ETHGas wants to bring Wall Street to public Ethereum by selling advance block reservations

Ethereum blockspace trading project ETHGas wants to makethe network more predictable for Wall Street banks and other financial institutions.

For banks trading on Ethereum, knowing when a transaction will go through matters particularly when moving large sums of money. ETHGas wants to give them the certainty without forcing them onto private blockchains by selling advance commitments to include transactions in Ethereum blocks

But there’s a catch: validators that fail to deliver on their commitments currently face no financial compensation requirement under the service.

“Currently, the compensation amount is set to 0, and we haven’t had any major issues, but the mechanisms exist for the market to determine the right price,” the project's founder, Kevin Lepsoe, told CoinDesk.

ETHGas is developing Institutional Blockspace, which would let banks and trading firms choose which validators process their Ethereum transactions, screen counterparties for sanctions compliance, and reserve space in upcoming blocks. The transactions would still settle on Ethereum’s public network.

For institutional traders, reserving blockspace could make it easier to schedule large transactions and know when they will be processed, rather than competing for space when they submit an order. For validators, ETHGas offers another way to earn revenue by selling that capacity in advance.

An October report by Delphi Digital, which examined ETHGas’ institutional offering and the availability of participating validators, describes about $800 million in blockspace commitments and a three-year agreement involving about $3 billion of ether from ether.fi, including exclusive use of ETHGas’ pre-confirmation platform. Delphi’s consulting arm produced the report under a paid agreement with ETHGas.

The service faces a validator availability issue. Lepsoe said qualified validators currently represent about 5% of Ethereum’s network, with a target of 20% to 30% or more by year-end.

Under Delphi’s model, at 5% coverage, the expected wait for an eligible validator to propose a block is roughly four minutes, with a 23% chance of one becoming available within a minute. At 30% coverage, the average wait falls to about 40 seconds.

“That table is a model, not live data, but the logic holds: a smaller qualified set means longer waits,” Lepsoe said.

“Today, their answer is to build another L1 (layer one blockchain) or L2, where everyone is permissioned, and the liquidity is fragmented,” Lepsoe said. “I’d rather bring that capital onto Ethereum than watch it build a walled garden somewhere else.”

“It’s opt-in. It doesn’t filter anyone else’s activity, and every block still settles under normal Ethereum consensus.”

Neither Lepsoe nor Delphi's report identified a bank currently using Institutional Blockspace in production.