Sponsored Transaction

The core mechanism where a sponsor (dApp, wallet, or service) pays the gas fees for a user's transaction. This decouples the need for the user to hold the network's native token (e.g., ETH, SOL, SUI) to interact with the blockchain, removing a significant barrier to entry. The user signs the transaction, but the sponsor submits and pays for it.

A smart contract-based system, often called a paymaster, that holds the sponsor's funds and logic for validating and paying for sponsored transactions. Key functions include:

• Validate Paymaster User Op: Checks if a transaction request meets the sponsor's criteria (e.g., specific dApp, user whitelist).
• Post-Op: Handles post-execution logic, like refunding the user or the sponsor.
• This architecture is central to ERC-4337 Account Abstraction on Ethereum.

Sponsored transactions enable gasless transactions, where users experience seamless interaction without managing gas fees, wallets, or native tokens. This is critical for:

• Onboarding: New users can try a dApp without first acquiring crypto.
• Batch Operations: Sponsoring a user's multi-step onboarding or complex DeFi transaction.
• Subscription Models: Applications can sponsor fees for premium users as a service benefit.

Sponsors implement rules to prevent abuse and manage costs. Common controls include:

• Whitelists: Only specific smart contracts or user addresses are eligible.
• Rate Limiting: Capping the number or value of sponsored transactions per user.
• Expiry Windows: Transactions must be submitted within a set time after signing.
• Signature Verification: Ensuring only the intended user's signed transaction is sponsored, preventing replay attacks.

Sponsored transactions are implemented via key technical standards:

• ERC-4337 (Ethereum): The Account Abstraction standard formalizes the UserOperation mempool and Paymaster contract role.
• SUI: Native support via the TransactionBlock with a designated sponsor field.
• Aptos: Implemented through Sponsored Transactions in the transaction payload.
• zkSync Era & Starknet: Support via their native account abstraction implementations.

Enables new monetization and growth strategies:

• Acquisition Cost: dApps sponsor initial transactions to acquire users, treating fees as a marketing expense.
• Bundled Services: Wallets or infra providers offer sponsored tx as a premium feature.
• Developer Subsidies: Platforms like Base and Optimism have grant programs to sponsor developer gas fees.
• Session Keys: Sponsoring gas for a user's session of interactions within a game or social dApp.

Allows new users to interact with a dApp without needing to acquire the blockchain's native token for gas fees first. This is critical for mass adoption, as it removes a major friction point for newcomers.

• Example: A user can mint an NFT or swap tokens on a DEX without ever holding ETH or SOL.
• Mechanism: The dApp developer or a designated sponsor pre-funds a paymaster or sponsor account to cover the costs.

Enables meta-transactions where users can pre-approve a series of actions within a defined session, with fees covered by the application. This creates a seamless, web2-like experience.

• Use Case: A gaming dApp can sponsor a player's in-game transactions for an hour.
• Use Case: A DeFi protocol can offer a premium subscription tier where all trading fees are sponsored for a month.

Businesses can sponsor transactions for their customers or partners as a customer acquisition cost or service benefit. This abstracts blockchain complexity from end-users.

• Example: A company airdropping tokens to its community can sponsor the gas for the claim transaction.
• Example: A wallet provider can sponsor the gas for the first 10 transactions of a new user.

Users can pay transaction fees in the token they are transacting with, rather than the network's native gas token. This is often implemented via a paymaster contract that accepts ERC-20 tokens.

• Mechanism: A user swaps USDC for ETH. The paymaster pays the gas in ETH and deducts the equivalent cost from the user's USDC swap output.
• Benefit: Simplifies the user experience and eliminates the need to manage multiple token balances for gas.

Sponsored transactions are a core feature of ERC-4337 account abstraction. UserOperations (bundled user intents) can specify a paymaster to sponsor gas, enabling social recovery, batched actions, and custom security rules without gas concerns.

• Key Component: The Paymaster contract validates and pays for UserOperations based on arbitrary logic (e.g., whitelist, token balance).
• Outcome: Enables smart contract wallets to offer sponsored gas as a built-in feature.

Sponsorship is not unconditional; sponsors implement rules to prevent abuse. This turns gas payment into a programmable resource.

• Common Rules: Rate limiting per user, whitelisted destinations (e.g., specific dApp contracts), maximum gas limits per transaction.
• Sybil Resistance: Sponsors may require a proof-of-humanity or link to a social identity to qualify for free gas.

A sponsor (e.g., an app or wallet) covers the gas fees for a new user's first transaction, removing the initial requirement to acquire the native token. This is critical for frictionless onboarding, allowing users to interact with dApps before owning any cryptocurrency. It abstracts away the complexity of gas management, similar to a "freemium" model in web2.

The technical implementation often involves a paymaster contract, a smart contract that holds funds to subsidize transactions. Key components include:

• Validation Logic: The paymaster verifies the transaction is eligible for sponsorship (e.g., specific dApp, user type).
• Gas Payment: It uses its deposited balance to pay the base fee and priority fee to the block builder.
• Account Abstraction Integration: On EVM chains, this is frequently implemented via EIP-4337 using a Paymaster contract that validates and pays for UserOperation bundles.

Businesses use sponsored transactions to manage operational costs and customer experience.

• Customer Gas Rebates: A company can refund gas costs for users who complete specific, high-value actions.
• Batch Operations: Paying fees for bulk administrative transactions (e.g., airdrops, NFT mints) from a single sponsored account.
• Subsidized APIs: Developer platforms can offer APIs where the service provider pays the gas, simplifying integration for their clients.

