_stage1
-    STAGES="${STAGES/stage1/}"
-    SEED="${TYPE}/stage1-${ARCH}-latest"
-fi
-
 catalyst_build
 
 if [[ "$STAGES" =~ stage4 ]]; then
diff --git a/build_library/build_image_util.sh b/build_library/build_image_util.sh
index 4abef8f0ef4..285ed519708 100755
--- a/build_library/build_image_util.sh
+++ b/build_library/build_image_util.sh
@@ -365,7 +365,7 @@ get_metadata() {
             local mirror="$(echo "${v}" | grep mirror:// | cut -d '/' -f 3)"
             if [ -n "${mirror}" ]; then
                 # Take only first mirror, those not working should be removed
-                local location="$(grep "^${mirror}"$'\t' /var/gentoo/repos/gentoo/profiles/thirdpartymirrors | cut -d $'\t' -f 2- | cut -d ' ' -f 1 | tr -d $'\t')"
+                local location="$(grep "^${mirror}"$'\t' /mnt/host/source/src/third_party/portage-stable/profiles/thirdpartymirrors | cut -d $'\t' -f 2- | cut -d ' ' -f 1 | tr -d $'\t')"
                 v="$(echo "${v}" | sed "s#mirror://${mirror}/#${location}#g")"
             fi
             new_val+="${v} "
@@ -491,7 +491,6 @@ EOF
     local license_dirs=(
         "/mnt/host/source/src/third_party/coreos-overlay/licenses/"
         "/mnt/host/source/src/third_party/portage-stable/"
-        "/var/gentoo/repos/gentoo/licenses/"
         "none"
     )
     for license_file in ${license_list}; do
diff --git a/build_library/catalyst.sh b/build_library/catalyst.sh
index ef08aa5f8b6..fab4a947c1e 100644
--- a/build_library/catalyst.sh
+++ b/build_library/catalyst.sh
@@ -104,7 +104,8 @@ catalyst_stage1() {
 cat <<EOF
 # stage1 packages aren't published, save in tmp
 pkgcache_path: ${TEMPDIR}/stage1-${ARCH}-packages
-update_seed: no
+update_seed: yes
+update_seed_command: --exclude cross-*-cros-linux-gnu/* --exclude dev-lang/rust --ignore-world y --ignore-built-slot-operator-deps y @changed-subslot
 EOF
 catalyst_stage_default 1
 }
@@ -225,7 +226,7 @@ write_configs() {
     info "Configuring Portage..."
     cp -r "${BUILD_LIBRARY_DIR}"/portage/ "${TEMPDIR}/"
 
-    ln -sfT '/var/gentoo/repos/coreos-overlay/coreos/user-patches' \
+    ln -sfT '/mnt/host/source/src/third_party/coreos-overlay/coreos/user-patches' \
         "${TEMPDIR}"/portage/patches
 }
 
