Why Gasless Transactions Create Misaligned Incentives

Gasless transactions are a subsidy that externalizes costs from users to relayers or applications. This creates a principal-agent problem where the entity paying the gas has different optimization goals than the end-user, leading to censorship or front-running risks.

The relayer becomes a centralized point of failure and control. Systems like ERC-4337 Account Abstraction or Gelato Network must manage private keys or off-chain services, reintroducing the trusted intermediaries that blockchains were built to eliminate.

Fee abstraction does not eliminate costs, it redistributes them. Applications must monetize user activity elsewhere, often through extractive MEV or inflated tokenomics, creating a hidden tax more opaque than transparent gas fees.

Evidence: The Polygon Gas Station Network initially subsidized transactions to bootstrap adoption, a cost that became unsustainable at scale and shifted to a more explicit sponsorship model, proving the subsidy is temporary.

Gasless transactions externalize costs. Users do not pay gas, so they have zero incentive to optimize transaction size or frequency. This creates a moral hazard where users spam the network, forcing the entity subsidizing the gas—like a dApp or a relayer network—to bear the full cost.

This cost externalization breeds centralization. To manage unpredictable costs, subsidizing entities implement rate-limiting and KYC. Services like Biconomy and Gelato become centralized gatekeepers, deciding which transactions get relayed based on their own risk models, not user sovereignty.

The result is protocol capture. The economic model of ERC-4337 account abstraction and intent-based systems like UniswapX depends on off-chain actors (bundlers, solvers) acting honestly. These actors consolidate power to achieve economies of scale, recreating the web2 platform risks crypto aimed to dismantle.

Evidence: On Polygon, over 90% of gasless transactions processed by a major relayer were Sybil-generated airdrop farming attempts. This forced the relayer to implement strict geo-blocking and wallet reputation filters, centralizing access control.

Gasless transactions are not free. They externalize costs to relayers or dApps, creating a hidden subsidy model that distorts economic signals. This is the core misalignment.

Relayers become centralized rent-seekers. Services like Biconomy or Gelato must front gas costs, incentivizing them to batch transactions for profit, not user benefit. This recreates the MEV extractor role.

Protocols face unsustainable burdens. A dApp offering gasless onboarding, like a hypothetical UniswapX feature, assumes a massive, volatile liability. This creates a winner-takes-most dynamic favoring well-funded incumbents.

Evidence: The EIP-4337 Account Abstraction standard centralizes bundler power. Analysis shows top three Ethereum bundlers control over 60% of UserOperation volume, a clear centralization vector.