Native token gas fees are a UX dead end because they force users to hold volatile assets for utility. This creates a friction tax that scales with network adoption, directly opposing mainstream onboarding. Protocols like EIP-4337 (Account Abstraction) and Solana's priority fees demonstrate the path forward by decoupling payment from execution.
wallet-wars-smart-accounts-vs-embedded-wallets
Blog
Why Gas Abstraction Will Kill the Native Token Gas Model
A first-principles analysis of how paymasters, session keys, and dApp-sponsored transactions are systematically dismantling the economic moat of L1/L2 native tokens, shifting the ultimate fee market to stablecoins.
introduction
THE ECONOMIC FORK
The Inevitable Fee Shift
The native token gas model is a user-hostile abstraction that will be replaced by intent-based fee markets.
Intent-based architectures will win by letting users pay in any asset. Systems like UniswapX and Across already abstract gas for cross-chain swaps, proving users choose convenience over ideological purity. The winning L2 will be the one that makes its native token invisible to the end-user.
The counter-intuitive insight is that subsidizing gas with stablecoins strengthens, not weakens, the underlying chain. Particle Network's gas abstraction and Biconomy's paymasters show that absorbing fee volatility into the protocol layer increases transaction volume and developer lock-in. The fee market shifts from users to applications.
Evidence: On Arbitrum, over 60% of new accounts are now smart accounts (ERC-4337), not EOAs. This migration proves the demand for abstracted fee logic. Chains that enforce a native gas token, like early Ethereum, will be outcompeted by chains that treat gas as a backend settlement detail.
key-trends
THE END OF GAS TOKENS
The Three Forces Dismantling Native Token Utility
The requirement to hold a network's native token for gas is a UX bottleneck and a barrier to capital efficiency. These three forces are abstracting it away.
01
The Problem: Stranded Capital & Friction
Forcing users to hold dozens of native tokens for gas creates a terrible UX and locks capital in non-productive assets.
- Capital Inefficiency: Billions in ETH, SOL, AVAX sit idle in wallets just for gas.
- Onboarding Friction: New users must first acquire a specific token before interacting with any dApp.
- Cross-Chain Fragmentation: A user with USDC on Arbitrum cannot pay a gas fee on Polygon without a complex swap.
$10B+
Idle Gas Capital
~5 steps
Extra Onboarding
02
The Solution: ERC-4337 & Paymasters
Account Abstraction allows users to pay fees in any token, with a third-party (Paymaster) covering the native gas cost.
- Gasless Transactions: DApps can sponsor user ops, removing upfront cost.
- ERC-20 Gas: Users pay with USDC, USDT, or any token in their wallet.
- Subscription Models: Protocols like Biconomy and Stackup enable fixed-fee billing, decoupling usage from volatile gas prices.
ERC-4337
Standard
~0
Native Token Needed
03
The Enforcer: Intent-Based Architectures
Systems like UniswapX and CowSwap shift execution complexity to solvers, who batch and optimize transactions off-chain.
- User Declares 'What': User specifies desired outcome (e.g., "swap X for Y"), not the transaction steps.
- Solver Handles 'How': Professional solvers compete to fulfill the intent, sourcing liquidity and paying gas across chains.
- Gas Becomes a B2B Cost: The end-user never sees or pays a gas fee directly; it's baked into the settlement.
UniswapX
Key Entity
B2B
Gas Model
04
The Network Effect: Cross-Chain Messaging
Bridges and interoperability protocols are building gas abstraction directly into their core infrastructure to capture flow.
- Unified Gas Pools: LayerZero's DVN network and Axelar's GMP allow dApps to pay gas on destination chains from a single source.
- Relayer Subsidies: Protocols like Across and Wormhole use relayers to front gas costs, reimbursing them later in the user's desired token.
- The Result: The user's chain of choice (and its native token) becomes irrelevant for cross-chain actions.
LayerZero
Key Entity
Single-Chain
Gas Payment
deep-dive
THE USER EXPERIENCE IMPERATIVE
First Principles: Why Stablecoin Gas Wins
The native token gas model is a UX failure that stablecoin abstraction solves by aligning user and network incentives.
