The Hidden Cost of EIP-4337 Without Aggregator Competition

Without a competitive aggregator layer, the highest-staked or most integrated Bundler becomes a centralized transaction gateway. This creates a single point of censorship and MEV extraction, mirroring the validator centralization in early PoS chains.

• Centralized Order Flow: A dominant Bundler controls the transaction inclusion pipeline.
• MEV Capture: No competitive auction for user operations, leading to value leakage.
• Censorship Vector: A single entity can blacklist addresses or dApps.

Sponsored gas fees (gasless UX) require a trusted Paymaster to hold native tokens and assume reimbursement risk. Without a competitive marketplace, this role defaults to deep-pocketed foundations or wallets, creating vendor lock-in and regulatory baggage.

• Vendor Lock-in: Users are tied to the wallet's or dApp's chosen Paymaster.
• Balance Sheet Risk: Paymasters must manage volatile gas costs and token prices.
• Compliance Chokepoint: A centralized Paymaster becomes a KYC/AML gatekeeper.

The solution is a competitive aggregation network for Bundlers and Paymasters, similar to block builders in PBS or solvers in CowSwap. This creates a market for inclusion, better gas prices, and redundancy.

• Intent-Based Routing: User operations are routed to the best Bundler/Paymaster combo via an auction.
• Reduced Censorship: Multiple redundant execution paths prevent single-entity control.
• Efficiency Gains: Aggregators optimize for cost and speed across the network.

Early AA implementations on L2s like StarkNet and zkSync Era demonstrate centralized Bundler/Paymaster models. Their sequencer-bundler coupling shows the natural drift towards consolidation without explicit architectural guards.

• Sequencer as Bundler: The L2 sequencer is the de facto, exclusive Bundler.
• Protocol-Owned Paymaster: Sponsored transactions are funded and controlled by the foundation.
• Walled Garden Risk: Innovation in AA is limited to the core dev team's roadmap.

A dominant bundler becomes a centralized sequencer, able to blacklist addresses or transactions. This violates core Web3 principles and creates regulatory choke points.

• MEV extraction becomes predictable and extractable by a single entity.
• OFAC compliance can be enforced unilaterally, breaking protocol neutrality.
• User experience degrades as transactions are delayed or dropped.

Bundlers capture the entire UserOperation fee market. Without aggregator competition like UniswapX or CowSwap, they can impose rent-seeking premiums.

• Fee inflation: Users pay for bundler profit margins on top of base chain gas.
• Stagnant innovation: No incentive to optimize bundling algorithms or pass on MEV savings.
• Vertical integration risk: A bundler like Stackup or Alchemy could favor its own services.

Reliance on a few major bundler infrastructures (e.g., Alchemy, Blocknative) reintroduces the downtime and slowness of Web2. This negates the resilience of decentralized L1s/L2s.

• Global latency is dictated by the bundler's node geography.
• DDoS vulnerability: A targeted attack on a major bundler cripples UX for millions of smart accounts.
• Upgrade governance: Critical protocol changes require bundler adoption, creating coordination bottlenecks.

The antidote is a competitive marketplace of bundlers, similar to Across or LayerZero for bridging. This requires standardized APIs, reputation systems, and efficient mempools.

• Intent-based routing: Users express desired outcomes; competing bundlers bid to fulfill them.
• Reputation slashing: Malicious or lazy bundlers lose stake and are excluded.
• Shared mempool: A permissionless public pool of UserOperations prevents bundler exclusivity.

Without a competitive market of alternative bundlers like Etherspot or Stackup, a single dominant provider (e.g., Alchemy's Rundler) becomes the de facto sequencer for all ERC-4337 UserOperations. This creates a single point of failure and censorship, negating the permissionless ethos of Ethereum.

• Centralized Sequencing: All user intents flow through a single, trusted entity.
• Fee Extraction Risk: No competitive pressure to minimize bundler margins.
• Censorship Vector: A single entity can block or reorder transactions.

Bundlers are sophisticated block builders that can extract maximum extractable value (MEV) from the UserOperation mempool. Without a competitive auction or shared revenue model like Flashbots SUAVE envisions, this value is captured entirely by the bundler, not the user or application.

• Hidden Tax: User pays gas, bundler pockets the MEV.
• No Searcher Competition: Limits price discovery for order flow.
• Protocol-Level Leakage: Value intended for the base layer leaks to a middleware cartel.

Sponsorship of gas fees via paymasters is a killer feature, but it creates a new dependency. Dominant paymaster services (e.g., Biconomy, Candide) can impose rent-seeking fees or become targets for regulatory pressure, breaking the "gasless" experience for entire dApp ecosystems.

• Single Point of Breakage: If a major paymaster fails, sponsored transactions halt.
• Compliance Risk: KYC/AML requirements can be enforced at the paymaster layer.
• Vendor Lock-in: Dapps become tied to a specific paymaster's infrastructure and token.

The endgame is moving from explicit transaction execution (which bundlers control) to declarative intent fulfillment. Systems like UniswapX, CowSwap, and Across use solvers that compete in an open auction to fulfill user intents, driving costs down and returning MEV to users.

• Competitive Fulfillment: Solvers bid for the right to execute, optimizing for user outcome.
• MEV Recapture: Competition forces MEV savings back to the user as better prices.
• Resilience: No single solver is critical; the best offer wins.

Just as 1inch and LI.FI aggregate DEXs and bridges, a meta-aggregator for bundlers and paymasters is needed. This layer would route UserOperations to the most efficient and reliable provider, creating a competitive market and abstracting complexity from developers.

• Dynamic Routing: Automatically selects bundler/paymaster based on cost & latency.
• Redundancy: Failover between providers ensures uptime.
• Standardized APIs: Simplifies developer integration versus managing multiple vendors.

The winning infrastructure play will be a vertically integrated stack that controls the bundler, paymaster, and solver network. This mirrors the evolution of Coinbase (exchange + wallet) and Jump (trading + validator). Control over the full stack allows for subsidized user acquisition, superior economics, and defensible moats.

• Cross-Subsidization: Use bundler/paymaster profits to fund user onboarding.
• Full-Stack Data: Optimize all layers for maximum efficiency and revenue.
• Protocol Capture: The integrated stack becomes the default backend for major wallets.