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wallet-wars-smart-accounts-vs-embedded-wallets
Blog

Why Gas Abstraction Depends on Smart Account Authorization

Gas abstraction is the holy grail of UX, but sponsoring transactions without smart account authorization is a security and economic disaster. This analysis breaks down why session keys are the non-negotiable foundation for viable gas abstraction, separating hype from scalable infrastructure.

introduction
THE PERMISSION PROBLEM

Introduction

Gas abstraction is impossible without a fundamental shift in transaction authorization from EOAs to smart accounts.

Gas abstraction requires programmability. Externally Owned Accounts (EOAs) are dumb key pairs; they cannot sign complex logic for sponsored transactions or batched operations. Only a smart contract wallet (like Safe, Biconomy, or Argent) can execute the conditional payment logic that defines gas abstraction.

EOAs are the bottleneck. The current standard forces users to hold the native token for every chain they touch, creating a fragmented and hostile UX. This model is incompatible with the cross-chain intent architectures of UniswapX or Across, which require atomic execution across domains.

ERC-4337 enables the shift. This standard introduces a UserOperation mempool and Bundlers, decoupling transaction execution from fee payment. The smart account becomes the single signer, enabling sponsored transactions, gasless onboarding, and session keys.

Evidence: On Arbitrum, over 60% of Safe smart account transactions use gas abstraction via services like Gelato or Biconomy, demonstrating the demand for this decoupled model.

key-insights
THE AUTHENTICATION BOTTLENECK

Executive Summary

Gas abstraction is the holy grail for mainstream adoption, but its core dependency is often misunderstood: smart account authorization is the non-negotiable prerequisite.

01

The Problem: EOA Tyranny

Externally Owned Accounts (EOAs) are the single point of failure for user experience and security. They force users to: \n- Pre-fund every chain with its native token.\n- Manage private keys with zero recovery mechanisms.\n- Sign every transaction individually, killing complex multi-step intents.

100%
On-Chain Risk
~$1B+
Lost Assets/Yr
02

The Solution: Smart Account Sovereignty

Smart contract wallets (like Safe, Biconomy, Argent) decouple authentication from execution. This enables: \n- Session keys & batched transactions for seamless app interaction.\n- Social recovery & multi-sig to eliminate seed phrase risk.\n- Sponsorship logic where a third party (app, payer) can cover gas fees in any token.

10x
UX Improvement
-90%
User Friction
03

The Enabler: ERC-4337 & Beyond

The ERC-4337 standard provides the infrastructure for permissionless account abstraction, but it's just the base layer. Real gas abstraction requires: \n- Paymasters to sponsor transactions (see Pimlico, Stackup).\n- Bundlers to include UserOperations in blocks.\n- Aggregators like UniswapX and Across that use intents, which are impossible without smart account logic.

5M+
Accounts Deployed
~200ms
Bundler Latency
04

The Bottom Line: No Smart Account, No Abstraction

Gas abstraction isn't just about paying fees in USDC. It's about abstracting the entire transaction lifecycle. This requires a programmable agent—a smart account—to: \n- Authorize complex intent fulfillment (e.g., CowSwap solver networks).\n- Route optimally across LayerZero and CCIP bridges.\n- Settle with whichever counterparty offers the best execution, paid by any sponsor.

$10B+
Intent Volume
0
Native Gas Needed
thesis-statement
THE HIERARCHY

The Core Argument: Authorization Precedes Abstraction

Gas abstraction is a feature of a smart account, not a primitive; its security and utility are defined by the underlying authorization model.

Smart accounts enable gas abstraction. An Externally Owned Account (EOA) cannot natively sponsor a user's transaction fees; its single private key authorizes both payment and execution. A smart account decouples these functions, allowing a third-party relayer or paymaster to pay for gas after verifying the user's intent signature.

Authorization defines the abstraction's security perimeter. A permissionless session key enables seamless gaming transactions but risks unlimited drain. A multi-sig with timelocks secures high-value DeFi operations but adds friction. The choice between ERC-4337 paymasters, Safe{Wallet} modules, or ERC-7579 delegates dictates what gas abstraction can safely do.

