Article source: ChainFeeds
Author: 0XNATALIE
Since the beginning of this year, the community has begun to discuss topics related to Gas fee derivatives. In June, Nethermind researcher Finn proposed a pricing model for Ethereum base fee options, attracting widespread attention from the community regarding Gas fee derivatives. This financial instrument provides participants in the Ethereum ecosystem with new means to cope with the uncertainty of Gas fee fluctuations, helping users hedge against operational cost volatility and bringing new speculative opportunities.
Base Gas Market: Betting on future fluctuations in Gas fees
Recently, Alkimiya has built a financial market on Base: Base Gas Market (not officially launched yet), allowing users to indirectly participate in changes in network economic activities by trading the fluctuations of Gas fees on the Base network. Alkimiya is a protocol that trades blockchain space resources (such as transaction fees), helping users hedge against fee volatility by converting blockchain transaction fees and other resources into tradable assets, providing more speculative opportunities.
In the Alkimiya Base Gas Market, users can bet on the increase or decrease of Base's total Gas fees through going long (LONG) or short (SHORT). If a user believes that Base's revenue will increase in the near future, they can go long to bet on increased Gas consumption; if they believe revenue will decrease, they can short. Since these fees are charged by Base's sequencer, Gas consumption actually reflects Base's usage and revenue. Thus, this trading is essentially speculation on the future development trends of the Base ecosystem.
In this market, each pool corresponds to a time period, and the pool consists of all long and short positions during the same time frame. All users participating in that time period gather in the same pool. Users can enter this pool at any time, and exits and settlements will occur at the end of the time period, at which point the user's rewards or losses will be determined based on the changes in total Gas consumption.
For example, suppose User A sees that Base has multiple airdrop activities in the next two weeks and predicts that these events will lead to a significant increase in Base's total Gas consumption. Therefore, User A decides to join a market pool from January 1 to January 15 (for 15 days). During this market period, Gas fees are calculated to be between 20 ETH/Day and 60 ETH/Day (if exceeded, it will be capped at the maximum/minimum values). User A chooses to enter at 42 ETH/Day, predicting that Gas consumption will exceed 42 ETH/Day, and buys 1% of the total Gas fee share in the market, meaning he needs to pay an initial margin of: (42-20)*15*1% = 3.3w ETH. If the actual daily Gas consumption remains above 42 ETH/Day, User A will profit.
How to participate?
Base Gas Market provides users with a way to participate in the fundamental growth of Base. Unlike investing in Base governance tokens, users can directly bet on the usage and activity level of the Base ecosystem by trading total Gas consumption. More users and higher activity levels mean more Gas fees. In this way, users can invest based on Base's Gas usage without relying on token price fluctuations. Additionally, users can use this market to hedge against the volatility of Gas fees, avoiding risks brought by unstable Gas prices.
External factors that may affect the Gas market include: Base may raise the Gas Limit, leading to a decrease in Gas prices; Base needs to batch process transactions to Ethereum L1 for settlement. With adjustments to Blobs (such as raising the Blob base fee), the settlement costs on L1 may change; changes in OP Superchain's rent may also affect Base's Gas prices, etc.
Ordinary user participation process:
Based on their prediction of Base's Gas consumption, choose a bullish (long) or bearish (short) position.
Select the time period to participate in and choose the corresponding market pool.
Pay the corresponding margin and enter the market pool to start trading.
Wait for the pool's cycle to end, and claim rewards (wETH) based on the actual changes in total Gas consumption. (See this document for specific calculation formulas)
In addition to the transaction fee market on Base, Alkimiya also offers a Bitcoin transaction fee market, helping users hedge against volatility in Bitcoin network Gas. Additionally, it launched Bitcoin transaction fee rate runes (BTC•FEERATE•RUNES), a synthetic asset (rune) directly linked to Bitcoin transaction fees, the value of which rises when transaction fees increase, allowing users to buy and sell runes in the market for hedging or speculation. Users can also pay a certain fee to redeem the rune for Bitcoin.
