Paymasters or Relayers: A Comprehensive Comparison

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Introduction

The complexity of gas fees has long been a barrier to mainstream adoption of Web3 technologies. Biconomy recognized this early on and pioneered gasless solutions for industry leaders through the use of Relayers (ERC2771). While our relayer technology has enabled hundreds of thousands of users on web3 platforms like The Sandbox to execute 1,000,000 gasless transactions, saving 18,000 $MATIC in the process, the emergence of ERC4337 with account abstraction prompted us to pivot towards a superior solution: Paymasters. Our powerful Paymasters have been adopted by industry leaders such as Trust wallet.

Account abstraction, which introduces Smart Accounts on blockchain, has been in development for several years and has garnered significant support from Ethereum founder Vitalik Buterin, who believes smart accounts are crucial for the future of blockchain technology.

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With both solutions available to builders today, a common question arises: “Which is better, Relayers or Paymasters?” However, the real question should be: “Do I want to merely simplify gas fees for transactions, or do I aim to deliver a seamless user experience (UX) that attracts and retains mainstream users?”

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TLDR: Quick Comparison

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Relayers and ERC2771

Relayers were our initial solution to simplify gas fees. Sending a meta-transaction is similar to sending a standard transaction (from, to, value, and signature), but instead of sending it directly to the blockchain, it is sent to a third party—the Relayer—that covers the gas cost.

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Pros

Compatibility: Relayers work with Externally Owned Accounts (EOA), meaning dApps like The Sandbox do not need to overhaul their entire infrastructure, and users can continue using wallets like MetaMask without switching to Smart Accounts.

‍Slightly Better Gas Efficiency: Relayers are marginally more gas-efficient, making them a lighter option for quick transactions, although the difference is minimal. 

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Cons

Codebase Compatibility: Smart contracts and assets must be meta-transaction compliant, which may require dApps to update their entire codebase to leverage relayers effectively. This can involve significant development work and integration effort.

‍Limited Functionality: Relayers only support sponsorship mode and lack the ability for users to pay gas in any ERC20 token, unlike Token Paymasters.

‍Token Restriction: Relayers can only sponsor transactions where the transaction token is different from the gas token, such as USDC payments on Ethereum or MANA payments on Polygon.

‍Cost Burden on dApps: dApps must bear all the costs to sponsor gas fees for transactions, which can become expensive if there is a high volume of activity. This can significantly increase operational costs for projects with heavy transaction loads.

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Paymasters and ERC4337 Account Abstraction

Leveraging Account Abstraction (ERC4337), Paymasters provide a more powerful and flexible solution for managing gas fees. ERC4337 not only supports Paymasters but also introduces Smart Accounts on blockchain which are a game-changer for UX. Vitalik Buterin, the founder of Ethereum, believes that Smart Accounts are the future as they unlock a truly Web2-like user experience. Additionally, Smart Accounts offer enhanced security features, such as quantum resistance and account recovery options. Paymasters under ERC-4337 not only sponsor gas fees but also enable users to pay gas in any ERC20 token and offer conditional sponsorship options.

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Pros

Flexible Gas Payment Options: Paymasters support Sponsorship Paymaster and Token Paymaster modes, allowing gas payments in any ERC20 token.

Conditional Sponsorship: Paymasters can sponsor gas for selected users or transactions while allowing others to pay in any token.

Enhanced UX: By enabling Web2-like experiences, Paymasters help bridge the gap between Web2 and Web3, making it easier for mainstream users to adopt blockchain technology.

Future-Proof: With quantum proofing capabilities and broader account abstraction features, Paymasters are positioned for long-term use.

Enhanced Security: Smart Accounts offer improved security features such as quantum-proofing and account recovery options, making them more secure than EOAs.

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Cons

Smart Account Requirement: Users must have Smart Accounts on blockchain, which may require initial setup and adjustment. However, using Biconomy’s smart account SDK, developers can easily deploy Smart Accounts for their users, on top of their existing EOA wallet, and maintain full control of the UI. Additionally, there are multiple plug-and-play solutions available, such as Obvious Wallet, to simplify the transition with account abstraction.

For more details on Account Abstraction and sponsoring gas via paymasters, visit our documentation or watch our video walkthrough.

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Conclusion

While Relayers (ERC2771) offer a quick and straightforward solution for gas sponsorship without requiring significant infrastructure changes, they are limited in functionality and scalability. In contrast, Paymasters (ERC4337) provide a superior, future-proof solution with more flexibility, enhanced user experience, benefits of account abstraction and broader capabilities.

Biconomy’s advanced and flexible Paymasters support over 200 networks and tokens on blockchain, offering numerous ways to customize conditional sponsorship. This makes them the ideal choice for developers looking to create seamless, user-friendly Web3 experiences. Additionally, the enhanced security features of Smart Accounts, including quantum-proofing and account recovery, make Paymasters a more secure choice compared to traditional EOAs.

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