Sponsorship requires safeguards to prevent financial drain. Common mechanisms include:

• Rate Limiting: Capping the number of sponsored transactions per user or per time period.
• Whitelists: Restricting sponsorship to specific smart contract functions or user addresses.
• Staked Deposits: Requiring dApps to stake funds in the paymaster, which can be slashed for malicious behavior.
• Reputation Systems: Tracking and limiting sponsorships for addresses associated with spam or failed transactions.

Real-world implementations vary by blockchain:

• Ethereum (EIP-4337): Bundlers submit UserOperations with a designated paymasterAndData field.
• Polygon & Optimism: Native support for gasless transactions via their respective SDKs and middleware.
• Sui & Aptos: First-class transaction sponsorship where the sponsor's address is a direct parameter in the transaction payload.
• Starknet & zkSync Era: Integrated paymaster systems within their account abstraction frameworks.

The business model for sponsorship must be sustainable. Common approaches include:

• Direct Subsidy: The dApp pays fees as a user acquisition cost, funded by treasury or revenue.
• Relay Services: Third-party relayers (like OpenGSN) operate paymasters, charging dApps a subscription or fee-per-transaction.
• Tokenomics Integration: Sponsorship costs are offset by protocol rewards or captured value from the sponsored activity.
• Sponsored Gas Tokens: Using a stablecoin or the dApp's own token for fee payment, separated from the volatile native gas token.

A sponsored transaction allows a dApp or service to pay the gas fees on behalf of a user. This removes a major friction point for new users who may not yet hold the native token (e.g., ETH, SOL) required for fees.

• Key Benefit: Enables gasless transactions, improving the user experience for onboarding and specific actions like minting.
• Use Case: A gaming platform can sponsor a user's first in-game asset purchase, eliminating the need for them to first acquire ETH.

The technical implementation typically involves a paymaster smart contract (common on EVM chains with EIP-4337) or a relayer network. These entities hold funds and submit transactions on the user's behalf.

• Paymaster: A smart contract that validates and pays for a user's transaction, often implementing custom logic for sponsorship rules.
• Relayer: An off-chain service that receives a signed transaction from a user, adds gas, and broadcasts it to the network.

Sponsorship introduces new attack vectors. A malicious actor could spam the network with worthless transactions if the sponsor's validation logic is flawed.

• Sybil Attacks: An attacker creates many fake identities to drain the sponsor's funds via micro-transactions.
• Mitigation: Sponsors implement rate-limiting, whitelists, proof-of-humanity checks, or require a valid cryptographic signature from a trusted authority for each transaction.

Sponsorship is not charity; it's a customer acquisition cost with an expected ROI. Businesses sponsor transactions to drive specific user actions.

• Customer Acquisition: The cost of sponsored gas is weighed against the lifetime value of a new user.
• Subscription Models: Services might offer a certain number of free transactions per month as part of a premium plan.
• Ad-Based Models: Users view an advertisement in exchange for a sponsored transaction, with the ad revenue covering the gas cost.

The sponsor must maintain a liquid balance of the native token to pay for gas. Mechanisms exist to manage this capital efficiently and prevent loss.

• Deposit Contracts: Sponsors often pre-deposit funds into a smart contract (like a Paymaster stake) used to cover fees.
• Refund Models: In some systems (e.g., EIP-4337), the sponsor can specify that the user reimburses them in a different ERC-20 token within the same transaction, converting the sponsorship into a seamless token swap.

Paying for someone else's network interaction can have legal implications, especially around Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.

• Transaction Origin: The sponsored transaction is technically submitted by the sponsor, potentially making them the "sender of record" from the blockchain's perspective.
• Due Diligence: Enterprise sponsors may need to implement KYC checks on users before offering gasless services to comply with financial regulations.

The core concept of removing the requirement for a user to hold a blockchain's native token to pay for gas fees. A sponsor (e.g., a dApp, wallet, or enterprise) covers the cost, abstracting the complexity of the underlying blockchain's economics from the end-user.

• Key Benefit: Lowers the barrier to entry for new users.
• Implementation: Often uses a paymaster contract or a relayer network to validate and subsidize transactions.

A smart contract that acts as the sponsor in a sponsored transaction system. It holds funds and contains the logic to decide whether to pay for a user's transaction.

• Function: Validates transaction conditions (e.g., user whitelist, specific dApp calls) and submits payment for gas.
• Common Models: General paymasters (open to all), whitelisted paymasters (for specific users/apps), and ERC-20 paymasters that accept payment in tokens other than the native currency.

A user experience where the end-user perceives zero cost for submitting a transaction. This is achieved through sponsored transactions or meta-transactions, where the gas fee is paid by a relayer or dApp backend.

• Flow: User signs a message, a relayer packages it into a paid transaction.
• Use Case: Critical for onboarding flows, allowing users to interact with a dApp before acquiring any crypto.

Infrastructure services that facilitate sponsored or gasless transactions by acting as the transaction submitter and fee payer. Users submit signed payloads, and relayers broadcast them to the network, covering the gas costs.

• Examples: GSN (Gas Station Network) was an early Ethereum relayer network.
• Function: Manages sponsor economics, prevents spam, and provides a seamless gateway for dApps to offer gasless interactions.

Sponsored transactions solve critical friction points for businesses and new users.

• Corporate Gas Wallets: Enterprises can pay for all employee or customer interactions on-chain from a central treasury.
• DApp Trials & Promotions: Applications can sponsor first-time user transactions or specific promotional actions.
• Mass Airdrops & Claims: Projects can distribute tokens without requiring recipients to have ETH for gas to claim them.