What is a paymaster?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
A paymaster is the ERC-4337 component that pays gas on someone else's behalf. It lets a user with no ETH transact at all, and makes paying fees in tokens such as USDC possible. Who gets sponsored and on what terms is decided in the paymaster operator's code.
Key points
- A mechanism for a third party to cover gas
- Lets users with no ETH transact at all
- Enables paying fees in tokens such as USDC
- Sponsorship conditions are entirely operator-defined
Definition
A smart contract in ERC-4337 that pays the gas for a user's transaction, under conditions defined by the contract's own code.
Historically, doing anything on Ethereum required ETH. A user who bought only USDC and had it sent over was stuck: no gas, no way to move it. Paymasters solve that onboarding problem, letting an application absorb the cost or deduct an equivalent amount from tokens the user already holds.
Implementations vary. Some sponsor only their own application's transactions; some accept a token and front the ETH; some limit sponsorship to new users, or to a set number of operations. The EntryPoint contract checks that the paymaster has posted sufficient stake before proceeding.
The thing to understand as a user is that fees are not free — someone is paying. Sponsorship comes out of an operator's budget and stops when the budget or the strategy changes. Routing transactions through a paymaster also means that operator can see your activity.
Watch out for
- · Sponsored gas is discretionary and can end without notice
- · Going through a paymaster exposes your activity to its operator
- · When paying fees in tokens, check what margin is built into the conversion rate