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account-abstraction-fixing-crypto-ux
Blog

Why ERC-4337's Core Architecture Incentivizes Spam

Account Abstraction's flagship standard, ERC-4337, introduced a critical architectural trade-off. The separation of verification and execution creates a low-cost spam vector that threatens network stability and bundler economics.

introduction
THE INCENTIVE MISMATCH

Introduction

ERC-4337's design creates a systemic vulnerability where spam is a rational, profitable strategy for network participants.

Bundlers are profit-maximizing actors. The protocol's core architecture delegates transaction ordering to independent bundlers, who compete for UserOperation fees. This creates a direct incentive to prioritize the highest-fee transactions, which spam inherently provides.

Paymasters subsidize spam costs. The standard's fee abstraction via paymasters, like those from Stackup or Biconomy, decouples the spammer from the gas token. An attacker can fund a paymaster contract once to sponsor infinite invalid transactions, externalizing the network's verification cost.

The mempool is a free public good. Unlike Ethereum's base layer, the ERC-4337 UserOperation mempool lacks a mandatory inclusion fee (basefee). Submitting a UserOperation has near-zero cost, but validating it consumes bundler and Pimlico searcher resources, creating a classic tragedy of the commons.

Evidence: The first major pump-and-dump ERC-4337 spam attack on Polygon in 2023 demonstrated the model's fragility, where attackers flooded the network with worthless tokens to exploit this economic loophole for profit.

key-insights
THE INCENTIVE MISMATCH

Executive Summary

ERC-4337's core architecture, while revolutionary for user experience, creates a predictable economic attack surface for spam by misaligning incentives between users, bundlers, and the blockchain.

01

The Paymaster Subsidy Loophole

Paymasters can sponsor transaction fees, decoupling user intent from payment. This creates a free transaction channel for spammers, as seen in early Ethereum testnet deployments where >90% of UserOps were spam.\n- Zero-Cost Spam: Attackers can mint infinite transactions via sponsored sessions.\n- MEV Frontrunning: Spam can be used to obfuscate profitable MEV bundles.

>90%
Testnet Spam
$0
User Cost
02

Bundler's Prisoner's Dilemma

Bundlers are profit-maximizing actors competing in a first-price auction for inclusion. Rational bundlers must include any UserOp with sufficient fees, even spam, or lose revenue to competitors.\n- No Native Filtering: Protocol lacks a canonical spam-slashing mechanism.\n- Race to the Bottom: Economic pressure prevents coordinated spam rejection, similar to early Ethereum block builder issues.

100%
Inclusion Pressure
0
Slashing
03

Mempool as a Free Public Good

The UserOperation mempool is a shared, unstructured broadcast layer. Unlike Ethereum's tx pool with explicit gas pricing, it lacks a robust fee market to price out spam, making it a free-to-pollute commons.\n- No Priority Fees: Spam occupies the same queue as legitimate transactions.\n- DoS Vector: Cheap to flood, expensive to validate, creating network instability for clients like Nethermind and Geth.

~0
Marginal Cost
High
Validation Load
04

The Altruistic Builder Fallacy

Solutions like Pimlico's ERC-7560 for native spam penalties or Ethereum's PBS assume altruistic or perfectly coordinated builders. In practice, fragmented bundler markets (e.g., Stackup, Alchemy) and cross-chain intent systems like UniswapX increase complexity and attack surface.\n- Coordination Failure: Real-world deployment will have hundreds of independent bundlers.\n- Cross-Chain Spam: Spam can originate from sponsored transactions on Polygon or Base, exploiting subsidized gas.

100s
Bundlers
Multi-Chain
Attack Surface
thesis-statement
THE INCENTIVE MISMATCH

The Core Flaw: Decoupled Verification

ERC-4337's separation of validation and execution creates a fundamental economic vulnerability exploited by spam.

Validation is unbundled from execution. A Bundler's job is to validate a UserOperation's signature and paymaster logic. The actual on-chain execution is a separate, later step. This creates a window where a Bundler's work is not directly compensated by transaction fees.

Bundlers bear the verification cost. Checking a signature or simulating a paymaster contract consumes CPU/GPU cycles. Under high load, this creates a verification resource race similar to Proof-of-Work, but without a block reward. Services like Stackup and Alchemy absorb these costs.

Spam is a rational economic attack. An attacker submits thousands of invalid UserOperations. Each one forces Bundlers to waste resources on verification they cannot bill for. This is a Denial-of-Wallet attack, draining Bundler profitability without requiring on-chain execution.

Evidence: The Pimlico team documented this in 2023, showing a single attacker could stall the network by spamming Bundlers with computationally expensive, failing paymaster simulations. This is a systemic flaw, not an implementation bug.

