Detailed explanation of Vitalik Buterin’s new proposal: Why can EIP-3298 reduce gas fees?

According to GitHub, Vitalik has updated the EIP-3298 proposal on February 28, which is to remove the rule of "executing SELFDESTRUCT to get a gas fee refund" in the London upgrade. Although the proposal is expected to be implemented at least until July, the gas fee has indeed dropped over the weekend. As of press time, the average gas fee is around 76 gwei. According to previous reports by Rhythm, the London upgrade will be implemented around mid-July.

So what is SELFDESTRUCT?

The function of the self-destruct operation SELFDESTRUCT (called suicide before EIP6) is to allow people to clean up the blockchain by deleting old or unused contracts. The operating system will provide Gas refunds to encourage users to delete storage status to release resources. Deleting a smart contract does not clear the historical transaction records before the contract, and the blockchain itself is immutable.

Nick Chong, a trader with the Twitter ID @n2ckchong, further explained how SELFDESTRUCT affected Gas fees and why Gas fees dropped significantly after Vitalik Buterin updated the proposal.

Rhythm compiled and translated Nick Chong’s tweets as follows:

Currently, every transaction on Ethereum requires a gas fee. Generally, the more complex the transaction, the more gas it consumes. SELFDESTRUCT is an EVM-level opcode that sends the balance of a contract to an "address". It is also unique in that executing the opcode will directly destroy the contract, but the EVM will actually refund some of the fees to the user to eliminate state bloat, thereby helping nodes manage state size.

This might not sound fun, but some clever developers realized that you can keep state space cheap by storing gas fees in the contract when gas is cheap.

To put it simply, the storage method is to mint or purchase gas fee tokens when the gas fee is cheap, such as GST and CHI launched by the 1inch team, and then realize profits by destroying these tokens when the gas fee fluctuates.

Note: Gas Tokens tokenizes Gas fees into an ERC20 Token, allowing users to buy and sell directly, or use it as a prepayment for future Gas usage. When Gas prices are cheap, users can purchase and store them appropriately, and then use them when Gas prices rise.

Specifically, when the Gas price is low, Gas tokens encourage users to create or mint tokens GST1/GST2 in contracts. At this time, Gas tokens will use the funds provided by users to store data/create contracts at a lower cost. When the Gas price soars, users can use or consume GST1/GST2, and Gas tokens will obtain network rewards or Gas refunds by deleting data or contracts (that is, SELFDESTRUCT), thereby consuming Gas at a lower price.

This also explains why many arbitrage transactions on the Ethereum browser Etherscan will have a prompt "Self-destruct contract 0x..." before viewing the transaction details.

This approach is very smart.

When a running arbitrage bot spends thousands of dollars per day in Ethereum transaction fees, over time they can save a lot of money by saving on fees using Gas tokens.

Some people believe that the existence of gas tokens has led to considerable state bloat, because when gas tokens were cheap, many "meaningless" contracts were injected into Ethereum nodes. By increasing state bloat, the uncle rate may increase.

The above is probably why Vitalik suggested yesterday to cancel the gas refund rules of SELFDESTRUCT in the London upgrade.

Anyway, thanks to Vitalik for this proposal, after this proposal was issued, the gas fee dropped sharply and returned to a more normal level. The prices of gas fee tokens CHI and GST tokens also plunged: CHI price dropped by 40%, and GST dropped by 30%.

Once the proposal is formally implemented, these tokens may quickly become useless, so there may be no incentive for users to mint CHI or GST.