Native tokens are friction multipliers. Every new chain forces users to acquire a novel, volatile asset just to transact, creating a liquidity onboarding barrier that fragments the user experience. This is the opposite of seamless onboarding.
Stablecoins align economic incentives. Paying gas in USDC or USDT directly ties transaction cost to real-world value, eliminating the speculative tax of holding a depreciating native asset. Users think in dollars, not in ETH or SOL.
Account abstraction enables this shift. ERC-4337 and smart accounts from Stackup or Biconomy allow sponsors to pay fees in any token, abstracting the gas currency. This makes the chain's economic security independent of its gas token's market cap.
Evidence: On Arbitrum and Optimism, over 30% of gas is already paid by relayers for sponsored transactions, a trend that ERC-4337 adoption will accelerate. Protocols like Pimlico demonstrate this is the default future.
THE END OF NATIVE GAS
Gas Abstraction Adoption: The On-Chain Evidence
Comparison of transaction funding models, highlighting the operational and economic superiority of gas abstraction over the incumbent native token model.
| Core Metric / Feature | Native Token Model (Status Quo) | Sponsored Gas (ERC-4337 Paymasters) | Intent-Based Relaying (UniswapX, Across) |
|---|---|---|---|
User Onboarding Friction | User must acquire & manage native token | User pays with any ERC-20 token | User pays with input token; zero gas knowledge required |
Transaction Cost for User | Network gas fee + potential slippage on swap | Network gas fee + sponsor markup (~5-15%) | Relayer fee baked into quoted output; often <1% |
Protocol Wallet Drain Risk | High (exposed seed phrases) | Medium (Smart Account dependency) | Low (user signs intent, never holds funds mid-flow) |
Required User Pre-Funding | Yes, for native gas | Yes, for the chosen ERC-20 | No, payment is atomic with transaction settlement |
Cross-Chain UX Complexity | High (bridge, then swap, then transact) | Medium (bridge any asset, use as gas) | Low (single signature for cross-chain intent) |
Developer Integration Overhead | Low (wallet default) | Medium (Paymaster contract setup) | High (integration with solver/relayer network) |
Dominant Use Case | All on-chain interactions | Dapp-specific onboarding (Circle, Base) | Cross-chain swaps & complex trades |
counter-argument
THE GAS ABSTRACTION ENDGAME
The Bull Case for Native Tokens (And Why It's Wrong)
The native token gas model is a temporary artifact of early blockchain design, destined for obsolescence by intent-based architectures.
Native tokens are friction. Every chain demands its own token for gas, creating a user experience tax that fragments liquidity and onboarding. This model assumes users will manage dozens of volatile assets just to transact.
Gas abstraction breaks this model. Protocols like UniswapX and Across enable users to pay in any token. The system's solver network atomically swaps the user's token for the required gas, abstracting the native asset entirely.
The value accrual shifts. In an abstracted world, value accrues to the solver layer, not the base chain's token. The native token becomes a back-end settlement rail, a commodity with minimal premium.
Evidence: The rise of intents. The UniswapX and CowSwap order flow demonstrates users prefer this model. The ERC-4337 standard for account abstraction further codifies the separation of payment and execution assets.
protocol-spotlight
THE GAS ABSTRACTION FRONTIER
Who's Winning the Post-Native-Token World
The native token gas model is a UX dead end. Gas abstraction shifts the cost and complexity off-chain, creating a winner-take-all market for seamless onboarding.
01
ERC-4337: The Account Abstraction Standard
The foundational protocol enabling sponsored transactions, batch operations, and social recovery. It decouples payment from execution.
- Key Benefit: Users never hold ETH for gas; apps or paymasters sponsor it.
- Key Benefit: Enables session keys for ~500ms gaming and DeFi interactions.
6M+
Smart Accounts
$0
User Gas Cost
02
Paymaster as a Service (PaaS)
The B2B battleground. Entities like Stackup, Biconomy, and Candide operate the off-chain infra that pays gas, abstracting complexity for dApps.
- Key Benefit: DApps can pay gas in any token (e.g., USDC), absorbing cost as a marketing expense.
- Key Benefit: ~10x faster user onboarding by removing the faucet/swap step.
