Only 10.21% of the bundlers are profitable. Rest are yet to cross the $10 mark in profit. The complete play is around gas prices.
So in this post, let's understand the different gas parameters in 4337 and show what made the bundlers actually earn in a couple of sample transactions.
As per the report Development of 4337, published in September 2023 by SixDegree only 10.21% of the bundlers have made more than $10 in earnings.
Introduction
ERC-4337 Introduced multiple new gas parameters that take a bit of time to wrap your hand around currently. One needs to deep dive into the entrypoint smart contract code and bundler implementations to see how the values impact the actual processing. In this post, we will learn the meaning and intent behind the values relevant to a UserOp & their relation to the actual blockchain transaction or bundler earnings.
We will later use 2 bundles (or transactions) submitted on the Ethereum mainnet and use their values for our reference. There's no particular reason for choosing these two specifically, apart from the fact that one has a single UserOperation in the bundler while the other has 2 UserOperations in the bundle.
Defining Gas Parameters
First, let's define the various gas parameters that aid in calculating the cost at a UserOperation and Bundle Level.
- UserOp Level: Values from UserOperation Input or UserOperation Event Log are sufficient.
- Bundle Level: Needs values from TransactionInput and TransactionReceipt.
Note: You may not get the differences completely just yet. Please bear through till the next section where we use real values from UserOps/Bundles submitted on-chain and show the impact of these fields.
UserOperation Related Parameters
These impact the processing of an individual UserOperation and the gas fee paid for its execution.
| Parameter | Source | Description | |
|---|---|---|---|
| A | callGasLimit | UserOperation Calldata | Max unit of Gas that can be consumed by the Exec.call() triggered inside the Entrypoint contract for doing the operation desired by the wallet owner. |
| B | verificationGasLimit | UserOperation Calldata | Max unit of Gas that can be consumed for checks carried out by the entrypoint before & after the execution of Exec.call() statement. These include deploying the Smart Contract Wallet when initcode is present, confirming validness of the UserOp and paymaster's support for the UserOp and triggering postOp on paymaster to validate successful completion of the userOp and fee sponsor. |
| C | preVerificationGas | UserOperation Calldata | This is a fixed amount of Gas Units compensated to the Bundler for performing checks before submitting the UserOperation to the blockchain. |
| D | maxFeePerGas | UserOperation Calldata | The maximum price (in wei) per unit of Gas that can be charged for the UserOp, irrespective of the baseFee of the block. |
| E | maxPriorityFeeGas | UserOperation Calldata | The maximum additional price (in wei) per unit of Gas that can be used to incentivize block builders to accept the transaction over the other pending transactions. At UserOp level, it's to incentivize the bundler. The actual maxPriorityFee value a bundler submits for a bundle is not tied to this value directly. |
| F | actualGasCost | UserOperation Event Log | This the amount of Ether (in wei) the sender (or paymaster) is charged for the complete execution of the UserOp and gets transferred to the beneficiary at the end of the operation |
| G | actualGasUsed | UserOperation Event Log | Total Gas Units Consumed in processing the entrypoint through the entrypoint plus the preVerificationGas value shared in the UserOperation Input |
- You can refer to the previous article on UserOp calldata to know all the UserOperation calldata fields
Special Commmon Parameters
These impact the gas fee calculation at UserOperation as well as Bundle/Transaction Level.
| Parameter | Source | Description | |
|---|---|---|---|
| H | baseFeePerGas | custom | This is the minimum Ether (in wei) per Gas Unit that needs to be paid for accept a transaction in a block by a miner and changes based on the number of people attempting to submit a transaction to the ethereum chain. Currently this value is not directly exposed in Ethereum APIs can you have custom setup for this, or derive from other values. |
Bundle/Transaction Level Parameters
These impact the processing of the entire transaction reprenting a Bundle and the gas fee paid for its execution by the bundler, irrespective of what is charged to the individual wallet owner.
| Parameter | Source | Description | |
|---|---|---|---|
| I | gasLimit | TransactionInput | Maximum amount of Gas That can be consumed by the entire Transaction |
| J | maxPriorityFeePerGas | TransactionInput | The maximum amount of Eth per Gas Unit given as tip to the validator to include the transaction as per EIP-1559 |
| K | gasUsed | TransactionReceipt | Total amount of Gas Units consumed by the Transaction |
| L | effectiveGasPrice | TransactionReceipt | This is the actual Gas Price In Ether paid per Unit of Gas Consumed by the bundler. It's baseFeePerGas + maxPriorityFeePerGas |
Fees in Sample Bundles and UserOps
Let's take two sample transactions and what the Wallet Owners were Charged, what the bundler paid as Gas Fee, and the net profit (or loss) for the bundler.