diff --git a/build_library/catalyst_sdk.sh b/build_library/catalyst_sdk.sh
index ff3f3d4b1d4..742b04f86c9 100644
--- a/build_library/catalyst_sdk.sh
+++ b/build_library/catalyst_sdk.sh
@@ -20,12 +20,3 @@ for cross_chost in $(get_chost_list); do
     PKGDIR="$(portageq envvar PKGDIR)/crossdev" \
         install_cross_rust "${cross_chost}" ${clst_myemergeopts}
 done
-
-echo "Saving snapshot of repos for future SDK bootstraps"
-# Copy portage-stable and coreos-overlay, which are under
-# /mnt/host/source/src/third_party, into a local directory because they are
-# removed before archiving and we want to keep snapshots. These snapshots are
-# used by stage 1 in future bootstraps.
-mkdir -p /var/gentoo/repos/{gentoo,coreos-overlay}
-cp -R /mnt/host/source/src/third_party/portage-stable/* /var/gentoo/repos/gentoo/
-cp -R /mnt/host/source/src/third_party/coreos-overlay/* /var/gentoo/repos/coreos-overlay/
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0000-bump-baselayout-coreos-overlay.sh b/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0000-bump-baselayout-coreos-overlay.sh
deleted file mode 100755
index 9910b1cfeff..00000000000
--- a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0000-bump-baselayout-coreos-overlay.sh
+++ /dev/null
@@ -1,30 +0,0 @@
-#!/bin/bash
-
-set -euo pipefail
-
-stage1_repo="${1}"
-new_repo="${2}"
-
-good_version="3.6.8-r10"
-stage1_version=''
-
-for f in "${stage1_repo}/sys-apps/baselayout/baselayout-"*'.ebuild'; do
-    f="${f##*/}"
-    if [[ "${f}" = *9999* ]]; then continue; fi
-    f="${f%.ebuild}"
-    f="${f#baselayout-}"
-    stage1_version="${f}"
-done
-
-if [[ -z "${stage1_version}" ]]; then exit 1; fi
-
-older_version=$(printf '%s\n' "${stage1_version}" "${good_version}" | sort -V | head -n 1)
-
-if [[ "${older_version}" = "${good_version}" ]]; then
-    # Stage1 version is equal or newer than the good version, nothing
-    # to do.
-    exit 0
-fi
-
-rm -rf "${stage1_repo}/sys-apps/baselayout"
-cp -a "${new_repo}/sys-apps/baselayout" "${stage1_repo}/sys-apps/baselayout"
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0000-glibc-crypt-portage-stable.sh b/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0000-glibc-crypt-portage-stable.sh
deleted file mode 100755
index b5838185a10..00000000000
--- a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0000-glibc-crypt-portage-stable.sh
+++ /dev/null
@@ -1,19 +0,0 @@
-#!/bin/bash
-set -x
-set -euo pipefail
-
-stage1_repo=${1}
-new_repo=${2}
-update_seed_file=${3}
-
-cat=sys-libs
-pkg=libxcrypt
-
-if [[ -d "${stage1_repo}/${cat}/${pkg}" ]]; then
-    # libxcrypt is already a part of portage-stable, nothing to do
-    exit 0
-fi
-
-mkdir -p "${stage1_repo}/${cat}"
-cp -a "${new_repo}/${cat}/${pkg}" "${stage1_repo}/${cat}/${pkg}"
-echo x >"${update_seed_file}"
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0001-update-profile-coreos-overlay.sh b/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0001-update-profile-coreos-overlay.sh
deleted file mode 100755
index e9a01036aed..00000000000
--- a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0001-update-profile-coreos-overlay.sh
+++ /dev/null
@@ -1,25 +0,0 @@
-#!/bin/bash
-set -x
-set -euo pipefail
-
-stage1_repo="${1}"
-new_repo="${2}"
-parent_file='profiles/coreos/amd64/parent'
-old_parent_line='portage-stable:default/linux/amd64/17.0/no-multilib/hardened'
-stage1_parent="${stage1_repo}/${parent_file}"
-new_parent="${new_repo}/${parent_file}"
-
-if [[ ! -e "${new_parent}" ]]; then
-    echo "no file '${parent_file}' in new repo, nothing to do"
-    exit 0
-fi
-
-if [[ ! -e "${stage1_parent}" ]]; then
-    echo "no file '${parent_file}' in stage1 repo, nothing to do"
-    exit 0
-fi
-
-if grep --quiet --fixed-strings --line-regexp --regexp="${old_parent_line}" -- "${stage1_parent}"; then
-    rm -f "${stage1_parent}"
-    cp -a "${new_parent}" "${stage1_parent}"
-fi
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0002-glibc-crypt-coreos-overlay.sh b/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0002-glibc-crypt-coreos-overlay.sh
deleted file mode 100755
index e8891c76a33..00000000000
--- a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/0002-glibc-crypt-coreos-overlay.sh
+++ /dev/null
@@ -1,53 +0,0 @@
-#!/bin/bash
-set -x
-set -euo pipefail
-
-stage1_repo=${1}
-new_repo=${2}
-update_seed_file=${3}
-
-base_profile_dir='profiles/coreos/base'
-
-declare -A fixups_old=(
-    ['package.mask']='>=virtual/libcrypt-2'
-    ['package.unmask']='=virtual/libcrypt-1-r1'
-    ['package.use.force']='sys-libs/glibc crypt'
-    ['package.use.mask']='sys-libs/glibc -crypt'
-)
-
-declare -A fixups_new=(
-    ['package.mask']='>=virtual/libcrypt-2'
-    ['package.unmask']='<virtual/libcrypt-2'
-    ['package.use.force']='sys-libs/glibc crypt'
-    ['package.use.mask']='sys-libs/glibc -crypt'
-)
-
-for var_name in fixups_old fixups_new; do
-    declare -n fixups="${var_name}"
-
-    skip=''
-    for f in "${!fixups[@]}"; do
-        l=${fixups["${f}"]}
-        ff="${stage1_repo}/${base_profile_dir}/${f}"
-        if ! grep --quiet --fixed-strings --line-regexp --regexp="${l}" -- "${ff}"; then
-            # fixup not applicable, try next one
-            skip=x
-            break
-        fi
-    done
-
-    if [[ -n ${skip} ]]; then
-        unset -n fixups
-        continue
-    fi
-
-    for f in "${!fixups[@]}"; do
-        l=${fixups["${f}"]}
-        ff="${stage1_repo}/${base_profile_dir}/${f}"
-        ffb="${ff}.bak"
-        mv "${ff}" "${ffb}"
-        grep --invert-match --fixed-strings --line-regexp --regexp="${l}" -- "${ffb}" >"${ff}"
-    done
-    echo x >"${update_seed_file}"
-    exit 0
-done
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/README.md b/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/README.md
deleted file mode 100644
index d31163fe6c2..00000000000
--- a/sdk_container/src/third_party/coreos-overlay/coreos/stage1_hooks/README.md
+++ /dev/null
@@ -1,18 +0,0 @@
-The scripts in this directory are called by the SDK bootstrapping
-script when setting up the portage-stable and coreos-overlay repos for
-the stage1 build. The scripts are invoked with two arguments - a path
-to the stage1 repository, and a path to the current repository. The
-difference between the two is that the stage1 repository is a copy of
-a repository saved in the seed SDK (thus it's going to be an older
-version of the repository), whereas the current repository is a
-repository that will be a base of the new SDK. The idea here is that
-something in the stage1 repository may be too old, thus it should be
-replaced with its equivalent from the current repository.
-
-For more information about the bootstrap process, please see the
-`bootstrap_sdk` script in [the scripts
-repository](https://github.com/flatcar/scripts).
-
-The script for portage-stable should end with `-portage-stable.sh`,
-and the script for coreos-overlay with '-coreos-overlay.sh`. For
-example: `0000-replace-ROOTPATH-coreos-overlay.sh`.