ERC-4337 Paymaster: Gas Sponsorship Explained

Biconomy provides all paymaster functionality through the MEE (Modular Execution Environment) stack. While this page explains how ERC-4337 paymasters work conceptually, you should use MEE to implement gas sponsorship in your applications—it provides paymaster capabilities plus cross-chain orchestration in a unified interface.

What is a Paymaster in ERC-4337?

A Paymaster is a smart contract in the ERC-4337 account abstraction standard that pays gas fees on behalf of users. Instead of users needing ETH for gas, the paymaster covers the cost.

Traditional Transaction:
User → pays gas in ETH → Transaction Executed

With Paymaster:
User → signs UserOperation → Paymaster pays gas → Transaction Executed

Paymasters enable:

Gasless transactions: Users pay nothing
Gas abstraction: Users pay in ERC-20 tokens (USDC, DAI, etc.)
Sponsored transactions: Apps cover user gas costs

How does a Paymaster work technically?

The paymaster integrates with the ERC-4337 flow:

┌─────────────┐    ┌─────────────┐    ┌─────────────┐    ┌─────────────┐
│    User     │───▶│   Bundler   │───▶│  EntryPoint │───▶│  Paymaster  │
│  (signs     │    │  (submits   │    │  (validates │    │  (pays gas, │
│   UserOp)   │    │   UserOp)   │    │   UserOp)   │    │   verifies) │
└─────────────┘    └─────────────┘    └─────────────┘    └─────────────┘
                                             │
                                             ▼
                                      ┌─────────────┐
                                      │   Account   │
                                      │  (executes  │
                                      │   action)   │
                                      └─────────────┘

Key steps:

User creates and signs a UserOperation
UserOperation includes paymasterAndData field
Bundler submits to EntryPoint
EntryPoint calls validatePaymasterUserOp on Paymaster
Paymaster validates and agrees to pay
Transaction executes
Paymaster’s deposit is debited for gas

What types of Paymasters exist?

Paymaster Type	How It Works	Use Case
Verifying Paymaster	Off-chain signature authorizes sponsorship	App-controlled sponsorship with policies
Token Paymaster	Accepts ERC-20 tokens as gas payment	Let users pay gas in stablecoins
Deposit Paymaster	Users pre-deposit funds for gas	Enterprise/institutional use
Sponsoring Paymaster	Unconditionally sponsors gas	Development, promotions

Biconomy’s MEE provides all these paymaster capabilities:

Flexible sponsorship policies
Token payment options (pay gas in USDC, DAI, etc.)
Spending limits (per transaction, total)
Plus cross-chain gas abstraction (pay on any chain with tokens from any chain)

How do I implement gas sponsorship with Biconomy?

Biconomy provides paymaster functionality through MEE (Modular Execution Environment):Step 1: Get your MEE API key from DashboardStep 2: Initialize MEE client

import { createMeeClient, toMultichainNexusAccount } from "@biconomy/abstractjs";
import { base } from "viem/chains";

const account = await toMultichainNexusAccount({
  signer: userSigner,
  chains: [base]
});

const meeClient = await createMeeClient({ account });

Step 3: Send sponsored transaction

// Get quote with sponsored gas
const quote = await meeClient.getQuote({
  instructions: [
    { calls: [{ to: contractAddress, data: encodedCall }] }
  ],
  feeToken: { address: "sponsored" }  // Gas sponsored via MEE
});

// Execute gasless transaction
const { hash } = await meeClient.executeQuote({ quote });

MEE handles all gas sponsorship automatically based on your dashboard configuration.

How do I configure sponsorship policies?

Configure policies in the Biconomy Dashboard or via API:Per-Transaction Limit:

{
  "policy": {
    "transactionLimit": {
      "maxSpendUsd": 5
    }
  }
}

Total Spending Limit:

{
  "policy": {
    "globalLimit": {
      "maxSpendUsd": 1000
    }
  }
}

How do spending limits work?

Spending limits help you control costs and prevent abuse:Per-Transaction Limits:

Set maximum gas cost per individual transaction
Prevents unexpectedly expensive operations from draining your balance

Total Limits:

Set an overall spending cap
MEE automatically stops sponsoring once the limit is reached

Configure both limits in the Biconomy Dashboard for optimal cost control.

How do I let users pay gas in tokens?

MEE supports paying gas in ERC-20 tokens (gas abstraction):

import { createMeeClient, toMultichainNexusAccount } from "@biconomy/abstractjs";
import { base } from "viem/chains";

const account = await toMultichainNexusAccount({
  signer: userSigner,
  chains: [base]
});

const meeClient = await createMeeClient({ account });

// Get quote with token payment
const quote = await meeClient.getQuote({
  instructions: [
    { calls: [{ to: contractAddress, data: calldata }] }
  ],
  // User pays gas in USDC instead of ETH
  feeToken: {
    address: "0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48", // USDC
    chainId: base.id
  }
});

const { hash } = await meeClient.executeQuote({ quote });

MEE supports cross-chain gas payment - pay for gas on any chain using tokens from any other supported chain!Supported gas payment tokens vary by chain. Common options:

USDC
USDT
DAI
WETH

Check supported gas tokens for the full list.

How do I monitor gas sponsorship usage?

Biconomy Dashboard provides:

Real-time gas spending
Contract interaction breakdown
Spending trends over time

API Access:

// Get usage statistics
const stats = await fetch(
  "https://api.biconomy.io/v1/mee/stats",
  {
    headers: { "x-api-key": API_KEY }
  }
).then(r => r.json());

console.log(stats);
// {
//   totalTransactions: 15420,
//   totalGasSponsored: "1.234",  // ETH
//   uniqueUsers: 3250,
//   topContracts: [...],
//   dailyTrend: [...]
// }

Set up alerts:

// Configure spending alerts in dashboard
const alertConfig = {
  dailySpendThreshold: "$50",
  unusualActivityThreshold: "200%",
  lowBalanceThreshold: "0.01 ETH",
  notificationChannels: ["email", "slack"]
};

What are gas sponsorship security best practices?

1. Set per-transaction limits:

{
  "policy": {
    "spendingCaps": {
      "perTransaction": "$5"
    }
  }
}

2. Set total spending caps:

{
  "policy": {
    "spendingCaps": {
      "total": "$1000"
    }
  }
}

3. Monitor for abuse:

Watch for unusual patterns
Set up anomaly alerts
Review spending regularly in the dashboard

How does MEE handle sponsorship failures?

Common failure scenarios and handling:

Scenario	Cause	Solution
”Sponsorship validation failed”	Policy rejected	Check spending limits
”Insufficient sponsorship balance”	Low balance	Top up deposit in dashboard
”Spending limit exceeded”	Transaction or total limit hit	Adjust limits in dashboard
”Quote expired”	Quote too old	Get fresh quote

Implement fallback logic:

async function sendWithFallback(instructions) {
  try {
    // Try sponsored first
    const quote = await meeClient.getQuote({
      instructions,
      feeToken: { address: "sponsored" }
    });
    return await meeClient.executeQuote({ quote });
  } catch (error) {
    if (error.message.includes("sponsorship")) {
      // Fall back to user-paid gas (in tokens)
      console.log("Sponsorship unavailable, user pays gas in USDC");
      const quote = await meeClient.getQuote({
        instructions,
        feeToken: { address: USDC_ADDRESS, chainId: base.id }
      });
      return await meeClient.executeQuote({ quote });
    }
    throw error;
  }
}

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