Why Gas Abstraction Fails Without Sustainable Tokenomics

Protocols like Biconomy and Pimlico front gas costs to onboard users, but this creates a centralized cost center. Relayers must be funded by token inflation or VC capital, leading to a classic ponzi dynamic where new user subsidies are paid for by diluting existing holders.

• Key Risk: Protocol treasury drains at a rate of $X per 100k transactions.
• Outcome: Unsustainable once marketing budgets dry up.

Intent-based architectures (UniswapX, CowSwap, Across) promise to fund abstraction via captured MEV. In practice, order flow is a commodity and competitive bundling drives margins to zero. The promised 'surplus' that funds gas rarely materializes at scale.

• Reality: >90% of MEV is captured by searchers/builders, not the protocol.
• Result: Abstraction layer becomes a cost, not a profit center.

To guarantee transaction inclusion for abstracted users, systems default to a permissioned sequencer (e.g., StarkNet, zkSync). This recreates the very centralization crypto aimed to solve. The sequencer's profit (priority fees) is insufficient to decentralize it later, creating a permanent point of failure.

• Dilemma: Decentralization costs ~$1B+ in token incentives.
• Irony: Replaces Ethereum's credibly neutral base layer with a corporate endpoint.

MetaMask's 'fee-free' swaps on Polygon were a classic growth subsidy. The protocol paid gas, creating a seamless UX but a massive, opaque cost center. This model is unsustainable without a clear path to monetization or token utility.

• Hidden Cost: Protocol treasury subsidized millions in gas fees.
• User Expectation: Sets precedent for 'free' transactions, complicating future monetization.
• Outcome: A temporary growth hack, not a sustainable economic primitive.

Biconomy's paymaster service enables gasless transactions by sponsoring fees. The core challenge is shifting costs from the dapp developer to the end-user in a way that feels native, often requiring complex tokenomics or bundling with other services.

• Subsidy Phase: Dapps absorb costs to onboard users (~$0.01-$0.50 per tx).
• Sustainability Phase: Requires ERC-4337 bundling or token-staked fee markets.
• Risk: Developers churn when subsidies end, revealing true transaction costs.

Cross-chain messaging protocols like LayerZero initially subsidize relayer and oracle costs to bootstrap liquidity. The sustainability model hinges on fee switches and capturing value from secured volume, not one-off transactions.

• Initial Model: Protocol covers relayer/oracle gas for bridges like Stargate.
• Sustainable Model: Fees generated from $10B+ cross-chain volume must exceed infrastructure costs.
• Lesson: Abstraction must be funded by the value it enables, not venture capital.

L2s like Starknet and zkSync natively support account abstraction, pushing gas costs to smart contract wallets. This merely moves the economic burden to wallet developers, who must then design sustainable fee models, often leading to centralized bundlers or token-fueled points systems.

• Architecture Win: Native ERC-4337 support.
• Economic Fail: Shifts subsidy burden to wallet infra, not solving it.
• Result: Proliferation of points programs masking unsustainable fee economics.

ERC-4337 Paymasters front gas costs, creating a massive working capital requirement. Without a profitable fee model, they become a centralized point of failure reliant on unsustainable VC grants or token emissions.

• Key Risk: Liquidity drains faster than user acquisition.
• Key Metric: Requires $100M+ in float to scale.
• Example: Early Biconomy and Pimlico models.

Allowing users to pay fees in any token (e.g., USDC) shifts volatility and liquidation risk onto relayers. This creates a hidden subsidy in the form of hedging costs and bad debt.

• Key Risk: Relayer insolvency during market crashes.
• Key Metric: ~20-50 bps hidden cost per tx from hedging.
• Entity: Gelato Network's relay services.

Successful abstraction requires transitioning from token subsidies to capturing real economic value. The model must be fee-for-service, not pay-to-play.

• Solution: Bundle transactions for MEV capture or take a fee on sponsored actions.
• Example: UniswapX uses fillers who profit from execution, not user fees.
• Blueprint: Account Abstraction SDKs must become profit centers.

Starknet enforces AA for all accounts, baking costs into protocol economics. This proves that native L2 integration is the only viable path, avoiding the parasitic economics of add-on solutions.

• Key Insight: Costs are amortized across the chain's entire fee market.
• Contrast: Add-ons like Safe{Core} struggle with economic isolation.
• Result: Sustainable from day one, no separate token needed.

The endgame isn't paying gas with USDC; it's removing the user from fee mechanics entirely. Intent-based systems (UniswapX, CowSwap, Across) abstract execution, with solvers competing on total cost including gas.

• Superior Model: User expresses what, not how. Solvers absorb gas risk.
• Economic Fit: Solvers profit via bundling and MEV, aligning incentives.
• Future: AA wallets become intent signers, not transaction constructors.

Who validates the Paymaster's transactions? If it's a centralized entity, you've recreated Web2 with extra steps. If it's decentralized validators, you need a token to incentivize them—reintroducing the gas token problem you tried to abstract.

• Core Contradiction: Abstraction often centralizes or re-tokenizes.
• Architectural Mandate: Design for trust-minimized verification without a new rent-seeking layer.
• Reference: zkSync's native AA vs. LayerZero's Oracle/Relayer model.