With slashing now live on EigenLayer, the risk landscape for LRTs is evolving. Chaos Labs continuously analyzes and monitors these emerging risks to support a safer and more resilient restaking ecosystem. In this report, we examine ETHGas, a marketplace secured by ether.fi via EIgenlayer restaking, that integrates slashing as a core component of its design. The analysis focuses on how slashing is incorporated and its implications for the risk-reward profile of participating stakers.
Summary
ETHGas introduces a novel marketplace for Ethereum blockspace, allowing validators to pre-sell inclusion and execution guarantees. Market dynamics in ETHGas are shaped by the interplay between slashable collateral, validator reputation and blockspace demand. Validators can calibrate both their pricing and collateral levels to balance risk and potential rewards choosing to offer lower prices with minimal or no collateral based on trust, or commanding higher prices backed by greater economic guarantees. This flexibility allows validators to position themselves according to their individual risk tolerance and performance track record.
Chaos Labs assesses the slashing risk as minimal under normal operating conditions. As long as validators use the ETHGas-approved relayer, which ensures all commitments are validated before block signing, inadvertent slashing is avoided. Additionally, validators have flexibility in setting the amount they stake for slashing and are only penalized for the portion of blockspace that was non-compliant, further reducing potential penalties.
We also see strong potential for sustainable yield, with revenue closely tied to Ethereum transaction demand and the premiums buyers are willing to pay for deterministic execution. Additional benefits include flexible pricing, low operational overhead, and ETH-denominated payouts.
ETHGas remains in an early stage, its Collateral AVS is not yet deployed, and both reward payouts and slashing rely on an internal off-chain system, which is currently creating reliance on the ETHGas’ infrastructure and operations.
How ETHGas Works
The ETHGas marketplace functions as an open exchange, where validators list future blockspace availability, and buyers, ranging from traders to protocols requiring reliable execution, purchase guaranteed inclusion and customizable order flow. By enabling validators to pre-sell blockspace, ETHGas directly addresses core inefficiencies in Ethereum’s transaction layer, such as volatile gas fees and uncertainty around inclusion and prioritization. The premiums paid by buyers for deterministic execution outcomes unlock enhanced revenue streams for validators, supplementing traditional block rewards and MEV. In addition to execution premiums, participating validators are also eligible for a share of ETHGas’s overall protocol fees, distributed through the Vision AVS, which went live on EigenLayer on February 12, 2025, and currently holds 2.78M ETH in TVL, 1.3M of which is contributed via ether.fi.
To enforce execution preconfirmations, ETHGas employs a collateralized commitment framework. If a validator or associated provider fails to fulfill their obligation, the buyer is compensated via slashing of the validator’s staked assets. Currently this is handled via an internal accounting system. ETHGas plans to implement the Collateral AVS, where validators will post slashing collateral to back their blockspace commitments, once EigenLayer enables redistribution of slashed stake.
Rewards and Slashing
ETHGas enables validators to monetize not only entire blocks but also specific segments of their blockspace by selling transaction guarantees such as inclusion and execution assurances. This gives validators more granular control over their offering and unlocks value often missed by conventional block production. Validators can choose to accept market prices, set limit orders, or agree to a default prices, allowing them to potentially dynamically adjust their pricing in response to market demand. Rewards are distributed on a per-slot basis, they can be claimed either immediately upon generation or in batches. ETHGas uses an internal accounting system for reward distribution. Additionally, validators participating in the Vision AVS receive a share of the platform’s trading fees. As ETHGas has only recently launched on mainnet, APR data is not yet available; however, ETHGas estimates a near-term estimates annualized yield uplift of 15–20 bps, with potential to reach 50–75 bps as validator adoption scales. These figures are derived from modeling considerations discussed here.
To back their execution commitments, validators can currently post collateral in the form of native ETH deposited into a smart contract. To improve capital efficiency, ETHGas plans to integrate the Collateral AVS, allowing validators to post restaked ETH and other assets via EigenLayer while continuing to earn consensus or execution rewards on their collateral. Validators can choose the amount of collateral they post or even opt out entirely on posting collateral and rely solely on their reputation. ETHGas recommends 1 ETH per slot as the default slashable amount.
As long as validators use the ETHGas-approved relayer, inadvertent slashing is avoided! Upon receiving a proposed block from a builder, the relayer verifies that all preconfirmed transactions comply with ETHGas commitments. While ETHGas currently operates its own relayer, additional third-party relayers may be onboarded in the future. If a validator proposes a block via an unapproved relayer that fails to meet commitment constraints or if they miss their slot entirely, slashing is applied proportionally based on the blockspace that did not meet the obligations. The resulting slashed amount is then used to compensate the affected blockspace buyer. The formula for slashing is:
At present, slashing is enforced off-chain. ETHGas uses an internal system to compare the proposed block with the recorded commitments from its relayer. If inconsistencies are found, the the internal accounting system debits the validator’s collateral and credits the corresponding amount to affected buyers within the platform’s internal database. In the future, ETHGas plans to deploy on-chain slashing for improved transparency and is currently collaborating on a universal standard together with Fabric.
