Why are Layer2 tokens not used to pay for network GAS?

Written by: Andrew Huang

Translation: Huohuo, vernacular blockchain

Why shouldn't your protocol's native token be used as Rollup's gas token?

At @conduitxyz, we've been lucky enough to talk to hundreds of teams and protocols about launching their own Rollups. The most common question we get is: "Can we allow our users to pay for gas with our native token?"

Our answer ⬇️

**It is not suitable if there is no new net demand for Token. **

If you chart the flow of tokens, there won't be any net demand. Users buy your Tokens to connect to your Rollup. When they pay the gas fee, the sequence server will sell these tokens in an attempt to cover data availability (DA) costs, which are only denominated in ETH.

If your Tokengas fees cannot cover Data Availability (DA) costs, then your protocol will pay for the remaining DA costs. Essentially, you subsidize usage on your Rollup, but still pay DA costs in ETH.

In the long run, cross-domain interoperability and MEV may become the main revenue model of Rollup sequence server. By forcing your Rollup users to acquire your tokens, you are making it harder for those builders/searchers to extract MEV on your chain.

Unlike holding only one token (ETH), they need to hold N tokens on N rollups, which greatly complicates their token inventory strategy.

In fact, for some systems, like Optimism's Superchain, having your own token as a gas token can make you incompatible, breaking down access to your chain and isolating your Rollup from the wider ecosystem Come.

In the end, this adds a cumbersome user experience burden to users. All users hold ETH because that is the native token of Ethereum. Requiring them to first purchase your tokens in order to use your Rollup creates another barrier to using your application.

May be reasonable if:

If interoperability is not important to you, and there is net demand for your token (or a stablecoin), then this might work. An example might be @eco, whose core users are not crypto-native.

Requiring their users to acquire ether in addition to @ecostablecoin would add an additional UX burden. Essentially, this is the exact opposite of the crypto-native user experience.

Perhaps a more sustainable method is to return the value to the Token of the protocol through the repurchase of the excess serial server revenue obtained by your Rollup.

This could create a more sustainable demand for protocol tokens from transaction volume on Rollups and help create a stronger alignment of incentives between users and the protocol.

Of course, you can also use meta-transactions, relayers, or account abstractions to mimic the way users pay gas fees with protocol tokens.