diff --git a/arrow-libs/core/arrow-core/src/commonMain/kotlin/arrow/core/continuations/Effect.kt b/arrow-libs/core/arrow-core/src/commonMain/kotlin/arrow/core/continuations/Effect.kt
index e0bbf54beb5..4152a05e116 100644
--- a/arrow-libs/core/arrow-core/src/commonMain/kotlin/arrow/core/continuations/Effect.kt
+++ b/arrow-libs/core/arrow-core/src/commonMain/kotlin/arrow/core/continuations/Effect.kt
@@ -568,7 +568,7 @@ import kotlin.coroutines.resume
  * ```
  * <!--- KNIT example-effect-guide-13.kt -->
  */
-public interface Effect<out R, out A> {
+public sealed interface Effect<out R, out A> {
   /**
    * Runs the suspending computation by creating a [Continuation], and running the `fold` function
    * over the computation.
@@ -704,6 +704,10 @@ internal class Token {
  * the result.
  */
 @PublishedApi
+@Deprecated(
+  "This will become private in Arrow 2.0, and is not going to be visible from binary anymore",
+  level = DeprecationLevel.WARNING
+)
 internal class FoldContinuation<B>(
   private val token: Token,
   override val context: CoroutineContext,
@@ -754,7 +758,11 @@ internal class FoldContinuation<B>(
  */
 public fun <R, A> effect(f: suspend EffectScope<R>.() -> A): Effect<R, A> = DefaultEffect(f)
 
-private class DefaultEffect<R, A>(private val f: suspend EffectScope<R>.() -> A) : Effect<R, A> {
+@Deprecated(
+  "This will be removed in Arrow 2.0",
+  level = DeprecationLevel.WARNING
+)
+internal class DefaultEffect<R, A>(val f: suspend EffectScope<R>.() -> A) : Effect<R, A> {
   // We create a `Token` for fold Continuation, so we can properly differentiate between nested
   // folds
   override suspend fun <B> fold(recover: suspend (R) -> B, transform: suspend (A) -> B): B =
diff --git a/arrow-libs/core/arrow-core/src/commonMain/kotlin/arrow/core/continuations/EffectScope.kt b/arrow-libs/core/arrow-core/src/commonMain/kotlin/arrow/core/continuations/EffectScope.kt
index 5a1f7d23d6d..60e9332711d 100644
--- a/arrow-libs/core/arrow-core/src/commonMain/kotlin/arrow/core/continuations/EffectScope.kt
+++ b/arrow-libs/core/arrow-core/src/commonMain/kotlin/arrow/core/continuations/EffectScope.kt
@@ -54,7 +54,10 @@ public interface EffectScope<in R> {
    * ```
    * <!--- KNIT example-effect-scope-02.kt -->
    */
-  public suspend fun <B> Effect<R, B>.bind(): B = fold(this@EffectScope::shift, ::identity)
+  public suspend fun <B> Effect<R, B>.bind(): B =
+    when (this) {
+      is DefaultEffect -> f(this@EffectScope)
+    }
 
   /**
    * Runs the [EagerEffect] to finish, returning [B] or [shift] in case of [R],
diff --git a/arrow-libs/core/arrow-core/src/commonTest/kotlin/arrow/core/continuations/EffectSpec.kt b/arrow-libs/core/arrow-core/src/commonTest/kotlin/arrow/core/continuations/EffectSpec.kt
index f5566949003..4bc582ee6e2 100644
--- a/arrow-libs/core/arrow-core/src/commonTest/kotlin/arrow/core/continuations/EffectSpec.kt
+++ b/arrow-libs/core/arrow-core/src/commonTest/kotlin/arrow/core/continuations/EffectSpec.kt
@@ -21,6 +21,7 @@ import kotlin.coroutines.intrinsics.suspendCoroutineUninterceptedOrReturn
 import kotlin.coroutines.startCoroutine
 import kotlinx.coroutines.CompletableDeferred
 import kotlinx.coroutines.Dispatchers
+import kotlinx.coroutines.withContext
 
 class EffectSpec :
   StringSpec({
@@ -241,8 +242,27 @@ class EffectSpec :
         }.runCont()
       } shouldBe Either.Left(e)
     }
+    
+    "#2760 - dispatching in nested Effect blocks does not make the nested Continuation to hang" {
+      checkAll(Arb.string()) { msg ->
+        fun failure(): Effect<Failure, String> = effect {
+          withContext(Dispatchers.Default) {}
+          shift(Failure(msg))
+        }
+        
+        effect<Failure, Int> {
+          failure().bind()
+          1
+        }.fold(
+          recover = { it },
+          transform = { fail("Should never come here") },
+        ) shouldBe Failure(msg)
+      }
+    }
   })
 
+private data class Failure(val msg: String)
+
 suspend fun currentContext(): CoroutineContext = kotlin.coroutines.coroutineContext
 
 internal suspend fun Throwable.suspend(): Nothing = suspendCoroutineUninterceptedOrReturn { cont ->