Why Vitalik’s ‘gas futures market’ idea has split experts

Ethereum Co-Founder Vitalik Buterin has responded to rising concerns about the uncertainty of the chain’s scaling roadmap and its impact on future gas (transaction) prices. 

His proposal? Have a gas futures market that makes it easily predictable for large players and investors to effectively plan and hedge their operations on the chain. 

Source: X

This is standard practice in traditional markets.

Large players can use oil futures contracts to effectively plan their projects. This helps them manage their use of oil and ensures that future price volatility doesn’t affect their overall costs.

Although apt, his proposal has elicited mixed reactions from community members and experts. 

Mixed reaction to ETH gas proposal

One of the critics argued that the premium would incentivize other players to opt for a Sybil attack (faking IDs to manipulate markets). 

Kevin Lepsoe, Founder of ETHGas, a futures gas market, echoed Buterin’s call but also cautioned that validators would manipulate the base fee. But he added that it could work on Layer 2s (L2).

Source: X

Another user, Jason Chen, also acknowledged the proposal as a great idea, but warned that it will not “add up” because Ethereum gas demand is dispersed and isn’t as big as traditional oil. 

“In blockchain, gas is paid directly by users rather than some large project, so the demand is dispersed, and there are no major fuel users like ‘American Airlines Uniswap’ or ‘Emirates AAVE,’ naturally leading to not much demand for an options market.”

Source: X

Gas fees remain under pressure

Gas fees are the cost users pay to use Ethereum and have been on a decline amid aggressive scaling upgrades from Pectra to recent Fusaka overhauls.

This helps it remain competitive with new smart contract chains like Solana and Sui. 

You can also think of it as the Average Transaction Fee across the chain. For Ethereum, it’s been so high compared to Solana. But the recent scaling has brought down the cost and helped close the gap. 

Source: Token Terminal 

Unfortunately, the Ethereum scaling roadmap is not clear, and things could change, eventually affect transaction fees. Hence, the need for the gas futures market, as proposed by Buterin, is to quell the uncertainty fears. 

Meanwhile, at press time, the ETH price was held above $3K ahead of the Fed rate decision with a rising number of whales betting for an extended recovery. 

Final Thoughts 

• Many believe Buterin’s call for an Ethereum gas futures market was great, but there were manipulation risks.
• To avoid manipulation risk, an ETH Gas exec proposed removing ‘base fees’ and using L2s to achieve the goal