A gas token is a specialized smart contract token that exploits Ethereum’s gas refund mechanism to effectively “store” cheap gas for use when gas prices are high. The concept originated from Ethereum’s storage refund policy: contracts could receive gas refunds for clearing storage slots. Users could mint gas tokens during low-price periods (essentially pre-purchasing computation cheaply), then burn or redeem those tokens during high-price periods to receive refunds that offset transaction costs.
The most notable gas tokens were CHI (created by 1inch) and GST2 (GasToken.io), which were widely used in DeFi during 2020–2021’s high gas fee periods. However, Ethereum’s EIP-3529 (part of the London upgrade in August 2021) significantly reduced and capped gas refunds, effectively killing most gas token strategies by making them uneconomical. Gas tokens represent an important piece of Ethereum optimization history and illustrate how rational actors exploit protocol-level economic incentives.
Origin & History
| Date | Event |
| 2017 | GasToken.io launches GST1 and GST2 – first gas tokens exploiting Ethereum storage refund mechanism |
| 2019-2020 | Gas tokens gain traction as DeFi begins driving periodic gas price spikes |
| 2020 | 1inch launches CHI gastoken as improved version with better efficiency; widely integrated into 1inch aggregator |
| 2020-2021 | DeFi Summer creates extreme gas volatility; gas tokens save users significant fees on complex transactions |
| Aug 2021 | EIP-3529 (London upgrade) reduces maximum gas refund from 50% to 20% and eliminates self-destruct refunds |
| Aug 2021 | Gas token economics become marginal or negative after EIP-3529; most gas token usage ceases |
| 2022-2024 | Gas tokens remain as historical curiosity; Layer 2 scaling makes gas optimization less critical on mainnet |
How It Works
| Gas Token | Developer | Peak Efficiency | Status (2024) |
| GST1 | GasToken.io | Moderate | Obsolete |
| GST2 | GasToken.io | Better (cheaper mint) | Obsolete |
| CHI | 1inch | Highest (CREATE2 opcode) | Obsolete (EIP-3529) |
In Simple Terms
- Prebuying Computation: Gas tokens let users “store” cheap gas by minting tokens during low-price periods, then redeeming those tokens when gas is expensive to receive offsetting refunds.
- Storage Refund Exploit: Ethereum’s design gave refunds for freeing blockchain storage. Gas tokens exploited this by storing data cheaply and freeing it expensively.
- CHI Token: 1inch’s CHI was the most efficient gas token; using CHI could save 30–50% on gas costs during high-fee DeFi activity.
- Killed by EIP-3529: The London upgrade’s EIP-3529 drastically reduced gas refunds, making gas tokens economically unviable overnight.
- Historical Significance: Gas tokens demonstrate how crypto protocol economics create sophisticated optimization opportunities that users exploit until protocol changes eliminate the edge.
Real-World Examples
| Scenario | Implementation | Outcome |
| 1inch CHI Integration | 1inch automatically uses CHI tokens when available on user’s wallet for gas discounts | Users who held CHI saved 30–40% on complex swap fees during 2020–2021 high-gas periods |
| Gas Token Minting Strategy | DeFi power user mints CHI at 30 Gwei (Sunday night); uses on Monday during 200 Gwei congestion | Significant gas savings on multiple transactions; “gas arbitrage” becomes a known optimization |
| EIP-3529 Sunset | Developer holding 10,000 CHI tokens finds them suddenly uneconomical after August 2021 | CHI tokens become worthless for gas savings; illustrates protocol change impact on DeFi optimization |
Advantages
| Advantage | Description |
| Gas Cost Reduction | At peak, gas tokens saved 30–50% on complex Ethereum transactions |
| Capital Efficiency | Allowed sophisticated users to effectively average down their gas expenditure |
| Open Accessibility | Anyone could mint and use gas tokens; no permissioned access |
| Innovation Demonstration | Gas tokens illustrated how DeFi protocols can be optimized through creative contract design |
Disadvantages & Risks
| Disadvantage | Description |
| Protocol Dependency | Completely dependent on Ethereum refund policy; eliminated by EIP-3529 |
| Complexity | Required careful gas arithmetic to ensure token use was actually economical |
| State Bloat | Gas tokens contributed to Ethereum state bloat (adding data to the blockchain) |
| Obsolescence Risk | Protocol upgrades can eliminate any contract-based optimization overnight |
Risk Management Tips:
- Gas tokens are now obsolete post-EIP-3529; do not acquire CHI or GST2 for gas savings
- For gas optimization today, use Layer 2 networks or time transactions during low-fee periods
- Historical note: when evaluating any “gas optimization” contract, verify it remains functional after recent Ethereum upgrades
FAQ
Are gas tokens still useful?
No – EIP-3529 (August 2021) eliminated the gas refund mechanism that made gas tokens economical. CHI and GST2 are effectively obsolete for their intended purpose.
What replaced gas tokens for gas optimization?
Layer 2 networks (Arbitrum, Optimism, Base) fundamentally solve the gas problem by reducing fees 10–100x. Time-based gas scheduling (low-fee periods) is the remaining mainnet strategy.
Was using gas tokens legal/ethical?
A: Gas tokens exploited legitimate protocol mechanics, not bugs. Their use was entirely legal and even encouraged indirectly by Ethereum’s storage refund design. EIP-3529 addressed the economic incentive that made them useful.
Did gas tokens affect Ethereum’s blockchain?
Yes – gas token minting contributed to Ethereum state bloat, which was one reason EIP-3529 reduced refunds. The protocol change addressed both the economic inefficiency and state size concerns simultaneously.
Related Terms
- Gas Fee– The Ethereum transaction fee that gas tokens were designed to reduce
- EIP-3529– The upgrade that effectively ended gas token economics
- 1inch– The DEX aggregator that created and integrated CHI gas token
- Gas Limit– The maximum gas allocated to a transaction
- Layer 2– The modern solution to Ethereum gas fee reduction that superseded gas tokens
