Why Paymaster Relays Are the Next Major Infrastructure Business

Gas abstraction is the bottleneck. Every user experience in crypto is gated by the friction of acquiring and paying for gas. Paymaster relays solve this by letting applications sponsor transaction fees, removing the primary barrier to entry.

The business model is superior to RPCs. While RPC providers like Alchemy and Infura compete on price for commodity data access, paymaster relays like Biconomy and Pimlico capture value by enabling new user behaviors and monetizing intent flow.

This is an intent-based primitive. Similar to how UniswapX and Across abstract swap execution, paymaster relays abstract payment. They are the settlement layer for sponsored transactions, creating a direct revenue stream from application growth.

Evidence: Over 60% of transactions on Polygon PoS are now sponsored, demonstrating clear product-market fit for fee abstraction that will migrate to all major L2s like Arbitrum and Optimism.

The gas abstraction market is the wedge. Protocols like EIP-4337 and Pimlico solve the initial user onboarding pain of acquiring native gas tokens, but this is merely the entry point for a larger business.

Relays become the transaction orchestrator. Once a paymaster sponsors the gas, the relay infrastructure (e.g., Gelato, Biconomy) controls the entire transaction flow, from bundling to on-chain execution, becoming the default settlement layer for all user actions.

This creates a data moat. The relay observes the complete intent—the DEX, the bridge, the NFT mint—enabling cross-subsidization and order flow monetization models similar to UniswapX or CoW Swap but at the infrastructure level.

Evidence: Visa's partnership with Transak and Coinbase's Smart Wallet are early validation that abstracting gas is the prerequisite for capturing mainstream, non-crypto-native transaction volume.

User onboarding is broken. Every new user must acquire the native token before their first transaction, a cognitive and financial hurdle that kills conversion. This is the primary bottleneck for mass adoption.

Protocols subsidize inefficiency. Teams like Polygon and Arbitrum spend millions on direct gas grants, a leaky bucket where funds are wasted on sybil farmers instead of real users. It's a marketing cost, not infrastructure.

The business model doesn't scale. Managing multi-chain gas logistics is an operational nightmare. A protocol like Uniswap must hold and rebalance ETH, MATIC, and ARB across dozens of chains, creating treasury risk and overhead.

Evidence: Ethereum L2s process ~50M transactions monthly. If even 10% require manual bridging for gas, that's 5M user sessions broken by a primitive wallet UX.

Relays monetize abstraction. They charge a premium to pay gas fees on a user's behalf, converting complex blockchain interactions into simple API calls. This model mirrors the early days of AWS or Cloudflare, where complexity became a service.

The defensibility is in bundling. Winning relays integrate with ERC-4337 Account Abstraction wallets like Safe and Biconomy, offering sponsored transactions, gasless swaps, and cross-chain actions. This creates a sticky, multi-product relationship.

Scale dictates profitability. Relay margins compress with volume, but the unit economics flip with high throughput. The business is a bet on the L2/L3 ecosystem, where fragmented gas markets create arbitrage opportunities.

Evidence: Pimlico and Biconomy already process millions of user operations monthly. Their APIs are the plumbing for the next wave of dApps, making them the Plaid for blockchain transactions.

Paymaster relays are the new RPCs. Just as Alchemy and Infura monetized read access, the next wave monetizes transaction sponsorship and user abstraction. Every gasless transaction, every session key, and every sponsored NFT mint flows through a relay, creating a direct revenue tap on user activity.

The business is a natural monopoly. Relays require deep integration with wallet SDKs (like Privy or Dynamic) and bundler infrastructure (like Stackup or Alchemy's). This creates high switching costs and network effects that centralize volume, mirroring the consolidation seen in RPC and block builder markets.

Revenue scales with abstraction, not speculation. Unlike MEV or sequencing, relay fees are a predictable SaaS-style cut of sponsored gas. As account abstraction and intent-based flows (via UniswapX or CowSwap) dominate, the relay becomes the mandatory toll booth for mainstream UX.

Evidence: The ERC-4337 bundler market already shows 80%+ of UserOperation volume flows through the top three providers. This concentration will accelerate as paymasters like Biconomy and Pimlico bundle relay services with their SDKs, locking in developers.