January 5, 2026
Abstract
The cost of blockspace on Ethereum, driven by the BASEFEE, is the network’s core commodity, yet it remains unhedgeable.
Vitalik Buterin recently argued for a “trustless onchain gas futures” market to address this – a market on the BASEFEE that gives users a forward-looking price signal and lets them hedge future gas costs / prepay for gas in specific future intervals.
This case study demonstrates how Nunchi’s Yield Exchange (YEX) – a purpose-built “order book of time” for yield/rate discovery is the natural venue to build this missing market. By treating BASEFEE as a tradable rate process and listing our signature Yield Perps, we can create a forward curve for gas with deep liquidity and robust risk controls, deployed on Hyperliquid’s HIP-3.
For any business operating at scale on Ethereum, from;
- Rollups/Sequencers posting calldata to L1
- High-frequency dApps ((DEXs, bridges, NFT games/mints)
- Market makers / Searchers whose profitability depends on predictable execution costs
Gas cost uncertainty is a material risk. The inability to hedge future blockspace costs makes long-term financial planning difficult and exposes operators to unpredictable P&L swings. A market that provides a clear signal of future gas expectations and a tool to lock in costs is a piece of core, missing infrastructure.
At Nunchi, our core thesis is that any fundamental rate can and should be a tradable asset. The BASEFEE is an algorithmic, in-protocol value, and is a perfect candidate for one of our rate-perpetual contracts.
Under EIP‑1559, Ethereum has a base fee per gas that:
- exists in-protocol
- adjusts each block based on demand
- is burned
- is readable from the chain (and can be used directly in settlement logic)
This is critical: a gas futures market can be trustless if its settlement references an objective, onchain value like baseFeePerGas (vs subjective offchain quotes).
Note: EIP‑1559 also has a priority fee (“tip”) set by users; a BASEFEE futures market primarily hedges the systemic component of gas cost.
Core design
Nunchi lists a family of markets that let users trade a fixed base fee for a future time window vs the realized average base fee in that window.
This matches Vitalik’s framing: “prepay gas for a specific quantity in a specific future interval.”
Contract family (“Gas Perps Ladder”)
Example markets (illustrative):
- BASEFEE‑1D: realized average basefee over the next 24h window
- BASEFEE‑7D: realized average basefee over the next 7d window
- BASEFEE‑30D: realized average basefee over the next 30d window
- (later) quarterly / yearly windows for long-range planning
These are presented with perps UX, but economically behave like fixed-vs-float swaps on basefee (a “rates market” structure), which is exactly what Nunchi is already architected to support via its rate-based product catalog and universal funding logic.
The PnL for a long position (a “gas hedge”) is proportional to the difference between the realized average BASEFEE and the fixed price at which the contract was traded. This fixed-vs-float model is the same robust engine that powers all Nunchi rate markets, from funding rates to T-Bill yields.
Bootstrapping a novel market like gas futures requires a purpose-built architecture. Nunchi’s Yield Exchange is uniquely designed to solve the specific challenges this market presents.
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(A) The “Order Book of Time”: Our core design naturally creates a gas forward curve. When listed on Nunchi, the prices of these contracts will form a forward-looking signal for gas costs. This curve is formed directly from the price discovery of traders and market makers submitting orders to the BASEFEE order book.
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(B) Purpose-Built for Day-One Liquidity: A new market needs more than just a CLOB. Nunchi’s architecture ensures day-one stability by combining the precision of a CLOB for professional market makers with the baseline liquidity of a binned AMM, powered by our nLP vault.
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(C) Funding for Forward Discovery: Our funding model is intelligently designed to allow the market to price in future expectations. It gently guides the price toward the index but is calibrated to allow a premium or discount to persist, enabling the market to function as a true forward-looking instrument.
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(D) Intelligent Risk & Liquidity for HIP-3: Our nLP vault will act as the liquidity backbone for these HIP-3 markets, managed by a policy-driven engine. Furthermore, Nunchi’s dynamic risk controls continuously adjust leverage based on both a volatility cap (VaR) and a liquidity cap (the protocol’s loss-absorption capacity), ensuring the market remains stable as it grows.
Imagine a rollup whose biggest monthly expense is paying for unpredictable gas on Ethereum. This makes managing a budget a nightmare. Here’s how Nunchi’s “Gas Perps” market provides two distinct solutions.
Path 1: The Active Trader - Hedging on the Perps Market
- The Goal: The rollup wants to actively manage their exposure and lock in a fixed gas cost for the next 30 days.
- The Action on Nunchi: The treasurer opens a long position on the BASEFEE-30D Yield Perp, locking in a fixed price of 8 gwei. This contract does not expire; it perpetually tracks the market’s expectation of the next 30-day average BASEFEE.
- The Outcome: If the average BASEFEE spikes to 14 gwei, the profit on their Nunchi position offsets their higher gas bill. If the BASEFEE stays low at 4 gwei, the small loss on their hedge acts as an insurance premium. In either scenario, their cost is stabilized around the 8 gwei they locked in.
Path 2: The Passive Operator - The Fixed-Rate Gas Vault
- The Goal: The rollup wants a predictable gas cost without actively trading or managing a perps position.
- The Action on Nunchi: The rollup deposits capital into a Nunchi “Fixed-Rate Gas Vault.”
- How it Works: The vault abstracts away all the complexity. Internally, the vault’s automated market-making bot uses the price discovery from the perps order book to run the hedging strategy on the depositor’s behalf.
- Outcome: The rollup achieves the same goal – a fixed, predictable gas budget but through a simple, passive “deposit-and-forget” experience. This creates a flywheel: vault depositors become the market makers that deepen liquidity for active traders.
A major criticism of gas futures is that most participants will want to hedge (go long), but few will want to take the other side. Nunchi’s architecture addresses this structurally:
- Vault-Supplied Baseline Liquidity: Our nLP vault is programmatically supplied and rebalanced, supporting a two-sided market from day one.
- Incentivized Professional Makers: Our hybrid model is explicitly designed as the primary venue for professional market makers, with incentives and rebates to attract direction-agnostic liquidity.
- Protocol-Mediated Structures: As Vitalik himself suggested, Nunchi can support designs where a treasury or vault sells forward BASEFEE exposure within strict caps, effectively “manufacturing” the short side while dynamically managing risk.
Conclusion: A Natural Extension of the Yield Exchange
A trustless onchain gas futures market is not a detour from our mission; it is a perfect embodiment of it. It demonstrates that the same powerful, rate-based architecture we built for funding rates and T-Bills can be extended to price any fundamental, onchain commodity.
By treating BASEFEE as just another yield to be traded, Nunchi can provide the critical hedging tool Ethereum’s largest users need. We are not just building another market; we are building the infrastructure to price the foundational commodities of the onchain economy.