diff --git a/src/client.rs b/src/client.rs
index f5a4b43a6..bb7c324d0 100644
--- a/src/client.rs
+++ b/src/client.rs
@@ -1,4 +1,5 @@
 use util::*;
+use rocksdb::{DB};
 use blockchain::{BlockChain, BlockProvider};
 use views::BlockView;
 use error::*;
@@ -7,6 +8,9 @@ use spec::Spec;
 use engine::Engine;
 use queue::BlockQueue;
 use sync::NetSyncMessage;
+use env_info::LastHashes;
+use verification::*;
+use block::*;
 
 /// General block status
 pub enum BlockStatus {
@@ -95,7 +99,8 @@ pub trait BlockChainClient : Sync {
 /// Blockchain database client backed by a persistent database. Owns and manages a blockchain and a block queue.
 pub struct Client {
 	chain: Arc<RwLock<BlockChain>>,
-	_engine: Arc<Box<Engine>>,
+	engine: Arc<Box<Engine>>,
+	state_db: OverlayDB,
 	queue: BlockQueue,
 }
 
@@ -103,15 +108,56 @@ impl Client {
 	pub fn new(spec: Spec, path: &Path, message_channel: IoChannel<NetSyncMessage> ) -> Result<Client, Error> {
 		let chain = Arc::new(RwLock::new(BlockChain::new(&spec.genesis_block(), path)));
 		let engine = Arc::new(try!(spec.to_engine()));
+		let mut state_path = path.to_path_buf();
+		state_path.push("state");
+		let db = DB::open_default(state_path.to_str().unwrap()).unwrap();
+
 		Ok(Client {
 			chain: chain.clone(),
-			_engine: engine.clone(),
-			queue: BlockQueue::new(chain.clone(), engine.clone(), message_channel),
+			engine: engine.clone(),
+			state_db: OverlayDB::new(db),
+			queue: BlockQueue::new(engine.clone(), message_channel),
 		})
 	}
 
 
 	pub fn import_verified_block(&mut self, bytes: Bytes) {
+		let block = BlockView::new(&bytes);
+		let header = block.header_view();
+		if let Err(e) = verify_block_final(&bytes, self.engine.deref().deref(), self.chain.read().unwrap().deref()) {
+			warn!(target: "client", "Stage 3 block verification failed for {}\nError: {:?}", header.sha3(), e);
+			// TODO: mark as bad
+			return;
+		};
+		let parent = match self.chain.read().unwrap().block_header(&header.parent_hash()) {
+			Some(p) => p,
+			None => {
+				warn!(target: "client", "Stage 3 import failed for {}: Parent not found ({}) ", header.sha3(), header.parent_hash());
+				return;
+			},
+		};
+		// build last hashes
+		let mut last = self.chain.read().unwrap().best_block_hash();
+		let mut last_hashes = LastHashes::new();
+		last_hashes.resize(256, H256::new());
+		for i in 0..255 {
+			match self.chain.read().unwrap().block_details(&last) {
+				Some(details) => {
+					last_hashes[i + 1] = details.parent.clone();
+					last = details.parent.clone();
+				},
+				None => break,
+			}
+		}
+
+		let mut b = OpenBlock::new(self.engine.deref().deref(), self.state_db.clone(), &parent, &last_hashes, header.author(), header.extra_data());
+
+		for t in block.transactions().into_iter() { 
+			if let Err(e) = b.push_transaction(t.clone(), None) {
+				warn!(target: "client", "Stage 3 transaction import failed for block {}\nTransaction:{:?}\nError: {:?}", header.sha3(), t, e);
+				return;
+			};
+		}
 		self.chain.write().unwrap().insert_block(&bytes);
 	}
 }
@@ -171,6 +217,10 @@ impl BlockChainClient for Client {
 	}
 
 	fn import_block(&mut self, bytes: &[u8]) -> ImportResult {
+		let header = BlockView::new(bytes).header();
+		if self.chain.read().unwrap().is_known(&header.hash()) {
+			return Err(ImportError::AlreadyInChain);
+		}
 		self.queue.import_block(bytes)
 	}
 
diff --git a/src/queue.rs b/src/queue.rs
index 60026e818..f02a4ea72 100644
--- a/src/queue.rs
+++ b/src/queue.rs
@@ -1,6 +1,4 @@
 use util::*;
-use blockchain::*;
-use views::{BlockView};
 use verification::*;
 use error::*;
 use engine::Engine;
@@ -9,16 +7,14 @@ use sync::*;
 /// A queue of blocks. Sits between network or other I/O and the BlockChain.
 /// Sorts them ready for blockchain insertion.
 pub struct BlockQueue {
-	bc: Arc<RwLock<BlockChain>>,
 	engine: Arc<Box<Engine>>,
 	message_channel: IoChannel<NetSyncMessage>
 }
 
 impl BlockQueue {
 	/// Creates a new queue instance.
-	pub fn new(bc: Arc<RwLock<BlockChain>>, engine: Arc<Box<Engine>>, message_channel: IoChannel<NetSyncMessage>) -> BlockQueue {
+	pub fn new(engine: Arc<Box<Engine>>, message_channel: IoChannel<NetSyncMessage>) -> BlockQueue {
 		BlockQueue {
-			bc: bc,
 			engine: engine,
 			message_channel: message_channel
 		}
@@ -30,13 +26,8 @@ impl BlockQueue {
 
 	/// Add a block to the queue.
 	pub fn import_block(&mut self, bytes: &[u8]) -> ImportResult {
-		let header = BlockView::new(bytes).header();
-		if self.bc.read().unwrap().is_known(&header.hash()) {
-			return Err(ImportError::AlreadyInChain);
-		}
 		try!(verify_block_basic(bytes, self.engine.deref().deref()));
 		try!(verify_block_unordered(bytes, self.engine.deref().deref()));
-		try!(verify_block_final(bytes, self.engine.deref().deref(), self.bc.read().unwrap().deref()));
 		try!(self.message_channel.send(UserMessage(SyncMessage::BlockVerified(bytes.to_vec()))).map_err(|e| Error::from(e)));
 		Ok(())
 	}
diff --git a/src/verification.rs b/src/verification.rs
index 5dabcf84f..2c3fe130d 100644
--- a/src/verification.rs
+++ b/src/verification.rs
@@ -38,6 +38,7 @@ pub fn verify_block_unordered(bytes: &[u8], engine: &Engine) -> Result<(), Error
 
 /// Phase 3 verification. Check block information against parent and uncles.
 pub fn verify_block_final<BC>(bytes: &[u8], engine: &Engine, bc: &BC) -> Result<(), Error> where BC: BlockProvider {
+	// TODO: verify timestamp
 	let block = BlockView::new(bytes);
 	let header = block.header();
 	let parent = try!(bc.block_header(&header.parent_hash).ok_or::<Error>(From::from(BlockError::UnknownParent(header.parent_hash.clone()))));