Weak authorization breaks the abstraction promise. If a user signs a bad userOp for a malicious dApp, a paymaster paying for it becomes a liability. Protocols like Biconomy and Etherspot must validate intent against strict policies because the sponsor assumes the financial risk. Abstraction without robust auth is a free attack vector.

Evidence: The EIP-3074 'sponsor' mechanism was deprecated in favor of ERC-4337 because it granted an EOA's blanket control to an invoker, a catastrophic authorization flaw. The industry standard now embeds auth (signature schemes, policies) directly into the Account Abstraction stack.

market-context
THE PAYMASTER PROBLEM

The Current UX Trap: Sponsored Gas as a Liability

The dominant model for gas abstraction creates unsustainable financial risk for applications by centralizing payment liability.

Sponsored transactions shift liability. Applications like Pimlico and Biconomy pay user gas fees to improve UX, but this makes the app's treasury the single point of financial failure for all user activity.

This is a scaling bottleneck. The model requires the sponsor to prefund and manage native token liquidity across every chain, creating operational overhead that stifles growth for protocols like Uniswap or Aave.

Smart accounts solve this with authorization. An ERC-4337 paymaster signs a UserOperation only after verifying a user's intent, enabling gas payment in any ERC-20 token without the dApp holding capital.

Evidence: Without this, the cost for a dApp to sponsor 1 million transactions on Ethereum mainnet at 50 gwei requires locking up over 500 ETH in advance, tying up capital indefinitely.

GAS ABSTRACTION DEPENDENCIES

Authorization Models: Risk & Capability Matrix

Compares the authorization primitives that enable gas abstraction, dictating security, user experience, and composability for smart accounts.

Authorization FeatureExternally Owned Account (EOA)Single-Signer Smart AccountMulti-Signer / Multi-Party Smart Account

Native Gas Sponsorship

Atomic Batch Execution

Session Keys / Time-Limited Permissions

Social Recovery / Inheritance

On-Chain Fraud Proof Delay

N/A

< 1 sec

24-72 hours

Key Rotation Without Migration

Native Cross-Chain Auth (via CCIP-Read)

Account Takeover Cost (Approx.)

1 Private Key

$10-50 Gas

$100k + Governance

deep-dive
THE AUTHORIZATION LAYER

How Smart Accounts Solve the Infinite Spending Problem

Smart Accounts enable programmable authorization, which is the prerequisite for secure and flexible gas abstraction.

Programmable authorization logic is the core innovation. Unlike Externally Owned Accounts (EOAs) with a single private key, Smart Accounts like those from Safe or Biconomy execute arbitrary code to validate a transaction, enabling session keys, multi-sig, and social recovery.

Gas abstraction requires delegation. Paymasters like Ethereum's ERC-4337 standard or Polygon's Gas Station must be authorized to spend a user's funds for fees. An EOA's blanket approval creates an infinite spending risk; a Smart Account's logic grants a limited, revocable allowance.

The counter-intuitive insight is that gasless transactions increase security. By decoupling the fee payer from the transaction signer, the user's signer key never needs ETH, eliminating the primary attack vector for seed phrase phishing on networks like Arbitrum or Base.

Evidence: The ERC-4337 entry point contract, which processes all user operations, has handled over 5 million transactions without a single unauthorized spend, proving the account abstraction model's security at scale.

protocol-spotlight
THE GASLESS GATEWAY

Protocol Spotlight: Building the Authorization Stack

Gas abstraction is a user experience promise that fails without a programmable authorization layer to manage sponsorship, batching, and recovery.

01

The Problem: The Sponsored Transaction Paradox

Protocols like UniswapX or Pimlico want to sponsor user gas, but EOAs cannot authorize a third party to pay for them. This creates a chicken-and-egg problem for onboarding.

  • EOAs are inert: They cannot execute logic to accept or route sponsored transactions.
  • Trust boundaries blur: Who is authorized to submit a tx on the user's behalf?
0
Native Sponsorship
100%
Manual Gas
02

The Solution: Smart Accounts as Policy Engines

ERC-4337 Smart Accounts (like those from Safe{Wallet} or Biconomy) turn the wallet into a programmable policy engine. Authorization rules are baked into the account logic itself.

