Sponsored transactions invert the security model. The payer of gas fees is decoupled from the transaction signer, creating a principal-agent problem where the sponsor bears the cost for potentially malicious actions.
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Why Sponsored Transactions Create New Attack Vectors
Account abstraction's killer feature—gas sponsorship—introduces systemic risks. Paymasters become targets for spam, resource exhaustion, and economic attacks, demanding novel sybil-resistance and validation mechanisms beyond traditional mempools.
introduction
THE VULNERABILITY
Introduction
Sponsored transactions, while improving UX, systematically expose protocols to novel MEV and resource exhaustion attacks.
This enables MEV extraction at scale. Attackers can submit complex, gas-intensive bundles for free, forcing sponsors to pay for their failed front-running or sandwich attempts, as seen in early EIP-4337 account abstraction implementations.
Resource exhaustion becomes a cheap attack vector. Without a direct gas cost, bad actors can spam the network with computationally heavy transactions, targeting systems like Pimlico's paymaster services or Base's onchain summer campaigns.
Evidence: The Ethereum Foundation's ERC-4337 audit identified 'sticky canary' attacks where a malicious user could permanently drain a paymaster's funds by exploiting state changes in a single transaction.
key-trends
SPONSORED TRANSACTION RISKS
The New Attack Surface: Three Core Trends
Fee abstraction shifts security assumptions, creating novel vectors for MEV, censorship, and systemic failure.
01
The MEV Cartel Problem
Paymasters become centralized MEV gatekeepers. By controlling which transactions get sponsored and their order, they can extract value or censor users, centralizing a core network function.
- Front-running as a Service: Paymasters can reorder sponsored user bundles for optimal MEV capture.
- Censorship Vector: A dominant paymaster (e.g., a large wallet) can blacklist addresses or dApps.
>60%
Relay Control
$1B+
Annual MEV
02
The Solver Collusion Threat
Intent-based architectures (UniswapX, CowSwap) rely on competitive solvers. Sponsored transactions enable solver cartels to form, manipulating prices and splitting profits at user expense.
- Opaque Execution: Users submit intents, losing visibility into the final transaction path.
- Profit Splitting: Colluding solvers can artificially inflate quotes while appearing competitive.
~5
Major Solvers
10-30bps
Hidden Slippage
03
Systemic Paymaster Failure
A critical paymaster (like a major dApp's gas tank) going offline or being exploited creates a single point of failure, freezing user activity across entire ecosystems built on its abstraction.
- Cascading Downtime: A bug or exploit can brick all dependent user sessions.
- Liquidity Risk: Insufficient gas reserve management leads to sudden transaction rejection.
Minutes
To Brick dApp
$100M+
TVL at Risk
deep-dive
THE VULNERABILITY
Anatomy of a Paymaster Attack
Sponsored transactions introduce systemic risk by shifting gas payment logic from users to untrusted third parties.
Paymaster trust is non-custodial. Users delegate gas payment to a paymaster contract, which must approve the transaction. This creates a new approval attack surface where malicious logic can drain user assets during the pre-execution check.
The validation hook is the exploit vector. Paymasters like those in EIP-4337 execute a validatePaymasterUserOp function. A compromised or malicious paymaster uses this hook to siphon funds from the user's wallet before the intended transaction logic runs.
Spoofed dApp integrations are the delivery mechanism. Attackers create fake frontends that integrate with a malicious paymaster. Users signing for 'free gas' inadvertently authorize a payload that drains their wallet through the validation step, not the transaction.
Evidence: The BNB Chain exploit. In 2023, a malicious paymaster contract drained over $1 million by exploiting the validation hook, demonstrating the systemic risk of abstracting gas fees from user control.
