Reducing User Friction via Paymasters: Streamlining Blockchain Transactions with Sponsorship
Reducing User Friction via Transaction Sponsorship
Navigating the world of Ethereum and other blockchain networks often involves a steep learning curve, especially when it comes to understanding gas fees. For many users, gas fees are a constant source of friction—they must be paid for every transaction, using the network's native gas token (ETH in the case of Ethereum). This requirement is both cumbersome and restrictive, especially for those who may not have ETH readily available in their wallets or for those who are new to the space and find the concept of gas fees confusing.
Imagine a world where users don’t have to worry about gas fees at all. A world where transaction fees are seamlessly abstracted away or, if they must be paid, users have the flexibility to use various tokens to cover the cost. This isn't a distant dream, but a growing reality thanks to innovative solutions like Verifying Paymasters and ERC-20 Paymasters.
Breaking Down the Barriers: Verifying Paymasters and ERC-20 Paymasters
So, what exactly are Verifying Paymasters and ERC-20 Paymasters? These are mechanisms that allow for a more flexible and user-friendly way to handle transaction fees. Let’s review each:
1.Verifying Paymasters: A Verifying Paymaster is a smart contract that acts as an intermediary, allowing dApps to sponsor transactions on behalf of users, abstracting away the need for a user to have gas available. The Paymaster contract can verify conditions such as whether a user holds a specific NFT or if they meet certain other predefined criteria before deciding to sponsor the transaction fee. Reown is building a beautiful user experience that allows builders to create a “Policy” to manage these rules for sponsoring transactions.
2.ERC-20 Paymasters: The ERC-20 Paymaster takes this flexibility a step further by enabling users to pay for gas fees using ERC-20 tokens instead of ETH. This means that users could, in theory, pay for their transaction fees using stablecoins or other ERC-20 tokens they might hold. The ERC-4337 proposal supports this by allowing the Paymaster contract to accept ERC-20 tokens and handle the conversion to ETH for gas payments, creating a more flexible and accessible environment for users. Reown is building ERC-20 Paymaster support into our Swaps capability within AppKit, so builders don’t need to worry about adding support and it’s readily available for end-users to take advantage of.
The Role of Smart Accounts and EIP-7702
For these Paymaster mechanisms to function, the user’s account needs to be a Smart Account, which is currently available, but still being adopted by the wider community. A Smart Account is essentially a smart contract-based wallet that can interact with Paymaster contracts and handle complex transaction logic. However, with the introduction of EIP-7702, even EOAs (the simple user accounts with a public key controlled by a private key) will be able to leverage the functionalities of Smart Accounts. EIP-7702 is expected in Q1-Q2 2025. Once this happens, it means that any user, regardless of their account type, can take advantage of Paymaster features, furthering access to and ultimately adoption of these advanced transaction mechanisms.
Real-World Use Cases: Where Paymasters Shine
Paymasters can significantly enhance user experiences across a variety of decentralized applications (dApps). Here are a few scenarios where Paymasters could make a substantial impact:
Sponsoring NFT Mints: A dApp could choose to sponsor the gas fees for users minting NFTs on their platform, encouraging more users to participate without the concern of additional costs. Or conversely, with ERC-20 Paymasters, the user could choose which token they want to pay gas with for the mint.
Sponsoring DeFi Transactions: In the DeFi space, a dApp could sponsor transactions such as trades or staking, reducing barriers for users looking to engage with decentralized finance without having to manage gas fees. dApps could run special promotions around gasless trading or simply adopt the practice of sponsoring transactions permanently to reduce user friction.
Blockchain Gaming: For blockchain-based games, sponsoring transactions can be crucial for user retention and onboarding. By abstracting gas fees, games can provide a seamless experience, and keep the user focused on gameplay.
Building Paymaster Capabilities into Reown AppKit
At Reown, we are actively integrating ERC-20 Paymaster capabilities into our AppKit product as an option when swapping. Our goal is to provide dApp builders with powerful tools to manage gas fee sponsorship. Through Reown Cloud, developers will be able to configure policies, such as the types of transactions they want to sponsor, which chains to sponsor transactions on, and set rules around specific accounts and transaction types. Additionally, they can establish spending thresholds to manage their sponsorship budget effectively.
Paymasters: Simplifying the Future of User Experience
Paymasters represent a significant advancement in making blockchain transactions more accessible and user-friendly. By removing the complexity of gas fees and providing flexibility in payment methods, we can create a more inclusive environment for all users, regardless of their familiarity with blockchain technology. At Reown, we’re excited to be at the forefront of this evolution, helping to build a smoother, more intuitive experience for everyone.
Stay tuned as we continue to innovate and bring these powerful tools to developers and users alike, paving the way for a more seamless blockchain future.