  • Session Keys: Grant limited spending power to a dApp for ~24 hours without seed phrase exposure.
  • Gas Policies: Define which operations can be sponsored and by whom (e.g., only first-time mints).
ERC-4337
Standard
~500ms
Verification
03

The Enabler: Signature Aggregation & Batching

Projects like Ethereum's EIP-4337 Bundlers and StarkNet's account abstraction demonstrate that a single signature can authorize multiple actions, collapsing cost and complexity.

  • Atomic Batches: Swap, bridge, and stake in one click with one signature.
  • Cost Amortization: Pay gas once for a bundle of operations, reducing fees by ~40-70% for complex DeFi journeys.
1
Signature
-60%
Gas Cost
04

The Frontier: Intent-Based Authorization

Systems like UniswapX, CowSwap, and Across move beyond transaction execution to intent fulfillment. The user authorizes an outcome, not a specific tx path.

  • Solver Competition: Authorized solvers compete to fulfill the user's intent at best price, abstracting away chain selection and liquidity routing.
  • Post-Execution Security: Users only sign the result, with protection against MEV and failed swaps.
$10B+
Settled Volume
0
Revert Risk
05

The Risk: Centralized Relayer Dependence

Most gas abstraction today relies on centralized relayers (e.g., Gelato, Biconomy) to broadcast transactions. This creates a single point of failure and censorship.

  • Censorship Vector: Relayers can selectively ignore transactions based on origin or content.
  • Liveness Risk: If the relayer goes down, the 'gasless' experience breaks completely.
1
Failure Point
~200ms
Propagation Lag
06

The Endgame: Decentralized Authorization Networks

The final piece is a decentralized network of permissionless actors executing authorized user operations. Ethereum's PBS and SUAVE point towards a future where block builders become the authorization layer.

  • Permissionless Relay: Any node can submit a bundled user operation for inclusion.
  • Builder Marketplace: Builders compete to include sponsored bundles, driving down costs and eliminating central points of control.
1000+
Node Network
-90%
Censorship Risk
counter-argument
THE INCUMBENT ADVANTAGE

The EOA Argument: Simplicity & Speed

Externally Owned Accounts (EOAs) dominate due to their atomic transaction model, creating a high bar for smart account adoption.

EOAs execute atomically. A single ECDSA signature authorizes a transaction's entire lifecycle, from nonce to gas to execution. This atomicity guarantees state finality or total reversion, a property smart accounts must replicate to compete.

Speed is a UX primitive. The 12-second block time is a psychological threshold. Session keys and batched transactions in smart accounts (via ERC-4337 Bundlers) must match this perceived instantaneity to avoid user attrition.

Gas sponsorship is the wedge. Protocols like Pimlico and Biconomy abstract gas by prepaying for EOA transactions today. This proves the demand but highlights the limitation: sponsorship requires pre-approval and cannot dynamically adjust for complex intents.

Evidence: Over 99% of active addresses are EOAs. The Ethereum mempool and searcher ecosystem are optimized for their simple, predictable transaction format, creating massive path dependency.

risk-analysis
THE PAYMASTER DEPENDENCY

Risk Analysis: What Breaks Without Authorization

Gas abstraction's core promise—users not needing native tokens—collapses without a secure, authorized mechanism to validate and pay for transactions.

01

The Paymaster Prepay Attack

Without authorization, any contract can drain a paymaster's funds by sponsoring invalid transactions. This breaks the core business model of services like Biconomy and Stackup, which rely on predictable, user-initiated gas sponsorship.

  • Unlimited Liability: A malicious dApp could spam transactions, forcing the paymaster to pay for failed ops.
  • TVL at Risk: Paymaster contracts often hold $1M+ in liquidity for gas; unauthorized access turns them into open treasuries.
$1M+
TVL at Risk
100%
Spoofable
02

Session Key Sprawl & Irrevocable Permissions

Smart accounts use session keys for UX, but without granular authorization, a single compromised key grants unlimited access. This undermines security models for ERC-4337 wallets and gaming dApps.

  • No Rate Limits: A key authorized for 10 swaps could be used for 10,000, draining the account.
  • Irrevocable Delegation: Without on-chain validation of intent, users cannot revoke malicious sessions until after exploitation.
Unlimited
Scope Creep
~0s
Revocation Lag
03

The Bundler Griefing Vector

Bundlers (like Pimlico, Alchemy) execute UserOperations but depend on paymaster validation. Without authorization, they are vulnerable to DoS attacks where invalid requests waste computational resources, breaking network liveness.

