Sponsored Transaction

A sponsored transaction allows a third-party, known as the sponsor or fee payer, to cover the network gas fees for another user's transaction. This decouples the need for the transaction initiator to hold the network's native token (e.g., ETH, SOL, MATIC) to pay for execution, removing a major onboarding barrier.

• User Benefit: Users can interact with dApps without managing gas.
• Sponsor Benefit: Projects can subsidize user activity to drive adoption.

On EVM chains like Ethereum, Polygon, and Arbitrum, sponsored transactions are typically implemented via a Paymaster smart contract. This contract:

• Holds the sponsor's funds to pay for gas.
• Validates sponsorship rules (e.g., whitelisted users, specific dApp functions).
• Interacts with the EntryPoint contract as part of the ERC-4337 (Account Abstraction) standard to relay and fund user operations. This creates a trustless system where sponsorship logic is enforced on-chain.

The process involves distinct steps and entities:

1. User Signs: A user signs a transaction intent but designates a sponsor to pay fees.
2. Relayer Submits: A relayer (often the sponsor's service) receives the signed transaction and submits it to the network.
3. Sponsor Pays: The sponsor's designated account (e.g., Paymaster) is charged the gas costs.
4. Network Executes: The transaction is executed as if the user paid, with the sponsor covering the cost. This flow is fundamental to gasless transactions.

Sponsorship enables several key blockchain applications:

• Onboarding & User Acquisition: dApps can offer free transactions for new users.
• Corporate Gas Policies: Enterprises can pay for employee blockchain interactions.
• Batch Operations: Protocols can sponsor complex multi-step transactions (e.g., cross-chain swaps) for users.
• Recovery Transactions: Services can pay gas for users to recover assets from compromised wallets.

Sponsors implement rules to prevent abuse. Common validation patterns include:

• Whitelisting: Only pre-approved user addresses or smart contracts are sponsored.
• Function Gating: Sponsorship is limited to specific smart contract function calls.
• Rate Limiting: Caps on transaction volume or gas cost per user/time period.
• Signature Verification: Ensuring the user's signature is valid for the intended transaction payload. These are often encoded in the Paymaster's validatePaymasterUserOp function.

Sponsored transactions intersect with other core blockchain concepts:

• Account Abstraction (ERC-4337): The standard enabling programmable transaction validation and sponsorship via Paymasters.
• Meta-Transactions: A broader term for transactions relayed by a third party; sponsored transactions are a type of meta-transaction.
• Gas Fees: The computational cost paid to validators; the commodity being abstracted.
• Relayers: Network participants who broadcast transactions on behalf of users, often crucial for sponsorship infrastructure.

A sponsored transaction separates the entity that signs a transaction from the entity that pays for its execution. The user signs the transaction with their private key, authorizing the action, while a pre-approved sponsor (or smart contract paymaster) provides the native tokens required for gas fees. This is typically implemented via a meta-transaction pattern or native protocol features like Ethereum's EIP-4337 (Account Abstraction) with paymasters.

This model unlocks several key applications:

• Onboarding & User Experience: New users can interact with a dApp without first acquiring the blockchain's native token.
• Promotional Campaigns: Protocols can sponsor gas for specific actions, like trying a new feature or claiming an airdrop.
• Enterprise & B2B Flows: Companies can pay for their customers' or employees' transaction costs, creating seamless Web2-like experiences.
• Relayer Networks: Services like GSN (Gas Station Network) act as decentralized sponsors for transactions.

Sponsorship introduces specific security considerations:

• Sponsor Risk: The sponsor must be trusted to not censor or front-run transactions. Decentralized paymaster pools mitigate this.
• User Security: The user's assets are never at risk; they only sign the transaction intent. The sponsor cannot access user funds.
• Economic Attacks: Systems must guard against gas griefing where users spam sponsored transactions to drain the sponsor's funds, often prevented with rate limits and stake deposits.

Several major protocols have implemented or utilize sponsored transactions:

• Polygon (formerly Matic): Pioneered gasless transactions via their Gas Station infrastructure.
• Biconomy: Provides a commercial SDK and paymaster service for gasless meta-transactions.
• Starknet & zkSync Era: Have native account abstraction with paymaster support built into their Layer 2 architectures.
• OpenGSN: An open-source, decentralized relayer network for Ethereum and compatible chains.

Understanding sponsored transactions requires familiarity with adjacent primitives:

• Account Abstraction (AA): Allows accounts to have programmable validation logic, enabling sponsorship.
• Meta-Transactions: A broader pattern where a relayer submits a signed message (not a raw tx) on behalf of a user.
• Gas Fees: The computational cost of executing a transaction, denominated in the chain's native token.
• Bundler: An EIP-4337 actor that packages UserOperations and submits them to the blockchain.

