Why ERC-4337's Bundler Market Will Create New Economies

Bundlers are the new miners. They are the competitive, permissionless actors who execute UserOperations, paying gas and earning fees. This creates a fee market for execution, separate from Ethereum's block-building market.

The market will fragment by specialization. Generalist bundlers like Pimlico and Stackup will compete with vertical-specific services. A gaming dapp's bundler will optimize for speed, while a DeFi aggregator's will prioritize MEV capture.

This specialization creates new economies. A bundler servicing UniswapX intent flows will develop expertise in cross-chain liquidity, while one for Safe{Wallet} accounts will master batched social recovery transactions. Each vertical has unique fee and latency demands.

Evidence: The existing PBS (Proposer-Builder Separation) market for block building is a $500M+ annual industry. The bundler market, which executes user intent, will be larger because it sits closer to the application layer.

Bundlers execute user intents. They are the active, permissionless actors in ERC-4337 that collect UserOperations, simulate them, and submit them to the blockchain, replacing the wallet as the transaction's initiator.

This creates a new fee market. Bundlers compete on inclusion, ordering, and fee extraction from UserOperations, generating a dynamic auction layer separate from the base chain's gas auction, similar to MEV searchers on Ethereum.

Bundler revenue is multi-faceted. It includes direct user tips, cross-chain MEV opportunities via intents that span networks like Arbitrum and Polygon, and potential subsidies from paymasters like Circle or protocol treasuries.

The market will consolidate. Just as block building on Ethereum consolidated with Flashbots and builders like bloXroute, specialized bundlers (e.g., Stackup, Biconomy, Alchemy) will dominate through superior simulation, latency, and capital efficiency.

Evidence: The existing searcher/MEV economy on Ethereum is a $500M+ annual market; bundlers will capture a similar, if not larger, share from the entire smart account ecosystem across all EVM chains.

Bundlers are MEV extractors first. Their primary revenue is not user fees but cross-domain MEV from reordering and arbitraging UserOperations across chains like Arbitrum and Polygon. This mirrors searcher-builder dynamics in Ethereum's PBS.

Subsidies will bootstrap adoption. To attract users, bundlers will subsidize gas fees using their MEV profits, creating negative-cost transactions. This is a direct subsidy model, not a meta-transaction relay.

Vertical integration is inevitable. Successful bundlers will operate their own private mempools and block builders, akin to Flashbots' SUAVE, to capture maximum value and ensure execution guarantees for intents.

Evidence: On testnets, bundlers like Stackup and Alchemy's Rundler already compete on inclusion speed and fee quotes, proving the market's nascence.

Bundlers are permissionless validators. Any entity can run a bundler to aggregate UserOperations, creating a competitive market for block space. This is analogous to the searcher-builder-proposer separation in PBS, not a single centralized gateway.

Economic specialization will fragment the market. High-volume DEXs like UniswapX will run bundlers for their own intents, while infrastructure firms like Pimlico and Stackup will offer generalized services. This creates distinct economies for execution and subsidization.

The mempool is the decentralization anchor. The public UserOperation mempool prevents bundlers from censoring transactions. Users and alternative bundlers always see pending intents, ensuring no single entity controls flow.

Evidence: The existing searcher market for MEV, which involves thousands of independent actors, demonstrates that complex, permissionless coordination at the network layer is viable and anti-fragile.

Bundlers become specialized service providers. The generic bundler role will fragment into verticals like high-frequency arbitrage, privacy-focused execution, and cross-chain intent settlement. This mirrors the evolution of Ethereum's block builders.

The real value is in the mempool. Bundlers with proprietary access to user intent flow, like those integrated with major wallets (e.g., Safe, Rabby), will command premium fees. This creates a data marketplace for transaction ordering.

Cross-chain intents are the killer app. A bundler will source liquidity from UniswapX on Ethereum and settle on Arbitrum, abstracting the bridge. This turns bundlers into the execution layer for a unified cross-chain user experience.

Evidence: Pimlico's bundler service already processes over 1.5 million UserOperations monthly, demonstrating the demand for reliable, performant infrastructure ahead of mass adoption.