Updated: Dec 21, 2019
Gas Token is a new, cutting-edge, and revolutionary Ethereum contract that allows users to tokenize gas on the Ethereum network. In other words, users can store gas when it is cheap and use/deploy this gas when it is expensive. It is a fundamental resource on the Ethereum blockchain since every transaction on the network requires some amount of gas. Also, the fee paid to miners for each transaction is directly proportional to the amount of gas consumed by the said transaction.
This guide will explain what Gas is designed for, the team behind it, the way it works, and various uses and applications.
What Is Gas Designed For?
Prices of gas on the Ethereum blockchain can be difficult to predict. They can come as cheap as 1gwei or even less during off-peak hours. Conversely, some transactions may go into 100s of gwei when a user is looking to hit order on EtherDelta or buy into a promising ICO before any other players.
There is fierce bidding among users who are looking to be mined quickly or before other players. Bidding wars with the help of Gas tokens can offer an enormous advantage to users. It allows them to perform the same transaction without having to spend exorbitant amounts on gas. Gas tokens were also designed to help users who want to start with Ethereum blocks since space is getting even more coveted.
Who Is the Team Behind Gas?
The team behind Gas is a team of blockchain researchers and enthusiasts from around the world. It includes Lorenz Breidenbach (ETH Zürich, Cornell Tech, IC3), Phil Daian (Cornell Tech, IC3), and Florian Tramèr (Stanford University). Ari Juels (Cornell Tech, IC3, The Jacobs Institute) is involved in a big way towards advice, review, and support.
How Does Gas Work?
Gas tokens work by implementing the advantage of storage refund on Ethereum. Ethereum offers a refund whenever a storage element is deleted from the blockchain to encourage contracts to delete redundant storage variables. Typically, storage nodes are required to store these details forever, but this can bog down the system. Hence, Ethereum offers a refund to make the system quicker which is enough to pay half of the gas used by a contract transaction.
Users need to create or mint GAS by saving data into the contract's storage when gas prices are low. When gas prices start climbing during an ICO or peak hours, these tokens can be freed by returning to their Gas token contract for destruction. This allows the transaction to acquire a refund that makes it cheaper to execute as compared to contracts that do not make use of it.
Gas tokens are not a new idea or concept. The idea has been previously been suggested for miners since miners encountering a partially filled block have more incentive to fill it up with storage transactions. Gas tokens take this concept a step further by extending the idea to all Ethereum users and not just the miners.
What are Current and Future Applications of Gas?
The gas token has a singular function of storing the value of carrying out a transaction on Ethereum. The team does not offer any kind of support, guarantees, advice, or other help with the Gas token. The idea behind the token is simple. If you like then you are invited to use it.
There are no promises made by the team that the token is in any way an investment vehicle, security, or financial product. There are no promises of any returns, profit, or other material representations about any market properties of Gas tokens. It is also not based on any currency, asset, or other financial product.
However, the token does have its uses. This simple and powerful idea can help users save up to 0.0386 Eth per transaction. There are two versions of Gas – GST1 and GST2. The two variants have different efficiency profiles, and users need to choose, which is more appropriate for their use case.
GST1 works purely on deleting storage while GST2 involves creation and self-destruction. GST2 is more efficient than the GST1 variant. The token is part of a wider initiative that is headquartered at IC3, Project Chicago for the Study of Cryptocommodities.
The team behind Gas token believes that economically speaking, all blockchains can be viewed as a two-sided market for a set of virtual resources, including block space and UTXO space. These are backed by digital resources, such as computation, latency, storage, and network bandwidth with physical costs in terms of power, space, and capital.