ARCHITECTURAL VULNERABILITY

The Spam Cost Differential: EOAs vs. ERC-4337

Comparing the economic and structural incentives for spam and denial-of-service attacks between traditional Externally Owned Accounts and ERC-4337 smart accounts.

Attack Vector / Cost FactorEOA (Traditional Wallet)ERC-4337 Smart Account (Current)ERC-4337 with Mitigations

Gas Cost to Initiate Tx

21,000 gas (base)

~42,000+ gas (UserOp validation + base)

~42,000+ gas (validation + base)

Pre-Funding Requirement

Native ETH in wallet

Deposit in EntryPoint contract

Deposit in EntryPoint contract

Spam Cost (10k txs @ 30 gwei)

~0.063 ETH

~0.126+ ETH

~0.126+ ETH

Bundler Pays Gas Upfront

Paymaster Can Subsidize

DoS via Failed Validation

Costs attacker gas

Costs Bundler gas (if not mempool)

Costs attacker deposit (staked bundler)

Mempool Griefing Surface

Single tx, public

Multi-component UserOp, private mempools

Staked reputation system

Mitigation: Stake/Slash Model

deep-dive
THE INCENTIVE MISMATCH

The Bundler's Dilemma and Network Effects

ERC-4337's permissionless bundler design creates a fundamental economic conflict that degrades network performance.

Bundlers are profit-maximizing entities competing in a permissionless market. Their primary revenue is the priority fee from user operations, creating a direct incentive to prioritize the highest-paying transactions regardless of network health.

This creates a spam vector. A malicious actor can flood the network with low-value, high-fee user operations. Bundlers will process these profitable spam transactions, congesting the UserOperation mempool and increasing costs for legitimate users.

The system lacks a native spam deterrent. Unlike Ethereum's base layer, which uses gas fees as a spam control, ERC-4337's fee abstraction separates payment from execution. A user can pay a high priority fee in a stablecoin while the network burns minimal ETH.

Compare this to Flashbots' SUAVE. SUAVE's design centralizes block building for efficiency but introduces a trusted component. ERC-4337 chooses decentralization over spam resistance, accepting this trade-off for censorship resistance.

Evidence: The proliferation of Pimlico, Stackup, and Alchemy as dominant bundlers demonstrates market consolidation around capital efficiency, not network stewardship. Their profit motive aligns with processing any fee-paying operation, spam or not.

risk-analysis
INCENTIVE MISALIGNMENT

Consequences and Attack Vectors

ERC-4337's core architecture creates a permissionless, paymaster-centric market that inadvertently rewards spam and denial-of-service attacks.

01

The Bundler's Dilemma: MEV vs. Network Health

Bundlers are profit-maximizing entities, not network stewards. Their incentive is to include the highest-paying user operations first, creating a classic priority gas auction (PGA).\n- Uncapped mempool allows infinite low-fee spam to clog the queue.\n- No inherent spam penalty for submitting invalid ops, as paymasters absorb the validation gas.\n- This mirrors early Ethereum block space issues, but with weaker spam resistance.

0 gas
Spam Cost to User
PGA
Primary Incentive
02

Paymaster-as-a-Shield for Denial-of-Wallet

The paymaster's validatePaymasterUserOp function is a public, gas-paid entry point. Attackers can craft operations that fail validation but still cost the paymaster gas.\n- Sustained spam can drain a paymaster's deposit, disabling all its sponsored users.\n- Forces paymasters to implement complex rate-limiting and fraud detection off-chain, centralizing trust.\n- Creates a new attack surface where competing projects can financially sabotage each other's user onboarding.

~142k gas
Base Validation Cost
DoS Vector
New Attack
03

Stake-less Aggregation & Sybil Resilience

ERC-4337 has no protocol-level stake for bundlers or paymasters, unlike L1 proposers. This eliminates a key Sybil resistance mechanism.\n- Permissionless entry allows anyone to run a bundler, enabling spam syndicates to create their own.\n- Reputation systems (like those proposed by Ethereum Foundation's 4337 team) are off-chain and non-binding.\n- Contrast with SUAVE or MEV-Boost relays, which use stake and registration to filter participants.

0 ETH
Bundler Stake
Sybil
High Risk
04

Mempool Griefing & Unprofitable Bundles

The UserOperation mempool is transparent. Rival bundlers can snoop on profitable bundles, replicate them, and frontrun the original builder.\n- This disincentivizes complex bundle construction (like arbitrage), reducing overall network efficiency.\n- Leads to a race-to-the-bottom where only simple, spam-like bundles are safe to publish.\n- Solutions like threshold encryption (e.g., Ethereum P2P updates) are critical but add latency and complexity.

