Vitalik Buterin Proposes Stopping Ethereum Gas Refunds

Ethereum’s co-creator, Vitalik Buterin, has posted a proposal to remove gas refunds in the blockchain’s London update. 

Buterin posted a proposal, titled EIP-3298, on Ethereum’s Github page this week. He suggests removing gas refunds for the “SSTORE” and “SELFDESTRUCT” functions in Ethereum’s London update. 

Ethereum currently allows users to store gas inside smart contracts using the SSTORE function. By using SELFDESTRUCT to destroy a smart contract, it’s possible to use the gas stored inside contracts to cover the cost of a transaction when gas prices are high. Users currently take advantage of this through tokens like CHI, launched by the team behind the 1inch Exchange. 

While gas tokens can be useful for arbitraging the price of gas, it’s thought that gas refunds contribute to state bloat, as many contracts get added to Ethereum nodes when gas prices are low.  

ParaFi Capital investor Nick Chong posted a detailed tweetstorm explaining what impact EIP-3298 would have on the network. In it, he noted that the price of GST2, another gas token, and CHI had plummeted this weekend, arguing that the proposal may have been a factor.

Vitalik recently proposed the removal of the gas refund tied to 'SELFDESTRUCT' on Ethereum in the London upgrade.

This has seemingly lowered demand for gas, driving down prices to double-digit Gwei.

Let's explain what's going on and why this matters for gas tokens ($CHI, GST)