Hedgehog Summary

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Hedgehog Protocol

4 min readApr 16, 2024

Over the past weeks, we have explored the intricacies of the Hedgehog Protocol across a series of articles. Today, we’ve created a summary to provide an overview of Hedgehog, making it simple to understand the protocol’s core features and applications. This summary also serves as a gateway for those looking to dive deeper into any aspect of the protocol, with links to each of those articles included below each topic for an in-depth exploration.

What is Hedgehog?

Hedgehog Protocol is an infrastructure for onchain native derivatives currently building a Modular Synthetic Blockspace. It involves the creation of freely circulating synthetic assets that represent gas (or any other onchain native derivatives in the future) on the network.

Ilustration overview of the Hedgehog Protocol and several different actors interacting with it.

Hedgehog allows the transformation of complex blockchain functionalities into more manageable and tradable synthetic assets. By enabling strategic hedging against fluctuating gas prices and providing a robust market for gas fee derivatives, Hedgehog Protocol serves as a critical infrastructure for onchain native derivatives.

Learn more about What is Hedgehog?

Architecture of Hedgehog — Modular Synthetic Blockspace

The architecture of Hedgehog’s modular synthetic blockspace is designed to abstract the complexities of the Ethereum blockchain into a simplified, tradable asset. At first, by focusing on the base fee of each block, the protocol strips away unnecessary details and retains only the essential information needed to assess gas costs effectively.

Representation of the modular synthetic blockspace with the BaseFee CDP market built on top of it.

As described in the image above, it is composed of three critical components: Hedgehog Oracles, Collateralized Debt Positions (CDPs), and a carefully structured fee system. Oracles play a pivotal role, sourcing and submitting onchain Base Fee data to ensure market operations are based on accurate and reliable information.

This streamlined approach allows users to mint BaseFee tokens through Collateralized Debt Positions (CDPs), using wrapped staked Ether (wstETH) as collateral, ensuring a stable and predictable framework for managing blockchain operations.

Learn more about the Architecture of the Modular Synthetic Blockspace by Hedgehog Protocol

Economics of Hedgehog

Hedgehog Protocol not only addresses the volatile nature of gas fees but also transforms these challenges into opportunities for cost management and economic efficiency. Through the tokenization of gas fees, Hedgehog creates a market where users can lock in future gas prices, speculate on gas fee changes, and hedge against potential cost surges.

Representation of the potential of users using Hedgehog to lock in and have predictable costs.

This market dynamism is bolstered by the introduction of liquidity providers, minters, and traders, each playing a pivotal role in ensuring market liquidity and facilitating price conversion with the ‘spot’ price.

Learn more about the Economics of Hedgehog

How the BaseFee token works, and how to use Hedgehog

Engaging with Hedgehog Protocol is straightforward. Users can mint BaseFee tokens by minting a CDP, locking in wstETH as collateral. This process is managed through Hedgehog’s dApp interface, where users can also trade, provide liquidity, and participate in the stability pool to earn rewards. Each interaction within the ecosystem is designed to enhance user experience while providing tools for effective risk management and trading.

What Hedgehog dApp interface will look like. Everything will be one tab away.

Hedgehog Protocol is useful for several market participants:

dApp Developers: By leveraging Hedgehog, DApps can hedge against fluctuating gas fees, thereby stabilizing their operational costs — crucial for financial planning and sustainability.
Onchain Projects: Rollups, smart wallets and exchanges find value in our protocol to mitigate their gas expenditures through strategic hedging, making their operations more cost-efficient.
Users: Regular onchain users can use Hedgehog to speculate on events of high congestion or to hedge against increasing gas prices, making money or managing their transaction costs more effectively.

Learn more about How the BaseFee token works

Wen Testnet?

Soon.

Looking ahead, the launch of our Testnet is imminent as we finalize the auditing process with ChainSecurity. As we’ve mentioned in the announcement, this is crucial for ensuring the robustness and security of our platform.

Next week, we will be sharing more detailed information about the Testnet, including how you can participate and what to expect. Stay tuned and keep an eye on our upcoming updates to be among the first to explore the capabilities of the Hedgehog Protocol in a test environment.