Gas fees are a fact of life when interacting with the blockchain. Like a car, you need gas to get to where you want to go. As the blockchain grows more popular and gets congested, just like gasoline, the price of gas fees continue to rise.

WonderFi Labs is working to bring a user-friendly, gasless experience to our L2 network and beyond.

All blockchain networks, including Layer 2 solutions, generally require users to pay gas fees to process transactions. These fees compensate network operators for the computational work involved in validating transactions.

Although Layer 2 solutions aim to reduce transaction costs compared to Layer 1 networks, the gas requirement still presents onboarding and usability challenges. This especially affects non-crypto users or those unfamiliar with managing digital assets.

In this post, we’re going to look at the biggest issues with gas fees on Layer 2 networks. Then we’ll review existing solutions such as identity verification, paymasters, wallet abstractions, and meta-transactions. Covering both how they work, and what limitations they have that prevent mainstream adoption.

Issues with Gas Requirements in Layer 2 Blockchains

Even on Layer 2 networks, which aim to provide lower-cost alternatives to Layer 1 chains, gas fees introduce a number of challenges.

• Onboarding Complexity: Users unfamiliar with cryptocurrencies must acquire tokens (often impossible due to local regulations) to pay for gas, adding an unnecessary barrier and creating what’s referred to as the ‘empty wallet’ problem.

• User Experience Friction: Non-crypto users often find gas fees confusing and challenging to manage, leading to poor user experiences.

• Security Risks: New users may resort to third-party services to acquire gas tokens, exposing themselves to scams or high fees.

• Operational Inefficiency: dApps with frequent, low-value transactions (e.g., games, social media) are discouraged by gas requirements, reducing user engagement.

Current Gasless Solutions

There have been several gasless solutions proposed to address gas fees for Layer 2 networks. While each of these approaches offers certain benefits, they also have limitations that prevent them from fully solving the gas problem. These limitations can also hinder mainstream adoption of blockchain technology.

Coinbase Identity Verification

Coinbase identity verification solutions link wallet creation and transaction processes to verified user identities. This offers regulatory compliance and a more accessible entry point for new users.

Limitations:

• Limited to Verified Users: Identity verification restricts access to users who are willing to undergo the verification process, which may deter privacy-conscious individuals or those unfamiliar with crypto.

• Centralized Custodianship: Coinbase's identity verification implies a reliance on a centralized entity, which goes against the decentralized ethos of blockchain and introduces a single point of failure.

• Geographic and Compliance Constraints: Coinbase services may be limited in certain regions due to regulatory restrictions, excluding a significant portion of the global population.

• Onboarding Fees: While identity verification may streamline onboarding, it often does not address gas fees directly, meaning users still need to acquire and manage tokens for transaction costs.

Paymasters

Paymasters allow dApps or third parties to pay gas fees on behalf of users, enabling gasless interactions from the end-user's perspective. This approach abstracts gas payments, making the network more accessible.

info

Visa has proposed an interesting solution using Paymaster. Basically, instead of the user paying the gas fee in the native token they instead pay the fee in FIAT directly to Visa. Visa then uses a paymaster contract to pay the fee for them. Not gasless, but certainly frictionless.

Limitations:

• Operational Costs for dApps: Relying on a paymaster model shifts gas fees to the dApp provider, which can be financially unsustainable if the dApp has many users or high transaction volumes.

• Selective Funding: Paymasters may only cover specific transactions or new user interactions, limiting the number of gas-free interactions that users can perform.

• Vulnerability to Abuse: Malicious users may attempt to exploit the paymaster model by spamming low-cost transactions, increasing costs for the dApp or third-party sponsor.

• Dependency on Third Parties: Paymasters require dApps to set up and maintain funding mechanisms for gas payments, adding complexity to dApp operations.

Wallet Abstractions

Wallet abstractions hide the technical complexities of wallet management from end-users by bundling transactions and handling gas fees automatically.

Limitations:

• Limited User Control: By abstracting wallet management, users may have reduced control over their funds and transactions, which may not appeal to more security-focused individuals.

• Technical Complexity: Implementing wallet abstractions adds development overhead, particularly for dApps that need to handle multiple chains and transaction types.

• Insufficient for High-Volume Users: For power users who conduct frequent or large transactions, wallet abstractions may not adequately reduce gas costs, leading to dissatisfaction.

• Partial Solution: While wallet abstractions reduce visible gas costs, they do not fully eliminate the underlying need for gas, especially for transactions requiring prioritization.

Meta-Transactions

Meta-transactions allow users to delegate transaction costs to another entity, typically a relay service, which submits the transaction on behalf of the user.

Limitations:

• Reliance on Relays: Meta-transactions depend on relayers to cover gas fees, which adds dependency on third parties and introduces potential reliability issues.

• Limited Availability: Meta-transaction relays are not universally supported across all networks, limiting their usability for dApps on Layer 2 chains.

• Performance Bottlenecks: Meta-transaction systems can experience performance issues when relays are overloaded or when relayers prioritize high-fee transactions, causing delays.

• Increased Complexity: Meta-transactions add technical and operational complexity for both dApps and users, which may deter new users unfamiliar with blockchain technology.

WonderFi Labs gasless proposal

At WonderFi Labs, we are building a new kind of L2 network. One that enables uniform gasless experience for most users, and one that incentivizes protocol and application developers. We want to encourage the next wave of application innovation, letting developers build whatever they can dream of without having to worry about users having to deal with the ‘empty wallet’ problem.

Using a blend of incentives and game theory, we’re aiming to build a protocol that offers a gasless experience for the casual user. A protocol that easily handles dealing with the gas fees so anyone can hop into the DeFi space and get started right away.

In order to maintain an ecosystem that’s free of spam and malicious users we’ll be looking to the power users. They will help fund the gasless initiatives, while still being offered competitive transaction fees.

On the flip side, we know developers deserve to be rewarded for their work. We are looking at ways to build a system that offers incentives on a regular basis for those dedicated developer teams that bring users and traffic to the L2 network.

As we work on our solution we’ll be sharing updates with the community. As we’ve stated before, we want your feedback, your thoughts and your knowledge as we build this new network to benefit all users.

Keep an eye out on X, or join our Discord, to stay up to date!