Risk Considerations
Rewards
As for rewards we view these as sustainably generated and without price risk:
- Rewards are structurally aligned with validator performance and closely tied to overall demand for Ethereum transaction settlement. Validator participation requires minimal additional effort, as responsibilities align with standard staking workflows and incur no ongoing operational costs beyond the initial relayer setup. This enables sustainable yield generation with little incremental overhead.
- Rewards are denominated in ETH, shielding validators from the price volatility typically associated with platform-native tokens.
- Validators retain meaningful control over the pricing of their blockspace offerings, allowing them to better capture value and optimize revenue based on market conditions.
- As there is currently no on-chain reward payment system, validators must rely on ETHGas’s internal accounting to accurately track and distribute rewards, introducing an element of trust in the ETHGas’ off-chain infrastructure.
- The platform’s projected APR uplift of 15–75 bps remains speculative, given ETHGas’s recent mainnet launch. Actual returns may vary depending on market demand, validator participation, and potential protocol fees. However, the preconfirmation model directly addresses a well-known need for deterministic execution and could prove more attractive than traditional MEV and block-building approaches. Its long-term success will depend on the ETHGas’ ability to effectively balance demand and supply.
Slashing
We see minimal slashing risk in the foreseeable future under normal operating conditions, as slashing is only expected in cases of malicious or negligent behavior. Furthermore, validators can freely set their slashing risk exposure—or opt out entirely:
- As long as validators source blocks from the ETHGas-approved relayer, they are protected from slashing. The relayer serves as a key safeguard by enforcing preconfirmation requirements before block signing, preventing most potential violations. Validators must still trust the relayer to operate correctly, as there is currently no mechanism to hold relayers accountable in the event of misbehavior or failure.
- Validators have high control over their slashing risk, as they can actively manage their exposure by selecting the level of collateral to post—or choosing to forgo collateral entirely.
- Slashing is applied proportionally and only to the portion of blockspace where preconfirmation commitments are not fulfilled. This targeted mechanism minimizes the risk of excessive penalties and better aligns incentives between validators and buyers.
- The correctness of the slashing mechanism relies on the accurate recording and validation of preconfirmations and execution, both of which are handled internally by ETHGas. Any malfunctions or delays in this process could result in unjustified slashing. In the event of such failures, ETHGas plans to handle compensation through individual negotiations with affected validators.
- There is no veto committee or insurance fund in place at this stage. Penalty enforcement is handled off-chain, which may limit transparency and auditability around slashing. However, validators concerned about these limitations can choose not to post collateral until on-chain slashing or additional mitigation mechanisms are implemented.
Risk-Adjusted Return
Given our current understanding of the reward and slashing structures on ETHGas, we derive the following risk-adjusted return:
- We assume a 15 bps annualized incremental yield as a conservative base case, in line with ETHGas’s lower-bound projections. This reflects near-term expectations given the protocol’s early stage, limited current demand for preconfirmations, and the fact that key components such as the Collateral AVS are not yet deployed.
- For consistency and comparability, we use 32 ETH as the capital base per validator. Based on current estimates, a validator with this minimum stake is expected to propose an ETHGas-enabled block approximately once every 4.5 months, averaging 2.67 blocks per year.
- We assume the worst case of the entire block not meeting the commitment, hence
Total slashed amount = (Collateral per slot set by validator) Ă— (Total block gas limit) - There is no economic incentive for malicious behavior, as bypassing ETHGas results in both slashing penalties and forfeited execution rewards.The primary slashing risk arises from operator misconfiguration, particularly when relayers are incorrectly set up to accept blocks from non-ETHGas relays.On the Ethereum Beacon Chain, the historical slashing rate due to configuration errors and operational faults is approximately 0.04% annually. We adopt this figure as a proxy, given the comparable nature of the underlying risks.
We calculate the risk-adjusted return as follows:
Conclusion
With a risk-adjusted return of approximately 4,800%, ETHGas demonstrates a compelling reward-to-risk ratio. Even more so as this scenario reflects a conservative base case, assuming slashing for the entire block and 15 bps in incremental annual rewards.
In practice, the risk-reward profile could be significantly more favorable—particularly as demand for preconfirmations grows, validator pricing strategies evolve, and capital concentration on the validator side increases. Ultimately, success depends on the validator’s ability to consistently honor preconfirmations, maintain operational reliability, and build a strong reputation. Over time, this could enable premium pricing with minimal or no posted collateral, effectively reducing slashing exposure to zero.