100%
Mempool Visibility
Griefing
Core Vulnerability
05

Economic Abstraction's Double-Edged Sword

By allowing paymasters to sponsor gas in any token, ERC-4337 abstracts gas economics from users. This creates a spam subsidy.\n- Users feel zero cost, removing natural economic throttling.\n- Paymaster's gas tank becomes a centralized, attackable funding pool for network spam.\n- Similar to how LayerZero's default configuration relies on a centralized relayer, creating a bottleneck and target.

$0
User Gas Cost
Central Target
Paymaster Tank
06

The Verifier's Trilemma: Speed, Cost, Security

EntryPoint contract must verify each operation's signature and paymaster validity. Optimizing for low overhead (speed/cost) weakens spam defense.\n- High verification gas hurts legitimate users; low verification gas makes spam cheaper.\n- Static gas limits for validateUserOp are a blunt instrument, easy to game.\n- Contrast with zk-rollup circuits or Altlayer's optimistic verification, which move cost away from L1.

Static Gas
Blunt Tool
Trilemma
Unresolved
counter-argument
THE INCENTIVE MISMATCH

The Rebuttal: Staking and Reputation Systems

ERC-4337's core architecture creates a perverse incentive for bundlers to spam the network, which staking alone cannot solve.

Bundlers are rational profit-seekers. The protocol's paymaster abstraction allows any entity to sponsor transaction fees. A malicious actor can create a spam contract, fund a paymaster, and pay a bundler to include infinite worthless operations, flooding the UserOperation mempool.

Staking is a weak deterrent. A stake-slashing mechanism only penalizes censorship or invalid bundles. It does not penalize bundlers for including valid, but spammy, UserOperations. The economic cost of staking is trivial compared to the value extracted from MEV or the cost of network spam.

Reputation systems are reactive, not preventive. Systems like those proposed for Ethereum validators or used by Flashbots require observing malicious patterns over time. A spam attack can inflict maximum damage before any reputation penalty is applied, making it an ineffective first line of defense.

Evidence: The Pimlico bundler team has documented this flaw, noting that without a cost to inclusion, a staked bundler is still incentivized to fill blocks with profitable spam. This creates a tragedy of the commons for block space.

takeaways
INCENTIVE MISALIGNMENT

Key Takeaways

ERC-4337's design, while revolutionary for user experience, creates a new attack surface where economic incentives are fundamentally misaligned.

01

The Mempool is a Free-for-All

UserOperations are public in the mempool before inclusion, creating a front-running and DoS paradise. Unlike EOA transactions, there's no gas price to prioritize honest users, only a flat fee for bundlers.

  • Zero-cost spam: Anyone can broadcast infinite UserOps.
  • No built-in spam resistance: No equivalent to EOA's basefee * gas economic filter.
  • Bundler griefing: Spam clogs the mempool, forcing bundlers to waste resources.
0 GWEI
Spam Cost
100%
Public Data
02

Bundlers Bear the Cost, Not Spammers

Bundlers must simulate every UserOp to verify its validity and pay for the on-chain gas. Spammers pay nothing for failed simulations.

  • P&L asymmetry: Bundler pays for compute, spammer pays nothing.
  • Resource exhaustion: A spam wave can cripple a bundler's RPC node.
  • Centralization pressure: Only large, well-capitalized bundlers (like Stackup, Alchemy) can absorb this cost, harming decentralization.
Bundler
Pays Gas
Spammer
Pays $0
03

Paymasters are a Subsidy Attack Vector

Paymasters that sponsor gas create a free mint vulnerability. A spammer can craft UserOps that always fail validation but force the Paymaster's validatePaymasterUserOp to run, wasting its staked ETH.

  • Stake draining: Malicious ops can systematically drain a Paymaster's deposit.
  • Indiscriminate sponsorship: Paymasters struggle to filter spam without compromising UX.
  • **Protocols like Uniswap and Base using sponsored transactions become prime targets.
Staked ETH
At Risk
Free Mint
Attack Model
04

Solution: Reputation & Staking (EIP-7510)

The emerging fix is a reputation system and staking for senders. Proposals like EIP-7510 (Reputation Scoring) and Pimlico's VerifyingPaymaster prototype enforce economic accountability.

  • Sender staking: Require a bond to submit UserOps, slashed for spam.
  • Reputation scores: Bundlers prioritize known-good actors.
  • Whitelists: Paymasters restrict sponsorship to vetted dapps or users.
EIP-7510
Core Fix
Staking
Required
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Why ERC-4337's Architecture Incentivizes Spam | ChainScore Blog