diff --git a/settlement/base.go b/settlement/base.go
index e623dc179..e7673519d 100644
--- a/settlement/base.go
+++ b/settlement/base.go
@@ -76,7 +76,7 @@ func (b *BaseLayerClient) Start() error {
 		endHeight = latestBatch.EndHeight
 	}
 	b.latestHeight = endHeight
-	b.logger.Info("Updated latest height from settlement layer", "latestHeight", b.latestHeight)
+	b.logger.Info("Updated latest height from settlement layer", "latestHeight", endHeight)
 	b.sequencersList, err = b.fetchSequencersList()
 	if err != nil {
 		if err == ErrNoSequencerForRollapp {
@@ -85,6 +85,7 @@ func (b *BaseLayerClient) Start() error {
 		return err
 	}
 	b.logger.Info("Updated sequencers list from settlement layer", "sequencersList", b.sequencersList)
+	go b.stateUpdatesHandler()
 
 	err = b.client.Start()
 	if err != nil {
@@ -123,7 +124,6 @@ func (b *BaseLayerClient) SubmitBatch(batch *types.Batch, daClient da.Client, da
 		}
 	}
 	b.logger.Info("Successfully submitted batch to settlement layer", "tx hash", txResp.GetTxHash())
-	atomic.StoreUint64(&b.latestHeight, batch.EndHeight)
 	return &ResultSubmitBatch{
 		BaseResult: BaseResult{Code: StatusSuccess},
 	}
@@ -206,3 +206,22 @@ func (b *BaseLayerClient) validateBatch(batch *types.Batch) error {
 	}
 	return nil
 }
+
+func (b *BaseLayerClient) stateUpdatesHandler() {
+	b.logger.Info("Started state updates handler loop")
+	subscription, err := b.pubsub.Subscribe(context.Background(), "stateUpdatesHandler", EventQueryNewSettlementBatchAccepted)
+	if err != nil {
+		b.logger.Error("failed to subscribe to state update events")
+		panic(err)
+	}
+	for {
+		select {
+		case event := <-subscription.Out():
+			b.logger.Debug("Received state update event", "eventData", event.Data())
+			eventData := event.Data().(*EventDataNewSettlementBatchAccepted)
+			atomic.StoreUint64(&b.latestHeight, eventData.EndHeight)
+		case <-subscription.Cancelled():
+			b.logger.Info("Subscription canceled")
+		}
+	}
+}
diff --git a/settlement/mock/mock.go b/settlement/mock/mock.go
index e26e554d6..be05db07b 100644
--- a/settlement/mock/mock.go
+++ b/settlement/mock/mock.go
@@ -8,6 +8,7 @@ import (
 	"errors"
 	"strings"
 	"sync/atomic"
+	"time"
 
 	tmp2p "github.com/tendermint/tendermint/p2p"
 
@@ -186,10 +187,14 @@ func (c *HubClient) PostBatch(batch *types.Batch, daClient da.Client, daResult *
 	if err != nil {
 		return PostBatchResp{err}, err
 	}
-	err = c.pubsub.PublishWithEvents(context.Background(), &settlement.EventDataNewSettlementBatchAccepted{EndHeight: settlementBatch.EndHeight}, map[string][]string{settlement.EventTypeKey: {settlement.EventNewSettlementBatchAccepted}})
-	if err != nil {
-		c.logger.Error("error publishing event", "error", err)
-	}
+	go func() {
+		// sleep for 100 miliseconds to mimic a delay in batch acceptance
+		time.Sleep(100 * time.Millisecond)
+		err = c.pubsub.PublishWithEvents(context.Background(), &settlement.EventDataNewSettlementBatchAccepted{EndHeight: settlementBatch.EndHeight}, map[string][]string{settlement.EventTypeKey: {settlement.EventNewSettlementBatchAccepted}})
+		if err != nil {
+			c.logger.Error("error publishing event", "error", err)
+		}
+	}()
 	return PostBatchResp{nil}, nil
 }
 
diff --git a/settlement/settlement_test.go b/settlement/settlement_test.go
index 8511ea332..855bcd77c 100644
--- a/settlement/settlement_test.go
+++ b/settlement/settlement_test.go
@@ -2,6 +2,7 @@ package settlement_test
 
 import (
 	"testing"
+	"time"
 
 	"github.com/libp2p/go-libp2p-core/crypto"
 	"github.com/stretchr/testify/assert"
@@ -110,6 +111,8 @@ func TestSubmitAndRetrieve(t *testing.T) {
 		}
 		resultSubmitBatch := settlementClient.SubmitBatch(batch, da.Mock, daResult)
 		assert.Equal(resultSubmitBatch.Code, settlement.StatusSuccess)
+		// sleep for 500 ms to make sure batch got accepted by the settlement layer
+		time.Sleep(500 * time.Millisecond)
 	}
 
 	// Retrieve the latest batch and make sure it matches latest batch submitted