The Future of Gas Markets Runs Through Bundlers

Bundlers can front-run, censor, or reorder transactions for profit, undermining the neutrality of the network. This creates a single point of failure for permissionless access.

• PBS for ERC-4337 is not yet standardized, leaving the door open for centralized sequencer-like behavior.
• Staked dominance by a few players (e.g., Pimlico, Stackup) could lead to >51% of user ops being controlled by a cartel.
• Regulatory pressure could force compliant bundlers to blacklist addresses, breaking DeFi's core promise.

Layer 2 sequencers (e.g., Arbitrum, Optimism, Base) are the natural, dominant bundlers. This vertically integrates the stack and risks extractive pricing.

• They can impose rent-seeking surcharges on top of L1 gas costs, hidden from users.
• Creates vendor lock-in where the L2's native bundler is the only economically viable option, stifling competition.
• Threatens the shared security model by making the L2 a mandatory, trusted intermediary for account abstraction.

Future bundler staking mechanisms, intended for security, could replicate Proof-of-Stake centralization problems. Faulty slashing logic could cause catastrophic, cascading failures.

• Capital efficiency demands will favor large, institutional staking pools (e.g., Lido, Coinbase).
• A buggy slashing condition could wipe out a major portion of the network's bonding collateral in one event.
• Creates a too-big-to-fail dynamic where the protocol is afraid to enforce its own rules.

Paymasters require upfront capital to sponsor gas. If liquidity is siloed across competing networks (Polygon, Scroll, zkSync), it creates inefficiency and raises barriers to entry.

• Capital lock-up reduces yield and increases costs for paymaster operators.
• Cross-chain intent systems like UniswapX and Across could be forced to manage dozens of fragmented paymaster balances.
• Results in worse rates for users as paymasters bake their cost of capital into the exchange rate.

Wallet providers (Safe, ZeroDev) may bundle their own bundler/paymaster services, creating a closed ecosystem. This defeats the interoperable purpose of ERC-4337.

• Users face high switching costs if their wallet's backend services are proprietary.
• Vendor-specific extensions could fragment the standard, similar to the EIP-1559 base fee vs. priority fee market.
• Leads to rent extraction through hidden fees, as seen in traditional fintech.

Bundlers and Paymasters are clear, licensable Financial Intermediaries in the eyes of regulators (e.g., SEC, MiCA). This puts the entire AA stack in the crosshairs.

• KYC/AML requirements could be forced on bundlers, breaking privacy for all downstream users.
• OFAC compliance would turn bundlers into global transaction censors.
• Risk of coordinated shutdown of major regulated bundlers could paralyze smart account functionality.

ERC-4337 and Paymasters abstract gas, but the bundler that executes the transaction controls the final block inclusion. This creates a new, centralized MEV extraction point.

• Bundlers can front-run, censor, or reorder userOps for profit.
• Reliance on a few dominant bundlers (e.g., Pimlico, Stackup) risks network fragility.
• The $100M+ annual MEV opportunity shifts from searchers to bundlers.

To prevent centralization, the bundler role must be commoditized through open networks and competitive auctions.

• Permissionless bundler pools (like EigenLayer AVSs) can decentralize execution.
• Intra-block auctions for userOp ordering, inspired by SUAVE, maximize user refunds.
• Builders should integrate with multiple bundler providers and oracle-delivered gas estimates.

Bundlers are evolving into full-stack service providers, competing directly with RPC giants like Alchemy and Infura.

• Bundler-as-a-Service (BaaS) offerings bundle userOps, sponsor gas via paymasters, and manage key infrastructure.
• Revenue shifts from simple API calls to taking a spread on gas fees and paymaster services.
• The winning model will be the fastest, cheapest, most reliable bundler network, not the smartest wallet.

While bundlers are a low-margin commodity, paymaster services are high-margin, sticky, and defensible.

• Paymasters (like Biconomy, Pimlico) control the gas subsidy logic and token sponsorship.
• They enable gasless transactions, fee abstraction in stablecoins, and subscription models.
• The real moat is user acquisition and developer SDK integration, not raw transaction processing.

Pure ERC-4337 bundling is a transitional step. The endgame is intent-based architectures where users declare outcomes, not transactions.

• UniswapX, CowSwap, Across are intent-based for swaps and bridges.
• Future bundlers become generalized intent solvers, competing on fulfillment efficiency across chains.
• This shifts competition from latency to solver algorithms and liquidity access.

Bundlers and paymasters are natural points for financial surveillance and control, attracting regulator attention.

• OFAC-compliant bundlers could censor sanctioned addresses at the infrastructure level.
• Paymaster KYC for gas sponsorship creates a permissioned on-ramp.
• Builders must design for credible neutrality and bundler diversity to mitigate this systemic risk.