Transaction 1: Bundle with 1 UserOperation
The links to further explore the transaction/UserOperation details are:
- UserOperation on JiffyScan
- Bundle on JiffyScan
- Transaction on Etherscan
First Let's Show all the values. Then we show the fees paid and the bundler markup.
UserOperation Level
| Parameter | Source | Value for UserOp_1 | |
|---|---|---|---|
| A1 | callGasLimit | UserOperation Calldata | 39,551 Gas Units |
| B1 | verificationGasLimit | UserOperation Calldata | 100,000 Gas Units |
| C1 | preVerificationGas | UserOperation Calldata | 49,264 Gas Units |
| D1 | maxFeePerGas | UserOperation Calldata | 35,579,741,989 (wei/Gas) |
| E1 | maxPriorityFeeGas | UserOperation Calldata | 54,687,739 (wei/Gas) |
| F1 | actualGasCost | UserOperation Event Log | 2,103,274,083,204,352 (wei/Gas) |
| G1 | actualGasUsed | UserOperation Event Log | 107,648 Gas Units |
Common Parameters
| Parameter | Source | Value | |
|---|---|---|---|
| H1 | baseFeePerGas | custom | 19,483,753,135 (wei/Gas) |
Bundle Level
| Parameter | Source | Value | |
|---|---|---|---|
| I1 | gasLimit | TransactionInput | 226,976 Gas Units |
| J1 | maxPriorityFeePerGas | TransactionInput | 48,396,233 (wei/Gas) |
| K1 | gasUsed | TransactionReceipt | 102,924 Gas Units |
| L1 | effectiveGasPrice | TransactionReceipt | 19,532,149,368 (wei/Gas) |
Fee & Markup Calculations
A few observations we should make from the above data:
- Gas Units Markup: The gas consumed by the UserOp (
G1 = 107,648 Gas Units) is higher than the gas consumed in the transaction (K1 = 102,924 Gas Units). This is because the UserOperation gas calculation adds the fixed preVerificationGas (C1) value to the actual consumption, to account for the parts that can't be calculated. Thus, ~4.589% extra Gas Units were charged. In a perfect bundler, this value is zero. - Gas Price Paid by the Wallet Owner: The wallet owner paid gas fee (
F1)/gas used (G1) =2,103,274,083,204,352 / 107,648=19,538,440,874 wei/Gas. This value is exactly equal to baseFee for the block (H1) + priority fee for the bundler (E1), which is how it's calculated in the smart contract. ThusF1/G1 = H1+E1orF1 = (H1+E1) * G1. - Effective Gas Price: Similar to the Gas Price paid by the wallet, the gas price for the Bundle is the sum of the base fee for the block (
H1) and the priority for the validator (J1). ThusL1 = H1 + J1. - Bundler Gas Fee Markup: Now, since the two gas costs are different, the bundler charged a markup of
(H1+E1)/(H1+J1)=19,538,440,874/19,532,149,368 = 1.0003221102748or0.032%markup. So did the bundler make only 0.032% profit? Not quite! - Fee paid by Wallet Owner: As shown in
F1, the wallet owner was charged a total of0.002103274083204352 ETH, which is approximately3.527 USDas per the ETH price on that day. - Fee paid by Bundler: This is essentially the total gas consumed (
K1) * price per gas (L1) =102,924 * 19,532,149,368 = 0.002010326941552032 ETH, approximately$3.34as per the ETH price on that day. - Bundler Markup: This is the ratio of the last two values:
0.002103274083204352 ETH/0.002010326941552032 ETH=1.04623483859or ~4.62%profit.
Thus even though the bundler charged only a 0.032% the markup on the actual Gas Price paid, as there were additional gas units, the net markup was ~4.62%. (The net ratio can be calculated as (G1/K1)*((H1+E1)/(H1+J1))). When this value is greater than 1, the bundler makes a profit, or else a loss.
Let's see how to calculate these values in case of more than 1 UserOperation in a bundle.
