Project Chicago is a new research initiative aiming to explore a question fundamental to all cryptocurrencies: what resources are being
exchanged in blockchain markets, and how can we accurately price these resources?
Project Chicago is an interdisciplinary effort with top blockchain researchers from around the world, headquartered at the Initiative for Cryptocurrencies and Contracts. You can stay updated on Project Chicago's progress by following us on social media.
Like these conventional commodities, blockchain commodities are critically important to blockchain-based industries, and fluctuations in their prices pose a business risk. (Recent, high Bitcoin transaction fees, for example, were crippling.) A critical property of physical commodities is that they can be stored and delivered under contract. The resulting derivatives market (financial instruments based on commodity prices) is instrumental for managing and alleviating the business risks associated with surpluses and shortages of the commodities they rely upon. In contrast, cryptocommodities such as Ethereum Gas and Bitcoin block space cannot be directly stocked or traded. So how could a cryptocommodities market like, say, the Chicago Mercantile Exchange, possibly work? And how might it help blockchain users?
As a springboard for cryptocommodity market creation, we’ve implemented a contract called GasToken. GasToken allows gas in Ethereum to be “banked” in the form of an (ERC20-compatible) token, and released to pay for future transactions. GasToken is a first example of an explicit open market for a cryptocommodity. By enabling users to freely stock and tokenize gas, we open up avenues for trades on surpluses and shortages of gas in Ethereum (i.e., in periods of low or high computation in the network). In turn, such markets may hold the promise of stabilizing gas prices and transaction fees by absorbing part of the uncertainty associated with price movements.
GasToken is the first output of Project Chicago, and represents one of our two project thrusts. We are devising mechanisms, like GasToken, to retrofit existing systems and produce immediate benefits like price stability. We are also considering longer-term, clean-slate ideas in which consensus and mining protocols directly support stable and cost-efficient pricing regimes, evaluating proposals such as EIP87 and formulating principled new approaches.