SECURITY SURFACE EXPANSION
Attack Vector Comparison: Traditional vs. Sponsored Tx
Compares the security assumptions and exploit surfaces between user-signed transactions and intent-based, sponsored transaction flows like those in UniswapX, CowSwap, and Across.
| Attack Vector / Property | Traditional User-Signed Tx | Sponsored / Intents Tx (e.g., UniswapX, Across) | Mitigation Complexity |
|---|---|---|---|
Front-running Protection | Inherent via batch auctions (CowSwap) or encrypted mempools | ||
Transaction Signer | User (EOA/Smart Wallet) | Relayer Network / Solver | Shifts trust to relayers & their reputation |
Fee Payment Asset | Native Gas Token (ETH, MATIC) | Any ERC-20 (Sponsored by Relayer) | Introduces off-chain credit risk & settlement finality delays |
MEV Extraction Surface | Public Mempool (>90% of txns) | Private Order Flow & Solver Competition | Centralizes MEV to a few solvers; creates new cartel risks |
Replay Attack Surface | Chain ID & Nonce | Intent Signature & Fulfillment Deadline | Requires secure intent cancellation & deadline enforcement |
Censorship Resistance | Theoretically High (many builders) | Practically Low (few authorized relayers) | Governance capture of allowlists becomes critical |
Settlement Finality Lag | < 12 seconds (Ethereum) | Minutes to Hours (cross-chain via LayerZero, Axelar) | Multi-chain risk & oracle dependency for fulfillment |
User Gas Estimation Burden | High (wallet must predict) | None (abstracted by sponsor) | Sponsor bears cost volatility risk, may lead to service degradation |
protocol-spotlight
SPONSORED TX SECURITY
Building the Defense: Emerging Solutions
Fee abstraction is a critical UX primitive, but its naive implementation creates systemic risks that demand new architectural approaches.
01
The Problem: Unbounded Subsidy & MEV Extraction
A malicious relayer can front-run a user's sponsored transaction, replacing it with their own profitable MEV bundle while still charging the sponsor. This creates a moral hazard where the sponsor's gas budget is used against the user.
- Attack Vector: Relayer extracts value from both the user (via MEV) and the sponsor (via gas fees).
- Scale Risk: A single sponsor's $1M gas wallet could be drained in minutes by a sophisticated attacker.
>99%
Profit Margin
$1M+
Risk Per Wallet
02
The Solution: Intent-Based Architectures (UniswapX, CowSwap)
Decouple transaction execution from construction. Users submit signed intents (desired outcome), and a network of solvers compete to fulfill it optimally. The sponsor pays only for the solved outcome, not arbitrary execution.
- Key Benefit: Eliminates front-running and sandwich attacks by design.
- Key Benefit: Sponsors pay for value delivered, not gas consumed, aligning economic incentives.
0
Sandwich Risk
~100%
Fill Rate
03
The Problem: Sybil-Resistant Relayer Selection
Open, permissionless relay networks are vulnerable to Sybil attacks. A single entity can spin up thousands of relay nodes to monopolize the order flow of sponsored transactions, creating a centralized point of failure and censorship.
- Attack Vector: A Sybil-dominated network can censor transactions or extract maximum MEV.
- Systemic Risk: Undermines the decentralization and censorship-resistance guarantees of the base layer.
1 Entity
Can Dominate
1000+
Sybil Nodes
04
The Solution: Staked Relayer Networks & Proof-of-Stake
Require relayers to stake substantial capital (e.g., 10,000 ETH) to participate. Slash stakes for malicious behavior (e.g., censorship, incorrect execution). This creates a cryptoeconomic security layer analogous to L1 consensus.
- Key Benefit: High stake requirement disincentivizes Sybil attacks.
- Key Benefit: Slashing aligns relayer incentives with network health and user protection.
10K ETH
Stake Required
>50%
Slash For Misconduct
05
The Problem: Opaque Execution & Verifiability
Users and sponsors cannot easily verify if a relayer executed the transaction correctly or efficiently. A relayer could overcharge for gas, execute sub-optimal routes, or bundle transactions in a way that harms the user, with no accountability.
