What Is a Paymaster? Pay Gas in a Token, Not the Native Coin

A paymaster is a smart contract, defined by ERC-4337, that pays a transaction's native gas on the user's behalf and then settles with the user some other way — most commonly by deducting an ERC-20 token inside the same transaction, sometimes by charging nothing at all. It does not make gas cheaper or bypass the fee market: the network is still settled in the chain's native coin, and the paymaster is simply the party that hands it over. Paymasters are an EVM-only mechanism, because ERC-4337 is an EVM standard; Solana and TON reach the same outcome with a fee-payer or relayer account that signs and covers the native gas. A working example is the WATS Hot Wallet, which uses an ERC-4337 paymaster on EVM chains — and the equivalent fee-payer on Solana and TON — so every fee is charged in one token, ATS, instead of ETH, POL, BNB, SOL or Toncoin.

The native-gas problem

Every blockchain wants to be paid in its own coin. To move a token on Ethereum you need ETH; on Polygon you need POL; on Arbitrum, Base and other L2s you still settle in ETH; on Solana you need SOL; on TON you need Toncoin. That native asset is what the network charges to include your transaction in a block, and there is no getting around it at the protocol layer — the fee is denominated and settled in the chain's own unit.

For users this creates a familiar and annoying failure mode. You hold a stablecoin or a token you actually care about, you try to send it, and the transaction reverts because you have zero of the native coin. You end up buying, bridging, or keeping a small "gas float" of ETH, POL, SOL and Toncoin scattered across chains just to be able to move everything else. It is friction that has nothing to do with what you were trying to do.

What a paymaster is

A paymaster is a component defined by ERC-4337, Ethereum's account-abstraction standard. Its job is narrow and useful: it pays a transaction's native gas on your behalf, and then charges you for it in some other way. The network still receives its ETH (or POL, or whatever the chain's coin is) exactly as before — the paymaster is the party that actually hands it over. What changes is who you settle with and in what currency.

Mechanically, ERC-4337 routes transactions as "user operations" through a shared on-chain contract called the EntryPoint. When a user operation names a paymaster, the EntryPoint asks that paymaster contract to agree to cover the gas before execution — a validation step in which the paymaster inspects the operation and decides whether its policy allows sponsorship. If the paymaster approves, it fronts the native gas from a deposit it holds at the EntryPoint; afterward the accounting is settled according to the paymaster's own rules. The chain sees a normally-funded transaction; you never had to hold the native coin.

The three common paymaster types

Paymasters are just smart contracts, so their policies vary, but most fall into three buckets. A verifying paymaster agrees to sponsor a transaction only if it carries a valid signature from an off-chain service — useful when a dapp wants to approve specific actions or specific users under its own logic. A sponsored paymaster (often the same machinery) simply eats the gas so the end user pays nothing, which is how "gasless" onboarding and free in-app actions are built.

The type most relevant to everyday users is the ERC-20 token paymaster. Here the paymaster pays native gas up front and, in the same transaction, deducts an equivalent amount of an ERC-20 token from you — letting you pay fees in USDT, USDC, or another token instead of the native coin. The paymaster quotes a token-to-gas rate (typically from an oracle plus a small margin), takes its cut in tokens, and settles the network in the native asset. For that deduction to work the paymaster must be allowed to move your token, so the flow depends on a prior token approval or a permit signature carried in the same operation. From your seat, you spent one token and never touched ETH.

The flow: token in, native gas out

Follow a single transfer end to end. You sign a user operation that says, in effect, "move my tokens, and let this paymaster handle gas." A bundler picks the operation up and submits it; the EntryPoint checks that the paymaster will pay. The paymaster confirms it can charge you — say, in USDC or another ERC-20 — and its deposit covers the estimated gas. Your operation executes. On completion the EntryPoint deducts the real gas cost from the paymaster's deposit, the paymaster pulls the agreed token amount from you, and the network is settled in the native coin as always — on EIP-1559 chains that means the base fee is burned and the priority fee goes to the block proposer, exactly as it would for any ordinary transaction.

The key invariant is that the network is never shortchanged. A paymaster does not make gas free-in-aggregate or bend the fee market; it only reshuffles who pays and in what denomination. The native coin still pays for the block space underneath, which is also why a token paymaster is not a discount mechanism: the underlying cost of the block space is unchanged, and only the currency you settle it in has moved. This is why the model is trustworthy at the protocol level even when the user experience feels like magic.

Where it works: EVM and the non-EVM analog

ERC-4337 is an EVM-only standard. It works across Ethereum and EVM-compatible L1s and L2s because they all run the same EntryPoint-and-paymaster machinery. As of 2026 it is worth noting that EIP-7702 lets an ordinary externally owned account point its code field at a smart-contract implementation — a delegation it can repoint or clear at any time — so a plain address can run smart-account logic, which widens where paymaster-style sponsorship can apply — but the paymaster concept itself still lives inside the EVM account-abstraction world.

Non-EVM chains reach the same outcome by a different route. On Solana and TON there is no ERC-4337, so an equivalent fee-payer or relayer plays the paymaster's role: a Solana transaction can designate a separate fee-payer account that signs and covers the SOL, and TON's message model lets a relayer front Toncoin. The label differs, but the principle is identical — a third party settles the native gas so the user can pay another way. When you read "paymaster" for a non-EVM chain, mentally substitute "fee-payer/relayer."

Benefits, risks, and what to trust

The benefits are concrete: no scattered gas floats, one-token or zero-token user experiences, and onboarding flows where a newcomer can transact before they have ever bought the native coin. For anyone managing assets across several chains, collapsing "what do I pay gas in" to a single answer removes a real class of stuck-transaction errors.

The trade-offs are worth naming. A token paymaster sets the exchange rate you pay, so its oracle and margin matter; a poorly-priced or downtime-prone paymaster can quote you badly or fail to sponsor. Sponsored paymasters can run out of deposit. And any paymaster is a smart contract with its own trust surface — you are relying on its code and its operator's policy, not just on the base chain. None of this touches custody: a paymaster pays your gas, it does not hold your keys or your funds. Account abstraction changes how fees are paid, not who owns the assets.

How WATS uses this

WATS puts this model to work directly: in the WATS Hot Wallet every action — transfers, swaps, staking — is charged in a single token, ATS, instead of the chain's native gas coin. On EVM chains that is done with an ERC-4337 paymaster, and on Solana and TON with the equivalent fee-payer/relayer, so the network still receives its native gas underneath while you only ever spend ATS. Because ATS is a LayerZero OFT, one balance covers fees across Ethereum, Arbitrum, Optimism, Base, Polygon, BNB Chain, Solana and TON, and collected ATS is burned from 100M toward a 30M floor — the combination that makes WATS the first and only wallet to pair ERC-4337 + OFT single-token fees, charged instead of native gas, with that burn. It is not a discount, for the reason described above: the cost of the block space is the same, only the token that pays it changes. WATS is non-custodial throughout — you hold your keys, and WATS never holds a key.

If the recurring annoyance is topping up ETH, POL, BNB, SOL and Toncoin floats on eight different chains just to move the assets you actually hold, the practical step is to use a wallet where the paymaster plumbing is already wired end to end rather than assembling it yourself. The ATS fee model is one concrete way to do that: keep a single ATS balance in the WATS Hot Wallet and let the paymaster settle each chain's native gas for you in the background.