Economic Abstraction

Users can pay transaction fees (gas) using any ERC-20 token in their wallet, not just the native blockchain token (e.g., ETH). The protocol automatically converts the payment token to the native asset via a decentralized exchange, abstracting the complexity from the user.

• Example: A user swaps USDC for ETH. They can pay the gas fee for that swap directly from their USDC balance.

Removes a major friction point for new users who may not hold the native token. They can interact with dApps immediately using stablecoins or other familiar assets without first acquiring and managing a separate gas token.

• Key Benefit: Lowers the barrier to entry, as users don't need to understand the concept of a 'gas token' or perform a preliminary swap.

Allows capital locked in DeFi positions (e.g., LP tokens, staked assets, collateral) to be used directly for paying fees. This prevents the need to maintain separate, idle balances of the native token for gas, optimizing the utility of every asset in a portfolio.

• Use Case: A liquidity provider can pay fees directly from their LP token rewards without unwinding their position.

Enables advanced sponsored transaction models where dApps or third parties can pay fees on behalf of users. This is a core component of account abstraction (ERC-4337), allowing for gasless transactions, subscription models, and enterprise-grade onboarding flows where the cost of operation is abstracted away from the end-user.

Relies on a network of decentralized relayers or paymasters to submit transactions and handle the fee conversion. These entities are compensated for their service, creating a permissionless market for transaction inclusion. The security and liveness of the underlying blockchain remain unchanged.

Implemented at the protocol level (e.g., via EIPs) or through smart contract account standards. Key implementations include EIP-3074 (auth and sponsor calls) and ERC-4337 (account abstraction with paymasters). This differs from centralized 'gasless' meta-transactions, as it is natively supported and trust-minimized by the protocol.

The foundational mechanism enabling economic abstraction is fee delegation or sponsored transactions. A third-party relayer or paymaster contract pays the network's native gas fees on behalf of a user, who reimburses them in a different, agreed-upon asset. This separates the medium of payment from the medium of execution.

A pivotal implementation is ERC-4337, which introduces account abstraction via a higher-layer mempool and UserOperation objects. It uses Paymaster contracts that can:

• Accept fee payments in any ERC-20 token.
• Sponsor fees for specific users or dApp interactions.
• Apply custom logic for fee sponsorship, enabling gasless transactions.

This abstraction dramatically improves onboarding and usability by removing key friction points:

• No Native Token Required: Users can interact with a blockchain without first acquiring its specific gas token.
• Single-Asset Simplicity: Users can operate entirely within a stablecoin or game token, avoiding volatility and complexity.
• Sponsored Gas: dApps can absorb transaction costs as a customer acquisition cost, offering truly gasless transactions.

Some blockchains build economic abstraction directly into their consensus or fee market logic. Examples include:

• EIP-1559 Extension: Proposals to allow fee payment in non-ETH assets within the base fee market.
• Avalanche Subnets: Can configure their own gas token, effectively abstracting economics from the primary network.
• Cosmos Zones: Each application-specific chain defines its own fee token and economic model.

Decoupling payment from consensus introduces new design challenges:

• Validator Incentives: Must ensure block producers are still incentivized in a valuable, stable asset to secure the network.
• Paymaster Risk: Relayers or paymasters assume liquidity and price oracle risk for the assets they accept.
• Spam Prevention: Systems must maintain anti-spam measures without relying solely on a native token's value.

Often discussed alongside economic abstraction, token abstraction is a broader concept. It aims to make all tokens—whether for fees, governance, or utility—interoperable and recognizable across different smart contracts and applications without constant wrapping and approval steps, further reducing user friction.

On Solana, users can pay priority fees in SOL to incentivize validators to process their transactions faster. While the base fee is still in SOL, this system abstracts the economic decision of transaction ordering into a market-based fee, allowing users to pay for better service without managing a separate gas token wallet.

Through its Gas Station Network (GSN) and partnerships with paymasters, Polygon enables dApp developers to sponsor user transactions. This is a form of economic abstraction where the end-user experience is gasless, as the dApp or a sponsor contract covers the MATIC gas costs, significantly lowering the barrier to entry.

