- Vitalik Buterin has proposed a trustless onchain gas futures market that would insure Ethereum customers against future transaction fees.
- Critics say the model lacks a natural short side and is difficult to implement.
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He wants to create a trustless on-chain gas futures market, which would mean Ethereum gas fees would be more predictable for customers. Gas fees cover the computing costs of interacting with the Ethereum-Blockchain ab.
Buterin wrote:
“Users often ask whether today’s relatively low fees will persist over the next two years, even as Ethereum scaling work continues.”
To solve this problem, Buterin proposed a futuristic system to the Ethereum community. In what Buterin calls a “base-fee forecast market,” gas could be purchased in advance for specific future periods. In this way, customers could protect themselves against rising network costs, which usually occur when network activity is high.
Buterin said such a market would “provide a clear signal of people’s expectations regarding future gas fees” and improve transparency across the system. Buterin wrote:
“Customers would receive a clear signal about expectations of the level of future gas fees and would be able to protect themselves against future increases by prepaying for a specific amount of gas at a specific time interval.”
criticism
The idea has been questioned from several quarters, including Hasu, Flashbots’ pseudonymous strategy manager. According to him, many users want to protect themselves against higher gas prices, which means that there is a lot of demand for long positions on gas.
Funny wrote on X:
“The problem is that this market has no natural short side. A lot of people are short gas and want to hedge. But no one is long gas. There may be some noise in trading, but not enough interest to create a market of any meaningful size.”
Buterin then asked whether “the protocol should be the short side” and suggested an on-chain auction for the rights to claim the base fee. A possible solution could be to let the protocol act as a short side, possibly through an on-chain auction.
Rights could be granted to demand basic fees for parts of the block gas. Hasu countered that such buyers would still return almost all of the value to the protocol itself, which would reduce incentives and not resolve the central imbalance.
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