ETHGas pitches Wall Street on pre-reserved Ethereum blockspace, but missed delivery carries no financial penalty
Banks want guaranteed space; validators may be unpaid if they miss
ETHGas is trying to sell Wall Street banks advance reservations of space on Ethereum blocks. The goal is to give institutions certainty about when large transactions will go through, without moving them onto a private blockchain.
There is a notable gap in the deal. Validators that fail to deliver on their commitments currently face no financial compensation requirement. ETHGas founder Kevin Lepsoe told CoinDesk, "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 service, called Institutional Blockspace, would let banks and trading firms choose which validators process their Ethereum transactions, screen counterparties for sanctions compliance, and reserve space in upcoming blocks. Transactions would still settle on Ethereum's public network.
What the project offers
- ETHGas is building a way for banks to reserve Ethereum blockspace, pick their own validators, and screen counterparties for sanctions rules, while staying on the public network.
- Validators that miss their commitments are not required to pay financial compensation.
- Only about 5% of Ethereum's validators currently qualify, which limits how much space can be reserved.
- Neither Lepsoe nor a paid Delphi Digital report identified a bank using Institutional Blockspace in production.
Validator availability is a bottleneck
Lepsoe said qualified validators represent about 5% of the Ethereum network, with a target of 20% to 30% or more by year-end.
An October report by Delphi Digital looked at ETHGas's institutional offering and the availability of participating validators. The report says it examined about $800 million in blockspace commitments and a three-year agreement involving about $3 billion worth of ether from ether.fi, including exclusive use of ETHGas's pre-confirmation platform. Delphi's consulting arm produced the report under a paid agreement with ETHGas.
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. Lepsoe called the table a model rather than live data, but said the logic holds: a smaller qualified set means longer waits.
Why ETHGas is building it
Lepsoe said institutions that want more predictability often choose to build another layer one (L1) or layer two (L2) blockchain, where everyone is permissioned and liquidity is split across chains. "I'd rather bring that capital onto Ethereum than watch it build a walled garden somewhere else," he said.
He said the offering is opt-in, does not filter anyone else's activity, and every block still settles under normal Ethereum consensus. For validators, ETHGas offers another way to earn revenue by selling capacity in advance.
What is confirmed
- ETHGas is developing Institutional Blockspace to let banks reserve Ethereum blockspace and choose validators.
- Validators that fail to deliver face no financial compensation requirement; Lepsoe said the compensation amount is set to 0.
- About 5% of Ethereum's validators are currently qualified, per Lepsoe.
- Delphi Digital examined $800 million in commitments and a three-year agreement involving about $3 billion in ether from ether.fi, and produced the report under a paid agreement with ETHGas.
- No bank was identified as using the service in production.
What is still unclear
- Whether banks have actually started using Institutional Blockspace in production, since neither the founder nor Delphi's report named one.
- Whether the current zero compensation rule will change as the market settles on a price, which Lepsoe said is meant to be determined by the market.
- Whether the wait-time figures are live data or only a model; Lepsoe called them a model.
Where to read it
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