Postcards from the cutting edge of Gas research: what you don’t know can hurt you & ... | Devcon SEA

[Music] [Music] hey everyone uh thanks for coming uh we're going to blast through five minutes on Cutting Edge research on the gas markets and um this is research we have published previously uh at ECC about 3 months ago and now we're updating it so I'm I'm going to go super fast through this what is gas spot demand for Block space determines the spot price so uh gas is a realtime Market because anyone can submit a transaction at any time and often does and that changes the spot price it matters in every single way like everything we do on ethereum is affected by gas fees as I like to say there's three guarantees in life death taxes and web three fees um and there's a lot of them 5.2 billion in transaction fees in the past 12 months more than half of that is on ethereum L1 Alone um and often times it feels like all of web 3 is being held up by these markets but they're not particularly well understood now Efficient Market Theory says something really critical which is uh to be an efficient market All actors have to have access to price equal access to price and we just assume that the base fee actually reflects demand but our research would indicate that's not necessarily the case and it comes from sort of a funny and un unexpected Source uh we know about private transactions these are transactions are transmitted privately they show up on chain but never show up in the public mempool this is made possible by block building through Mev boost and and people are familiar with that and because of protection from me a private transaction flow is increasing and our most recent data says about 35% of all transactions are privately transmitted uh this has this very interesting effect uh this is six uh ethereum blocks the blue is how much private gas is used and you'll notice that this one doesn't have any private gas used why is that because it's a altruistic self-built or vanilla block by a home Staker or by someone running Mev boost with um uh the the Min bid turned on and what this does is pretty fascinating you have two me pools now you have the public M Pool and you have the private dark pools and pressure builds up across each of them and if you produce one of these altruistic self built blocks you don't have access to the dark pool and so you have none of that here and the pressure builds up on that side and then you wind up with a block immediately thereafter that has a lot more private transactions than it should because it's trying to clear the pressure and what this does is it juices the base fee so on this block that doesn't have any here it's abnormally uh uh empty the Bas fee drops and then it spikes back up and then it decays and uh this happens more frequently than you might expect basically uh vanilla or self-built blocks are about 9% of all blocks it's about one in every 11 blocks give or take and uh it turns out it's getting worse and this was predicted by us but we're actually seeing evidence of that part of this is driven by the fact it's not just the number of transactions which are transmitted privately but it's how much gas they consume and as you might expect the more complex the transaction is the more likely it do have me the more likely it is to be transmitted privately and that results in just about 50% % of all gas comes through private transactions today so we get this this green line is a sort of typical me boost Block it's about 50% full doesn't move the base fee these uh um uh altruistic self-built blocks are about 20% full now they Drop the Base feed down and the block that immediately comes after we call a recovery block and they're about 80% full and it's getting worse and so what winds up happening is uh uh that uh the base fee volatility so the the this is a a measure of volatility the Green in the middle which you can barely see says most blocks don't do much to volatility but that these uh altruistic self-built blocks and the recovery blocks do add a lot of volatility and it's about 10% so we expect the base fee to be roughly equivalent to realtime demand to spot demand and it turns out it doesn't always reflect demand it reflects this interesting Nuance created by private mols created by block building created by altruistic self- blocks and what self-built blocks and what this does is it affects how everything gets priced and so if you're a builder whether uh and for your users this is something you should be paying attention to because it's getting worse and so uh oh and by the way guess what's a real thing now privately transmitted blob transactions anyone notice that the blob base fees been a little more volatile than usual there's more demand but also there's private blobs being transmitted as well so this is something that I think we need to pay attention to as we go forward with the ethereum road map and I think it's something that's worth further research so that's what this is all about I think there's room for improvements in the 1559 fee asymmetry we provide a tool called ether now where you can watch this stuff live um you can watch private transaction flow and things like that and part of our solution to this is we're moving everything on chain on the gas markets and this is something we're just getting going with devet right now and you can find that at gas. Network and with that that was a lightning talk I hope everybody followed it and uh I'm happy to take questions if there's any questions um but that was Postcards From The Cutting Edge of gas research thanks so much that was very impressive we are in the era of lightning talks right now so they'll be moving very very fast um if you guys want to ask about any questions we have about a minute left um and then if if not you can chat to him um on the side and he will stick around um so if we don't have any oh there's one yeah we'll go live great question so how do we see Futures markets on block space playing into this Futures markets have a really uh important property which is they reduce volatility and so uh there are a number of efforts happening right now to enable shorter and longer ation block futures or block space Futures one of the benefits of that should be increased liquidity and reduced volatility but uh most of the protocols the the big stuff that I'm paying attention to now is pre-confirmation and we're just in shangai doing a whole week focused on that and you're going to see the same sort of thing because pre-confirmation require validator opt-in and you're not going to have 100% opt-in And so it's really easy to do things look at rated Network or look at a a um relay scan and say 90% of the network goes through uh uh Mev boost ask the question what does the other 10% do because in this case the other 10% has measurable effects on every single one of this in the entire ecosystem I think this is stuff that we're going to need to worry about moving forward great question