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 model for pricing Ethereum base fee options, attracting widespread attention from the community on Gas fee derivatives. This financial instrument provides participants in the Ethereum ecosystem with a new means to cope with the uncertainties of Gas fee fluctuations, helping users hedge against operational cost fluctuations while also bringing new speculative opportunities.
Base Gas Market: Bet on future Gas fee fluctuations.
Recently, Alkimiya has built a financial market on Base: the Base Gas Market (not officially launched yet), allowing users to trade on the fluctuations of Gas fees in the Base network, indirectly participating in the changes of network economic activities. Alkimiya is a protocol for trading blockchain space resources (such as transaction fees). By converting blockchain transaction fees and other resources into tradable assets, it helps users hedge against fee fluctuations and provides more speculative opportunities.
In the Alkimiya Base Gas Market, users can bet on the increase or decrease of total Gas fees by 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 go short. Since these fees are charged by Base's sequencer, Gas consumption actually reflects Base's usage and revenue. Therefore, 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 within the same time frame. All users participating in that time period will gather in the same pool. Users can enter the pool at any time, and withdrawals and settlements will occur at the end of the time period, at which point 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 events in the next two weeks and predicts these events will significantly increase Base's total Gas consumption. User A decides to join a market pool from January 1 to January 15 (a duration of 15 days). During this market period, Gas fees are calculated in the market 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 a 1% share of the entire market's Gas fee, 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?
The Base Gas Market provides users with a way to participate in the fundamental growth of Base. Unlike investing in Base governance tokens, users can bet directly 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 Gas fee fluctuations, avoiding risks caused by unstable Gas prices.
External factors that may affect the Gas market include: Base may increase the Gas Limit, leading to a decrease in Gas prices; Base needs to batch transactions for settlement on Ethereum L1. As Blobs are adjusted (e.g., if the base fee for Blobs increases), the settlement costs on L1 may change; variations in the OP Superchain's rent may also affect Base's Gas prices, etc.
Normal user participation process:
Based on your own prediction of Base Gas consumption, choose a long (bullish) or short (bearish) position.
Select the time period to participate and choose the corresponding market pool.
Pay the corresponding margin, enter the market pool, and start trading.
Wait for the pool's cycle to end and receive rewards (wETH) based on the actual total Gas consumption changes. (Specific calculation formula can be found in this document)
In addition to the transaction fee market on Base, Alkimiya also provides a Bitcoin transaction fee market, helping users hedge against the fluctuations of Bitcoin network Gas. It has launched Bitcoin transaction fee rate runes (BTC•FEERATE•RUNES), a synthetic asset (rune) directly linked to Bitcoin transaction fees. When transaction fees rise, the value of this rune also increases, and users can buy or sell runes in the market for hedging or speculation. They can also pay a certain fee to redeem the rune for Bitcoin.