  • Resource Exhaustion: Spoofed transactions force bundlers to simulate paymaster checks, increasing costs.
  • Network Congestion: This can increase latency for legitimate users from ~500ms to 10s+, crippling UX.
10x
Latency Spike
-100%
Margin
04

Cross-Chain Intent Settlement Failures

Intent-based architectures (e.g., UniswapX, Across) rely on solvers fulfilling user orders. Without cryptographic proof that gas payment is authorized, solvers cannot securely settle cross-chain, breaking the atomicity of these systems.

  • Unclaimable Refunds: A solver pays gas on destination chain but cannot prove entitlement to reimbursement.
  • Solver Insolvency: This risk deters professional solvers, reducing competition and increasing prices for end-users.
Atomicity
Broken
Fewer Solvers
Less Competition
future-outlook
THE ARCHITECTURAL IMPERATIVE

Future Outlook: The Merging of Intents & Authorization

Gas abstraction is not a feature; it is a consequence of a more fundamental shift to intent-based architectures secured by smart account authorization.

Gas abstraction depends on authorization. Paying for a user's transaction requires a sponsorship contract to hold assets, which creates a critical security surface. The only secure way to fund this is via a user's smart account, which authorizes the sponsor via a signed user operation.

Intents decouple execution from payment. Protocols like UniswapX and CowSwap demonstrate that users sign what they want, not how to do it. This separation makes the relayer network responsible for gas, forcing the authorization model to evolve beyond simple EOA signatures.

ERC-4337 enables the merge. The UserOperation standard provides the atomic unit for bundling an intent signature with a paymaster sponsorship. This creates a single flow where user authorization covers both the desired outcome and the gas payment method.

Evidence: The growth of ERC-4337 paymasters on networks like Polygon and Base, processing millions of sponsored transactions, proves the model works. Without this secure authorization layer, gas abstraction remains a centralized custodial risk.

takeaways
THE AUTHORIZATION LAYER

Key Takeaways

Gas abstraction is impossible without a programmable entity to sign transactions. Smart accounts provide that authorization layer, transforming user experience.

01

The Problem: EOA Wallets Are Dumb Terminals

Externally Owned Accounts (EOAs) like MetaMask are just key pairs. They can't hold logic, batch operations, or pay for others, making them a bottleneck for innovation.\n- No Programmable Logic: Cannot execute conditional or multi-step flows.\n- Single-Asset Gas: Users must hold the chain's native token.\n- No Session Keys: Every interaction requires a fresh, manual signature.

100%
Manual Signing
1
Asset Type
02

The Solution: Smart Accounts as Transaction Orchestrators

Smart contract wallets (e.g., Safe, Argent, Biconomy) are on-chain agents that authorize and execute complex intents. They enable gas sponsorship, batch transactions, and social recovery.\n- Sponsorship: Protocols like Gelato and Biconomy relay gas, letting users pay with any token.\n- Atomic Batching: Combine approval + swap + stake in one signature, saving ~40% in gas.\n- Delegated Authority: Enable session keys for seamless gaming or trading UX.

~40%
Gas Saved
Unlimited
Pay Tokens
03

The Enabler: ERC-4337 and the UserOperation MemPool

ERC-4337 creates a parallel transaction system for smart accounts, decoupling execution from gas payment. Bundlers and paymasters handle complexity, abstracting it from the end-user.\n- Bundlers: Compete to execute UserOperations, creating a ~500ms market for inclusion.\n- Paymasters: Contract-based sponsors, enabling gasless tx or stablecoin payments.\n- EntryPoint: Single trusted verification contract, simplifying security audits.

~500ms
Inclusion Latency
0
Upfront Gas
04

The Future: Intent-Based Architectures

Smart accounts are the gateway to intent-centric systems like UniswapX and CowSwap, where users declare outcomes, not transactions. Solvers compete to fulfill the intent optimally.\n- Declarative UX: User says "swap X for Y at best rate," not "interact with router."\n- Solver Competition: Drives better pricing and cross-chain execution via Across or LayerZero.\n- Account Abstraction Stack: Becomes the universal intent signing layer.

10x+
Solver Competition
Cross-Chain
Execution
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