Stablecoin Apps Hide ETH and SOL, but Paymasters Still Fund Fees

Fee abstraction routes native-token costs to infrastructure providers, obscuring chain economics from users

Stablecoin applications can present transactions to users without mentioning Ethereum or Solana gas fees, but infrastructure providers operating paymasters and sponsors still front those costs in native assets, according to research examining fee-abstraction mechanisms across both blockchains.

The separation works through three distinct roles: user authorization, intermediary funding of execution, and network native-fee charging. On Ethereum, a paymaster maintains a native-currency deposit at the EntryPoint contract and covers operations instead of the smart account. Coinbase’s ERC-20 gas-payment flow quotes fees in USDC while the paymaster covers native gas. Alchemy’s Gas Manager fronts gas and bills separately. On Solana, an app can designate a sponsor instead of the default fee payer, the first signer. Kora packages Solana fee sponsorship into a service accepting SPL-token payment or full fee subsidy.

“Gasless” can be accurate for the customer’s wallet while still being misleading about chain economics, according to the research materials reviewed.

Visa’s Onchain Analytics dashboard tracked $1.3 trillion in adjusted stablecoin volume and 230.3 million adjusted transactions over a 30-day window ending Aug. 27. The unadjusted figures reached $6.8 trillion and 1.75 billion transactions. Retail-sized stablecoin volume below $250 per transaction totaled $7.6 billion across 158.8 million adjusted transactions. Visa’s adjusted methodology uses probabilistic labels, counts only the largest stablecoin transfer per transaction, and filters unlabeled addresses exceeding 1,000 transactions or $10 million rolling 30-day volume.

Matt Corallo, a developer and researcher, published a post on Aug. 25 examining stablecoin routing patterns and their relationship to native-token demand.

Fee mechanics and validator incentives

Ethereum burns the protocol-set base fee and sends priority fee to validators. Solana splits the base fee evenly between burning and validators, with optional priority fees going to validators. On Solana, the base fee stands at 5,000 lamports per signature.

The analytics relied on data from Allium, which labeled 3 million addresses in the Visa methodology. The two firms collaborated to isolate stablecoin activity and measure its scale relative to total network volume.

Fee abstraction concentrates the responsibility for native-token funding among a smaller set of infrastructure providers rather than distributing it across individual users. As stablecoin adoption grows on Ethereum and Solana, this mechanism may reduce direct consumer demand for ETH and SOL while shifting fee-funding obligations to the intermediaries operating paymasters and sponsors.