Ethereum’s four-minute settlement plan could lower the cost of moving crypto
Ethereum researchers have proposed a new mechanism to reduce transaction finality time from 16 minutes to four minutes. This change aims to lower the capital costs for transfer services that front funds for users moving assets across networks.
Why it matters
Reducing settlement times improves capital efficiency in decentralized finance and enhances the user experience for cross-chain transactions.
Ben Edgington, who coordinates Ethereum’s fast-finality research, filed the draft Wednesday with fellow researchers Francesco D’Amato, Roberto Saltini, Yann Vonlanthen and Mikhail Kalinin.
Its initial target is a four-fold improvement, though the design is unfinished and has no activation date.
In the current mechanism, a transaction can land in an Ethereum block well before the network treats it as final, the point where validators, the computers that secure the network, commit to never rewriting it. Anyone moving funds off Ethereum has to decide when it’s safe to release money on the other side.
But sixteen minutes is a long time to have money in limbo.
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