- Trust Assumption: Forces reliance on relayer's honesty.
- Cost Impact: Can lead to >30% overpayment in gas fees due to lack of transparency.
0
Visibility
+30%
Cost Leakage
06
The Solution: ZK Proofs of Execution & Optimistic Verification
Relayers provide zero-knowledge proofs (ZKPs) or commit to results with an optimistic challenge period. Projects like Succinct, RiscZero enable cheap on-chain verification of correct execution off-chain.
- Key Benefit: Cryptographic guarantee that the sponsored transaction was executed as specified.
- Key Benefit: Enables trust-minimized, verifiable fee abstraction without sacrificing security.
ZK Proof
Verification
<$0.01
Proof Cost
counter-argument
THE ATTACK SURFACE
The Optimist's Rebuttal (And Why It's Wrong)
Sponsored transactions introduce systemic risks that outweigh their UX benefits.
Sponsored transactions centralize risk. The entity paying the gas becomes a single point of failure. This creates a massive DoS vector where attackers spam the sponsor's account to drain its gas allowance.
Account abstraction standards like ERC-4337 are insufficient. They shift the attack surface from the user to the paymaster contract, which becomes a high-value target for exploits and economic attacks.
Protocols like Pimlico and Biconomy manage this by rate-limiting and whitelisting. This reintroduces permissioned access, undermining the censorship-resistant promise of the base layer.
Evidence: The EIP-3074 'sponsored batch' model was rejected by core developers due to its inability to mitigate replay attacks across chains, a flaw inherent to the sponsorship model.
takeaways
SPONSORED TX ATTACK VECTORS
TL;DR for Protocol Architects
Abstracting gas fees introduces systemic risks beyond simple subsidization.
01
The MEV Cartel Subsidy
Sponsorship creates a centralized payment rail for block builders, turning them into the ultimate fee market. This centralizes transaction ordering power and creates a new rent-seeking layer.\n- Builder-Centric Flow: User -> Sponsor -> Builder -> Chain\n- Risk: Builders can censor or deprioritize non-sponsored transactions\n- Outcome: Recreates the miner extractable value (MEV) problem with a single point of failure
>85%
Builder Market Share
Single Point
Censorship Risk
02
The Resource Exhaustion Attack
Unbounded, free transactions enable spam that can paralyze a network's mempool and state growth. This is a fundamental shift from fee markets that naturally price out spam.\n- Vector: Malicious actor sponsors infinite low-value calldata transactions\n- Impact: Mempool flooding, state bloat, and validator resource exhaustion\n- Mitigation: Requires complex rate-limiting and sybil-resistance at the sponsor layer
~0 Cost
Attack Initiation
100x
State Growth
03
The Sponsor as a Trusted Third Party
Users must trust the sponsor's liveness and solvency. This reintroduces a custodial risk that permissionless blockchains were designed to eliminate.\n- Failure Mode 1: Sponsor goes offline, user transactions are dead\n- Failure Mode 2: Sponsor runs out of funds, transactions revert\n- Architectural Consequence: Shifts risk from the protocol layer to an off-chain entity, creating a new class of infrastructure dependency
Off-Chain
Trust Assumption
Systemic
Liveness Risk
04
The Intent-Based Wrapper Risk
Sponsored transactions are a primitive for intent-based architectures (like UniswapX, CowSwap). A compromised or malicious sponsor can exploit the settlement layer.\n- Attack Surface: Sponsor can front-run, censor, or manipulate the fulfillment of user intents\n- Amplification: A single sponsor failure can cascade across multiple intent protocols (Across, LayerZero) that rely on it\n- Design Imperative: Requires verifiable fulfillment proofs and decentralized solver networks to mitigate
Multi-Protocol
Cascade Risk
Solver Risk
New Attack Vector
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Time to ValueDirectly to Engineering Team
No Sales Fluff10+
Protocols Shipped
$20M+
TVL Overall