The relayer (sponsor) acts as a gatekeeper, deciding which transactions to pay for and forward to the network. This creates centralization risks:

• Censorship: A relayer can refuse to process transactions from specific users or for specific dApps.
• Single Point of Failure: If the primary relayer goes offline, user transactions that depend on it are blocked.
• MEV Extraction: Relayers can reorder or front-run sponsored transactions for profit, similar to block builders in traditional mempools.

By paying the gas fee, a sponsor can submit transactions on behalf of any user's address, which introduces impersonation and spam risks:

• Unsolicited Transactions: A malicious actor can spam a user's wallet with unwanted, but valid, transactions (e.g., unwanted NFT transfers).
• Dusting Attacks: Sponsoring tiny, legitimate transactions can be used to link addresses or poison wallets.
• Reputation Damage: A user's on-chain history can be polluted by transactions they did not initiate or authorize, though the sponsor paid for them.

Sponsorship logic within smart contracts adds new attack surfaces for developers to secure:

• Unbounded Sponsorship: A contract must implement robust logic to prevent a malicious user from draining the sponsor's gas budget via infinite loops or recursive calls.
• Signature Replay: Improper implementation of signature validation for the sponsored transaction payload can lead to replay attacks across different chains or contexts.
• Front-running the Sponsor: An attacker can observe a pending sponsored transaction, copy its calldata, and pay their own gas to execute it first, potentially stealing the intended outcome.

Free transactions for users shift the economic burden and can impact network health:

• Gas Price Manipulation: A well-funded sponsor could artificially inflate base gas prices by flooding the network with sponsored transactions, creating a paywall for non-sponsored users.
• Resource Exhaustion: Without proper rate-limiting, sponsored transactions could be used in a Denial-of-Service (DoS) attack against the network or specific smart contracts, with the sponsor bearing the cost.
• Subsidy Sustainability: The sponsor's business model must be sustainable; if the subsidy ends abruptly, it can break user experience for dApps that relied on it.

The sponsorship mechanism can inadvertently reveal sensitive information:

• Linkability: The relayer sees the plaintext transaction (user, contract, calldata) before it hits the public mempool, creating a privacy leak.
• Sponsor-User Relationship: On-chain, it becomes visible that a specific entity (the sponsor) paid for a user's transaction, potentially revealing business relationships or affiliations that users wish to keep private.

Protocols and dApps implement safeguards to counter these risks:

• Decentralized Relay Networks: Using a permissionless set of relayers (e.g., a relayer marketplace) reduces censorship risk.
• User Signatures: Requiring a user's EIP-712 signature for the specific transaction payload prevents full impersonation.
• Sponsored Gas Limits: Contracts enforce strict gas limits per transaction to prevent budget drain.
• Reputation Systems: Relay networks can implement slashing or reputation scores to penalize malicious actors.
• Intent-Based Architectures: Moving to a model where users submit signed intents rather than concrete transactions can enhance privacy and reduce front-running.

A broader design pattern where the complexities of gas fees are hidden from end-users. Sponsored transactions are a primary implementation, allowing a third party (the sponsor) to pay transaction costs on behalf of a user. This pattern is foundational to account abstraction and improves onboarding by removing the initial requirement for users to hold the native token.

A smart contract or off-chain service that acts as the sponsor in a transaction. The paymaster's core functions are:

• Validating sponsorship rules (e.g., user whitelist, specific transaction types).
• Paying the gas fee in the network's native currency.
• Potentially accepting payment in an alternative token (ERC-20) from the user, abstracting the gas token entirely. On Ethereum and EVM chains, paymasters are a key component of ERC-4337 account abstraction.

An Ethereum standard that enables smart contract wallets and sponsored transactions without requiring consensus-layer changes. It introduces a UserOperation mempool and Bundlers to execute transactions. Within this standard, a Paymaster contract is the mechanism that can sponsor gas fees, allowing for:

• Gasless transactions for users.
• Fee payment in ERC-20 tokens.
• Session keys and subscription models for gas.

A user experience where the sender does not pay the network gas fee. This is achieved via a sponsored transaction, where a dApp or service provider covers the cost. It's a critical tool for:

• Onboarding users who lack the native token.
• Marketing campaigns and free trials.
• Simplifying UX for non-crypto-native audiences. The term is often used interchangeably with 'sponsored transaction,' though 'gasless' emphasizes the user perspective.

An off-chain service that submits and often pays for a user's transaction. In earlier implementations (like Gas Station Network), a relayer would receive a signed transaction, pay the gas, and broadcast it. In modern account abstraction (ERC-4337), the role is split between a Bundler (which packages UserOperations) and a Paymaster (which pays for gas). Relayers/sponsors typically recover costs through business logic, not from the transaction's sender.

The business or technical logic governing who pays and why. Common models include:

• DApp Pays: The application sponsors all user transactions to reduce friction.
• Whitelisted Actions: Sponsorship only for specific, approved contract calls.
• Subscription: Users pay a flat fee (e.g., monthly) for a gas allowance.
• ERC-20 Gas: Users pay fees in a stablecoin or app token, which the sponsor converts to native gas. The model defines the paymaster's validation rules.