Prepaid Gas Balance

While not a traditional prepaid wallet, Solana users can add a priority fee (in SOL) on top of the base fee to bid for faster transaction inclusion during network congestion. Wallets and RPC services often manage this by:

• Estimating and prepaying a suggested priority fee.
• Debiting it from the user's SOL balance upon transaction success.
• This creates a competitive, auction-like system for block space.

Rollups like Arbitrum and Optimism require users to hold ETH on L2 for gas, but the sequencer often prepays the L1 settlement fee in a batch. From a user's perspective:

• They pay gas in ETH on the L2, drawn from their L2 balance.
• The sequencer aggregates thousands of transactions and prepays the single L1 fee, amortizing the cost.
• This abstraction simplifies the user experience while relying on the sequencer's capital and prepaid balance.

Organizations use prepaid gas systems for operational control and accounting. This involves:

• Funding a dedicated wallet with a gas budget for automated transactions (e.g., payroll, treasury operations).
• Using multi-sig wallets where gas payments require approvals, treating the balance as a managed resource.
• Monitoring and alerting on low balances to prevent service disruption, similar to cloud credit management.

Before ERC-4337, systems like GSN (Gas Station Network) allowed users to sign transactions without gas. A relayer would hold a prepaid balance, pay the gas fee, and submit the transaction on the user's behalf. Key aspects:

• The dApp or a sponsor maintains the relayer's ETH balance.
• Users pay fees via other means (off-chain or in tokens).
• This model pioneered the concept of abstracting gas payment from execution.

A user's wallet interface (e.g., MetaMask) displays their native token balance (ETH, MATIC, etc.) as their prepaid gas balance. Before submitting a transaction, the wallet estimates the gas fee and validates that the balance is sufficient. If the balance is too low, the transaction will fail with an 'insufficient funds for gas' error, preventing wasted computation and a failed state change on-chain.

When a developer deploys a new smart contract, they must prepay gas for the entire bytecode deployment transaction. This cost is deducted from their wallet's balance. The required gas depends on the contract's complexity; larger contracts with more opcodes consume more gas. This mechanism ensures the developer bears the cost of the permanent storage and initialization logic added to the blockchain state.

Executing a swap on a Decentralized Exchange (DEX) like Uniswap involves two transactions that require prepaid gas:

• Approval: Paying gas to grant the DEX router contract permission to spend your tokens.
• Swap Execution: Paying gas for the complex logic of finding the pool, calculating slippage, and transferring assets. The user's ETH balance must cover both gas fees on top of the swap amount, which is why gas optimization is critical during network congestion.

Protocols can abstract away the prepaid gas requirement for end-users via meta-transactions or gas sponsorship. In this model, a user signs a transaction, but a third-party relayer submits it and pays the gas fee from their own prepaid balance. This is common in onboarding flows for dApps and Layer 2 solutions, improving user experience by allowing interactions without holding the native gas token.

Advanced protocols use multicall or batch transactions to bundle multiple operations into a single on-chain transaction. The caller prepays gas for the entire batch, but this is often more efficient than paying for each call individually due to saved overhead costs. Wallets and DeFi aggregators use this to optimize user costs for complex interactions like harvesting rewards from multiple vaults in one action.

A transaction can fail mid-execution (e.g., a revert in a smart contract). The prepaid gas balance is still charged for all computation performed up to the point of failure—this is the gas consumed. The remaining gas limit is refunded. This creates a direct economic incentive for developers to write efficient code with clear revert conditions to minimize wasted user funds on failed operations.

A prepaid balance is a direct financial asset on-chain. If the account's private key is compromised, the attacker can drain the gas funds just like any other token. This is a primary attack vector, especially for accounts managed by EOAs (Externally Owned Accounts) with large prepaid balances for automation.

• Example: A bot wallet with 10 ETH for gas is hacked, losing both its operational capital and its gas reserve.
• Mitigation: Use smart contract wallets with daily limits or multi-signature controls for holding prepaid gas.

Smart contracts that hold a prepaid native token balance for gas are vulnerable to reentrancy attacks. A malicious contract could call back into the vulnerable contract during execution, potentially tricking it into paying gas for the attacker's operations or draining the balance.

• Critical for: Relayer contracts, gas tanks, and meta-transaction processors.
• Prevention: Apply the checks-effects-interactions pattern and use reentrancy guards (e.g., OpenZeppelin's ReentrancyGuard).

An attacker can deliberately trigger transactions from a prepaid gas account to exhaust its funds, causing a Denial-of-Service (DoS) for legitimate operations. This is particularly effective against contracts with public or permissionless entry points that pay gas on behalf of users.

• Mechanism: Spamming low-cost function calls to drain the prepaid balance.
• Defense: Implement rate-limiting, gas price caps, or require a stake from users to disincentivize spam.

Funds allocated as prepaid gas can become orphaned or stranded if the owning account is lost, the contract logic has a bug, or the gas pricing model changes (e.g., EIP-1559). This represents capital inefficiency and a permanent loss of value.

• Examples: A deprecated contract with locked ETH, or over-provisioning gas for a service that is rarely used.
• Best Practice: Use gas abstraction layers (like Paymasters) that allow dynamic funding instead of large static balances.

In systems like Ethereum, where users can set priority fees (tips), a prepaid account managed by a service could be exploited. A malicious actor could frontrun transactions, replacing them with identical ones that specify exorbitant priority fees, thereby draining the prepaid balance to miners/validators at an accelerated rate.

• Risk Profile: High for automated systems submitting many transactions.
• Solution: Implement strict max priority fee caps within the transaction submission logic.

Services that manage prepaid gas balances on behalf of users (e.g., certain gasless transaction providers) introduce custodial risk. Users must trust the service's security and solvency. A breach or insolvency of the service results in total loss of the prepaid funds.

• Trust Assumption: Contrasts with the self-custody ethos of blockchain.
• Alternative: Opt for non-custodial meta-transaction standards (ERC-2771, ERC-4337) where users retain control of gas funds.