$10M+
Sponsored Tx Volume
99.9%
Reliability
03
Intent-Based Architectures
The endgame. Protocols like UniswapX, CowSwap, and Across let users specify a desired outcome (an intent), not a transaction. Solvers compete to fulfill it optimally.
- Key Benefit: User never sees gas; it's baked into the solution fee, often resulting in -50% net cost.
- Key Benefit: Enables cross-chain swaps without owning destination chain gas tokens.
$1B+
Monthly Volume
5 Chains
Avg. Route
04
The L2 Native Advantage
Layer 2s like Arbitrum, Optimism, and zkSync are building gas abstraction natively. Their sequencers can sponsor batches, making their chains feel like gasless appchains.
- Key Benefit: Native integration allows for subsidized gas periods to bootstrap ecosystems.
- Key Benefit: Single, stable fee token (e.g., ETH) across a rollup ecosystem, reducing fragmentation.
$20B+
Combined TVL
-90%
Vs L1 Cost
05
The Wallet Aggregator Play
Wallets like Safe, Rainbow, and Argent are becoming gas abstraction hubs. They bundle user ops, negotiate with paymasters, and manage session keys.
- Key Benefit: One-click onboarding from any chain; the wallet handles funding and gas.
- Key Benefit: Portable security model; user's identity and preferences move across dApps.
30M+
Potential Users
1 Tx
To Activate
06
The VC-Backed Gas Middleware
Startups like ZeroDev and Etherspot are building SDKs that let any app embed gas abstraction in minutes. This is the Shopify for Web3 UX.
- Key Benefit: Zero blockchain knowledge required for developers to implement.
- Key Benefit: Predictable SaaS-style pricing for gas, turning a variable cost into a fixed CAC.
1000+
Integrated dApps
<1 Hour
Integration Time
takeaways
THE END OF NATIVE GAS
TL;DR for Protocol Architects
The native token gas model is a UX and economic dead end. Gas abstraction is the inevitable infrastructure shift.
01
The Problem: Friction Kills Adoption
Requiring users to hold a chain's native token for fees creates a massive onboarding barrier. It's a tax on every new user and dApp.
- User Drop-off: ~40%+ of potential users abandon transactions at the gas payment step.
- Capital Inefficiency: Forces users to maintain non-yielding balances across dozens of chains.
- Protocol Lock-in: Limits composability and traps liquidity within a single ecosystem.
40%+
User Drop-off
Dozen+
Tokens Needed
02
The Solution: ERC-4337 & Paymasters
Account Abstraction decouples payment from execution. Paymaster contracts allow sponsors (dApps, protocols) to pay gas in any token or even absorb costs entirely.
- Sponsorship Models: dApps can subsidize gas to acquire users, paid in stablecoins or their own token.
- Gasless Transactions: Users sign intent, a third-party (like Pimlico or Stackup) handles fee payment and bundling.
- Unified Experience: Interact with any EVM chain using a single wallet balance, abstracting the underlying L1/L2.
ERC-4337
Standard
$0
User Gas Cost
03
The Architecture: Intent-Based Infra
The endgame is intent-centric architectures like UniswapX and CowSwap, where users specify what they want, not how to do it. Solvers compete to fulfill the intent optimally, abstracting gas, slippage, and routing.
- Gas as a Variable Cost: Solvers bake gas into their solution cost, paying it in the most efficient token/chain.
- Cross-Chain Native: Projects like Across and LayerZero use this model for seamless bridging.
- Economic Shift: Value accrual moves from base-layer validators to solver networks and application layers.
Intent-Based
Paradigm
Solvers
New Actors
04
The Consequence: Native Token Devaluation
If gas fees can be paid in USDC or any other asset, the native token loses its primary utility and captive demand sink. This forces a fundamental re-evaluation of tokenomics.
- Fee Market Collapse: Validator/miner revenue becomes untethered from token price.
- New Utility Required: Tokens must accrue value via staking, governance, or revenue share, not pure gas fee capture.
- VC Portfolio Risk: Chains whose valuation is predicated on fee burn models face existential pressure.
Primary Utility
Lost
Fee Market
Disrupted
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