Why Gas Sponsorship Is a Trojan Horse for Centralization

Gas sponsorship centralizes transaction ordering and censorship power. The dominant relayer (e.g., Biconomy, Gelato) becomes the network's de facto operator.\n- Single Point of Failure: One entity controls the mempool for sponsored transactions.\n- Censorship Vector: They can selectively exclude or front-run user intents.\n- Fee Extraction: They set the final gas price, creating a hidden tax layer.

Rollups like Arbitrum and Optimism use sponsored gas to subsidize onboarding, but this entrenches their centralized sequencer.\n- Vendor Lock-in: Apps built on sponsored gas are economically tied to a single L2 stack.\n- False Decentralization: Users perceive a decentralized chain but rely on a single operator for execution.\n- Interop Risk: Creates friction for cross-chain intents with LayerZero or Axelar.

Systems like UniswapX and CowSwap abstract gas via solvers, but this shifts trust from the blockchain to solver committees.\n- Opaque Routing: Solvers can extract MEV without user consent.\n- Cartel Formation: A small set of solvers (e.g., Across, 1inch) dominate order flow.\n- Protocol Neutrality: The 'best' solution is what the solver chooses, not the user.

ERC-4337 Bundlers are the new centralizing force. While users get smart wallets, bundlers control transaction inclusion.\n- Bundler Oligopoly: High staking requirements favor large players like Stackup or Ethereum Foundation.\n- Regulatory Attack Surface: A KYC'd bundler service becomes a choke point.\n- L2 Fragmentation: Each rollup needs its own trusted bundler set, breaking composability.

Sponsored transactions on validiums or certain L2s rely on a centralized Data Availability (DA) committee. If the sponsor controls DA, they can hold state hostage.\n- Exit Fraud: Users cannot prove ownership or withdraw assets without the committee.\n- Service Weaponization: Gas sponsorship becomes a tool to enforce DA provider loyalty.\n- Contrast with Celestia/EigenDA: Decentralized DA providers mitigate this specific risk.

A centralized gas sponsor is a legally identifiable intermediary, creating a perfect target for enforcement. This risks recreating the traditional financial gatekeeping model.\n- Transaction Blacklisting: Sponsor must comply with OFAC sanctions, breaking censorship resistance.\n- KYC/AML Onramp: The 'free' gas service becomes a mandatory identity checkpoint.\n- Protocol Liability: Base-layer protocols like Ethereum inherit the compliance burden of their dominant sponsors.

The dominant wallet's default RPC endpoint, Infura, is a centralized chokepoint. Sponsorship amplifies this risk by making it the default for fee abstraction, creating a single point of failure for millions of users.

• Controlled Access: Infura can censor or throttle transactions.
• Data Monopoly: Sponsorship funnels all user intent data through a single entity.
• Vendor Lock-in: Breaking this default requires significant user education and action.

Omnichain Fungible Tokens (OFTs) rely on a centralized 'Oracle' and 'Relayer' set run by LayerZero Labs. Gas sponsorship for cross-chain transfers centralizes economic and execution control.

• Execution Censorship: The relayer can selectively delay or drop sponsored transactions.
• Upgrade Keys: LayerZero Labs controls upgradeability, a risk highlighted by the Stargate exploit.
• Economic Capture: Sponsorship locks protocols into a single interoperability stack.

Account Abstraction's paymaster model is vulnerable to bundler centralization. A few dominant bundlers (e.g., Stackup, Alchemy, Biconomy) could form an oligopoly controlling sponsored transaction flow.

• MEV Extraction: Centralized bundlers become privileged MEV searchers.
• Fee Manipulation: They can set arbitrary premiums on 'sponsored' gas.
• Protocol Risk: Dapps become dependent on a specific bundler's uptime and policies.

As a centralized L2 sequencer, it has unilateral power to order, censor, or exploit transactions. Gas sponsorship here means users pay for the privilege of trusting a single operator.

• Full Censorship: The sequencer can reorder or exclude any sponsored tx.
• Profit Centralization: All sequencing fees and MEV accrue to a single entity.
• Liveness Risk: A single point of failure halts the entire sponsored economy.

Nova uses a Data Availability Committee (DAC) of trusted entities instead of on-chain data posting. Sponsorship on Nova means your transaction's data integrity depends on a multisig of ~10 entities.

• Trust Assumption: Users must trust the DAC members not to collude.
• Data Withholding: The DAC can selectively withhold data, breaking chain state.
• False Abstraction: Sponsorship hides the underlying security trade-off from end-users.

StarkEx's SHARP prover batches proofs for multiple dApps (e.g., dYdX, Sorare). A centralized prover for sponsored transactions creates a systemic risk for the entire batch.

• Proof Censorship: The prover can refuse to generate a proof for a specific dApp's sponsored txs.
• Cost Arbitrage: Prover can impose variable costs, disadvantaging certain applications.
• Verifier Trust: The entire system's security rests on the correct operation of a single proving service.

Gas sponsorship consolidates transaction ordering power into a few centralized relayers like Biconomy and Gelato. This creates a single point of failure and censorship, directly contradicting permissionless design.

• Centralized Sequencer Risk: Relay networks become de-facto sequencers for sponsored transactions.
• MEV Extraction: Relayers can front-run or sandwich user transactions they are sponsoring.
• Fee Market Distortion: Sponsored tx pools bypass the public mempool, breaking fee auction transparency.

Builders integrate SDKs from sponsorship providers, creating deep technical and economic dependencies. This allows middleware providers to capture protocol value and dictate upgrade paths.

• Wallet Abstraction Tie-in: Sponsorship is often bundled with ERC-4337 Account Abstraction, creating a full-stack monopoly.
• Revenue Siphon: Providers take a cut of every sponsored transaction, extracting rent from the application layer.
• Interoperability Fragmentation: Different sponsorship standards (e.g., Pimlico, Candide) create walled gardens.

Sponsored transactions are inherently KYC-able. The entity paying the gas fee is a clear, on-chain regulated intermediary, creating a vector for enforced compliance at the network layer.

• Identity Linkage: Relayers must manage funds and can be forced to implement transaction filtering.
• OFAC Compliance: Sponsored tx pipelines can be mandated to screen and block addresses, acting like Tornado Cash sanctions on-ramps.
• Kill Switch Risk: Centralized relayers can be ordered to halt all sponsored operations for a dApp or region.

Sponsorship doesn't solve scaling; it just shifts the cost. It creates a meta-transaction debt bubble where relayers must pre-fund gas, leading to capital inefficiency and liquidity crises during volatility.

• Capital Intensive: Relayers must lock up millions in ETH/USDC across multiple chains to guarantee sponsorship.
• Liquidation Risk: During gas price spikes, relayers face insolvency if their prepaid gas runs out.
• False UX Promise: Users experience 'gasless' tx until the relayer fails or censors them.