> For the complete documentation index, see [llms.txt](https://hedgehog-protocol.gitbook.io/main/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hedgehog-protocol.gitbook.io/main/how-it-works/modular-synthetic-blockspace.md).

# Modular Synthetic Blockspace

This dynamic defines the **economy of the blockchain**, yet until now, it’s been impossible to **trade or hedge** that volatility directly.

#### Modular Synthetic Blockspace as a Solution

**Modular Synthetic Blockspace** transforms gas costs into **cash-settled, freely tradable assets**, effectively creating a **prediction market for on-chain costs**.\
Instead of buying or delivering real blockspace, users trade **synthetic contracts** that mirror the gas price of a given block or time window.

We take a block at its core:

* strip away all the technical complexity,
* extract only its **gas cost data**,
* and turn that into a **financial instrument**.

That’s the essence of it — a simple, elegant layer built from something inherently complex.

#### Options for On-Chain Costs

With Modular Synthetic Blockspace, **options and futures** can be built around gas price movements — letting traders speculate on congestion, and builders **hedge future costs** with predictable pricing.

Just like prediction markets anticipate real-world outcomes, **Hedgehog enables speculation and hedging on blockchain activity itself. T**ransforming gas volatility, MEV intensity, and transaction fees into **structured financial primitives**.

#### Why It Matters

For **rollups**, **validators**, **wallets**, and **AA paymasters**, cost unpredictability is operational risk.\
Hedgehog gives them a **simple hedging layer**: no need to touch baseFee mechanics, just trade synthetic exposure to it.

For **traders**, it’s a new asset class, a high-frequency, data-driven options market built on the rhythm of block production itself.<br>

This dynamic defines the **economy of the blockchain**, yet until now, it’s been impossible to **trade or hedge** that volatility directly.

#### Modular Synthetic Blockspace as a Solution

**Modular Synthetic Blockspace** transforms gas costs into **cash-settled, freely tradable assets**, effectively creating a **prediction market for on-chain costs**.\
Instead of buying or delivering real blockspace, users trade **synthetic contracts** that mirror the gas price of a given block or time window.

We take a block at its core:

* strip away all the technical complexity,
* extract only its **gas cost data**,
* and turn that into a **financial instrument**.

That’s the essence of it — a simple, elegant layer built from something inherently complex.\ <br>