Transaction 2: Bundle with 2 UserOperation
The links to further explore the transaction/UserOperation details are:
- UserOperation 1 on JiffyScan
- UserOperation 2 on JiffyScan
- Bundle on JiffyScan
- Transaction on Etherscan
UserOperation Level Fields
| Parameter | Source | UserOp_1 | UserOp_2 | |
|---|---|---|---|---|
| A2 | callGasLimit | UserOperation Calldata | 57307 Gas Units | 300,000 Gas Units |
| B2 | verificationGasLimit | UserOperation Calldata | 150,000 Gas Units | 150,000 Gas Units |
| C2 | preVerificationGas | UserOperation Calldata | 46,444 Gas Units | 51,232 Gas Units |
| D2 | maxFeePerGas | UserOperation Calldata | 13,597,415,618 (wei/Gas) | 13,597,415,618 (wei/Gas) |
| E2 | maxPriorityFeeGas | UserOperation Calldata | 1,500,000,000 (wei/Gas) | 1,500,000,000 (wei/Gas) |
| F2 | actualGasCost | UserOperation Event Log | 818,160,397,184,746 (wei/Gas) | 1,719,564,005,679,058 (wei/Gas) |
| G2 | actualGasUsed | UserOperation Event Log | 112,763 Gas Units | 236,999 Gas Units |
Common Fields
| Parameter | Source | Value | |
|---|---|---|---|
| H2 | baseFeePerGas | custom | 5,755,574,942 (wei/Gas) |
Bundle Level Fields
| Parameter | Source | Value | |
|---|---|---|---|
| I2 | gasLimit | TransactionInput | 732,603 Gas Units |
| J2 | maxPriorityFeePerGas | TransactionInput | 100,000,000 (wei/Gas) |
| K2 | gasUsed | TransactionReceipt | 346,938 Gas Units |
| L2 | effectiveGasPrice | TransactionReceipt | 5,855,574,942 (wei/Gas) |
Fee & Markup Calculations
Let's see how the values discussed before change when there are multiple UserOperations in the Bundle:
- Gas Units Markup: The gas consumed by the UserOps to calculate the markup is the sum of the two values (
G2_1 + G2_2 = 112,763 + 236,999 = 349,762 Gas Units). The gas consumed in the transaction (K2 = 346,938 Gas Units). The gas Units Markup is349,762/346,938 = 1.008139782901or ~0.814%. Less than a fifth of the previous bundle. - Gas Price Paid by the Wallet Owner: The wallet owners paid
F2_1/G2_1 = 818,160,397,184,746 / 112,763andF2_2/G2_2 = 1,719,564,005,679,058 / 236,999. Here both result in7,255,574,942 wei/Gas, since the priority feeE2_1andE2_2is the same. In the future, a bundler could provide different values to different UserOps to be competitive. As previously, this value is equal to the sum of the base fee for the block (H2) andpriority fee to bundler(B2). - Effective Gas Price: Similar to the Gas price by the wallet, the gas price for the Bundle is the sum of the base fee for the block (
H2) and the priority for the validator (J2). ThusL2 = H2 + J2. - Bundler Gas Fee Markup: Now, since the priority fee for both the UserOperations is the same, the bundler charged a markup of
(H2+E2)/(H2+J2)=(5,755,574,942+1,500,000,000)/(5,855,574,942) = 1.2390883925or a massive23.908%markup. If the priority fees for the UserOperations were different, then you would have to do a weighted average of the gas units consumed by each to get the effective gas markup, or calculate per UserOperation gas markup and do a weighted average in the overall markup calculation. - Fee paid by Wallet Owner: As shown in
F2_1andF2_2, the wallet owners were charged a total of0.000818160397184746 ETHand0.001719564005679058 ETH, adding to0.002537724402863804, which is approximately4.176 USDas per the ETH price on that day. - Fee paid by Bundler: The total gas consumed (
K2) * price per gas (L2) =346,938 * 5,855,574,942 = 0.002031521459227596 ETH, approximately$3.34as per the ETH price on that day. - Bundler Markup: This is the ratio of the last two values:
0.002537724402863804/0.002031521459227596 = 1.249174303or ~24.917%profit.
Thus the bundler charged a markup of 0.814% on the Gas units and ~23.908% on the gas price. The net profit was a sweet 24.917%.
What's Next
Check out a couple of Bundles and UserOperations, and their fees on JiffyScan to distill the information.
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Note: If you need real-time data on 4337, do check out our leading API.
We will be releasing more deep dives, walkthroughs, and quickstart tutorials for 4337 regularly in the coming weeks. Follow me on Twitter or JiffyScan to stay updated.