Gas Sponsorship

A precursor to full Paymasters where users sign a message off-chain, and a relayer submits and pays for the transaction. This involves:

• User Operation: The user creates a signed intent.
• Relayer Network: A service (like OpenGSN) broadcasts the transaction, paying the gas.
• Smart Contract Recipient: The destination contract verifies the user's signature and executes the logic. This model was crucial for early adoption but has scaling and decentralization limitations.

Layer 2 networks and application-specific blockchains frequently use gas sponsorship as a core growth tool. Common models include:

• Developer Gas Credits: Platforms like Starknet and zkSync provide grants to dApp developers to cover user fees.
• Session Keys: In gaming or social dApps, a single sponsored transaction can authorize multiple in-session actions.
• Fixed-Cost Sponsorship: Appchains with known operational costs can subsidize all transactions to provide a predictable, zero-fee user experience.

Individual decentralized applications implement sponsorship to reduce user friction. Examples include:

• Freemium Models: A social media dApp sponsors posts and likes, charging only for premium features.
• Onboarding Transactions: Covering the gas for a user's first mint or trade.
• Promotional Campaigns: Sponsoring all gas for a limited-time trading competition or NFT drop to drive engagement. These models treat gas fees as a customer acquisition cost.

Sponsorship introduces new economic models and attack vectors that must be managed.

• Sybil Resistance: Sponsors must implement mechanisms (like proof-of-humanity or staking) to prevent spam attacks.
• Sponsor Solvency: The Paymaster or relayer must maintain a sufficient balance of native tokens, requiring active treasury management.
• Regulatory Gray Areas: Depending on jurisdiction, consistently paying for a user's fees could be interpreted as a form of financial inducement or rebate, with compliance implications.

Gas sponsorship eliminates the primary barrier to entry for new users: needing native tokens to pay for gas. This is critical for:

• Mass-market applications: Games and social apps where users may not hold any cryptocurrency.
• Promotional campaigns: Projects can sponsor gas for users trying their service for the first time.
• Enterprise solutions: Companies can onboard employees or customers without requiring them to manage wallets and gas fees.

This is a foundational use case where a relayer submits a user's signed transaction and pays the gas. Key implementations include:

• ERC-4337 Account Abstraction: UserOperations are bundled by a Bundler, who pays the gas and is reimbursed from the user's smart contract wallet.
• Gas Station Networks (GSN): A decentralized network of relayers that allow DApps to pay for their users' gas, abstracting fee payment logic into the contract.

A Paymaster is a smart contract that can sponsor gas fees under specific conditions defined by its logic. Common models include:

• Sponsored Transactions: The Paymaster contract pays all gas (e.g., a DApp's promotional period).
• ERC-20 Token Payments: Users pay fees in an ERC-20 token (like USDC), and the Paymaster converts it to the native token.
• Subscription Models: Users with an active subscription have their gas sponsored by the service's Paymaster.

Businesses use gas sponsorship to manage operational workflows and customer interactions seamlessly.

• Batch Operations: A company sponsors gas for bulk transactions, like payroll or NFT distributions to employees.
• Customer Checkouts: E-commerce platforms can pay gas for blockchain-based checkouts, allowing customers to pay only for the product.
• Supply Chain & Logistics: Each step in a verifiable supply chain (e.g., shipping confirmation) can be a sponsored transaction from the coordinating enterprise.

Infrastructure providers offer gas sponsorship services to simplify development.

• SDKs & APIs: Services like Biconomy, Stackup, or Candide provide developer SDKs to easily integrate sponsored transactions into any DApp.
• Testnet Faucets & Sponsorship: On testnets, faucets often act as gas sponsors, allowing developers to test applications without obtaining test ETH.
• Transaction Bundling: Services that bundle multiple user actions into a single sponsored transaction to optimize cost and user experience.

Sponsorship introduces new economic and security models that must be managed.

• Sybil Resistance: Protocols must prevent abuse from users spamming sponsored transactions. Techniques include whitelists, reputation systems, or proof-of-humanity.
• Sponsor Reimbursement: Ensuring the sponsor (Paymaster or relayer) is reliably reimbursed, either from a user's contract balance or a DApp's treasury.
• Gas Price Volatility: Sponsors must manage risk from sudden spikes in network gas prices, often using gas price oracles and limit settings.

Gas sponsorship is implemented via meta-transactions. The user signs a transaction request off-chain, which is then submitted to the network by a relayer (the sponsor) who pays the gas. This decouples the need for the user to hold the network's native token (e.g., ETH). Key components include:

• User Operation: The signed intent from the end user.
• Paymaster: A smart contract that validates the user's request and commits to paying the gas.
• Bundler: An off-chain actor that packages multiple user operations into a single on-chain transaction for efficiency.

Sponsorship introduces new trust vectors. Security shifts from purely cryptographic to partially procedural.

• Paymaster Risk: The paymaster contract logic determines which transactions are sponsored. Bugs or malicious logic can lead to fund loss or censorship.
• Relayer/Bundler Centralization: If relayers are few, they become points of failure and potential censorship.
• Signature Verification: The system must robustly verify the user's EIP-712 signature to prevent replay attacks and spoofing.

The sponsor's business model is critical for long-term viability.

• Sponsor Pays Gas: The sponsor must hold the native token, exposing them to price volatility.
• Recouping Costs: Sponsors typically recoup costs through alternative means, such as:
  • Taking a fee in the transaction's token (e.g., taking 1% of a swapped token).
  • Subscription models (dApp pays sponsor).
  • Loss-leader for user acquisition.
• Gas Estimation Complexity: Sponsors must accurately estimate gas costs to avoid losses from failed transactions they still pay for.

While sponsorship dramatically improves UX by abstracting gas, it can re-centralize control.

• Censorship Resistance: A sponsoring service can choose which transactions or users to support, potentially violating network neutrality.
• Dependency: Users and dApps become dependent on the sponsor's infrastructure and solvency.
• Regulatory Surface: The sponsor may be viewed as a financial service provider, incurring regulatory obligations that a decentralized network typically avoids.

ERC-4337: Account Abstraction provides a standardized framework for gas sponsorship without consensus-layer changes. Its Paymaster contract is the central component for sponsorship logic. Paymasters can implement various policies:

• Verifying Paymaster: Sponsors all transactions that pass a signature check.
• Generalized Paymaster: Uses off-chain data (oracles) to decide sponsorship based on dynamic rules (e.g., user's token balance).
• Sponsorship Whitelists: Only pays for specific dApps or user addresses.

Specific threats emerge in sponsored transaction systems.

• Gas Griefing: A malicious user submits transactions that cause the paymaster to spend max gas, then reverts, wasting the sponsor's funds. Mitigated via strict validation and gas limits.
• Paymaster Drain: Exploiting a bug in the paymaster's deposit withdrawal logic to steal its staked ETH.
• Stake Locking: In ERC-4337, paymasters must stake ETH. Malicious actors may try to get this stake slashed. Mitigation involves careful paymaster contract auditing and monitoring.
• Oracle Manipulation: If a paymaster uses a price oracle, manipulating the oracle can trick it into sponsoring unfavorable transactions.