Avalanche Subnets are independent blockchains that can define their own fee token and economic model. A subnet can specify that its gas fees are paid in a custom token (e.g., a game's in-game currency) instead of AVAX. This is a foundational-level implementation of economic abstraction for entire application-specific chains.

StarkNet's roadmap includes enabling fee payments in its STRK token for L2 transaction execution and data availability costs on Ethereum. This allows users to operate entirely within the StarkNet ecosystem using STRK, abstracting away the need to hold ETH specifically for L1 settlement fees.

The dYdX perpetuals exchange uses its native DYDX token for governance and fee discounts, but trading fees on the platform are paid in the traded asset (e.g., USDC). This separates the platform's utility token from its operational fee mechanism, a key aspect of economic abstraction in DeFi applications.

The core risk is that validators may prioritize fee revenue over network security. If validators accept a volatile or worthless token for fees, the real value securing the chain (the stake slashing penalty) can become misaligned with their rewards. This can reduce the cost of mounting a long-range attack or make censorship economically rational.

Abstracted fee markets can exacerbate Miner Extractable Value (MEV) issues. Validators may be incentivized to reorder or censor transactions based on the most profitable fee token, not network health. This creates:

• Opaque bidding wars across multiple assets.
• Potential for collusion among validators favoring a specific token.
• Erosion of the credible neutrality of the block space.

Economic abstraction requires a secure price oracle to convert abstracted fees into a common unit of account for validator payouts. This introduces oracle failure as a systemic risk. A manipulated price feed could allow attackers to pay fees cheaply or cause validators to receive less value than expected, destabilizing the crypto-economic security model.

Despite aiming for flexibility, abstraction can lead to centralization. A dominant stablecoin or highly liquid blue-chip asset may become the de facto fee token, marginalizing the native asset. This can reduce the utility and demand for the native token, potentially weakening its value accrual and the security budget of the protocol over the long term.

The technical implementation is complex and bug-prone. Risks include:

• Smart contract vulnerabilities in fee handling logic.
• Cross-chain bridge risks if fees are paid on another chain (e.g., EIP-3074 sponsorships).
• Increased state bloat from tracking multiple fee assets.
• Ambiguity in transaction ordering rules during partial payments.

Accepting arbitrary tokens for fees may inadvertently subject validators to securities laws or money transmission regulations. If a fee token is deemed a security, validators receiving it could be seen as engaging in a regulated exchange. This creates legal uncertainty and operational overhead for decentralized validator sets.

An Ethereum standard that transforms externally owned accounts (EOAs) into smart contract wallets. This enables economic abstraction by separating the signer from the fee payer. Key features include:

• Flexible authentication (social recovery, multisig).
• Transaction batching for multiple operations.
• Sponsored fees via integrated paymasters.

The practice of representing transaction fee rights as a tradable ERC-20 token. Projects like Gas Station Network (GSN) and EIP-1559 relate to this concept by creating markets for block space. It allows:

• Pre-purchasing gas at predicted prices.
• Hedging against network congestion.
• Decoupling gas costs from native token volatility.

The incentive structures for block producers (validators/miners) to accept non-native token payments. This requires consensus-layer changes or relayer networks to ensure validators are compensated. Considerations include:

• Cross-chain settlement of fee payments.
• Economic security implications for the base chain.
• Implementation in chains like Polygon and Ethereum via proposals.

Off-chain infrastructure that forwards user transactions and handles fee payment in a separate settlement layer. They enable meta-transactions, where a third party pays the gas fee. Key components are:

• Relayers that broadcast transactions.
• Fee market for relay services.
• Reputation systems to prevent spam.

A user-centric paradigm where users specify a desired outcome (intent) rather than a transaction. Solvers compete to fulfill the intent, abstracting away complexity and fees. This relates to economic abstraction by:

• Bundling fee payment into the solution.
• Optimizing across assets and liquidity sources.
• Examples: CowSwap, UniswapX.