Will Ethereum allow stablecoins to pay for Gas, and will ETH be "abandoned"?

Author: Little Cake

On September 7, a tweet spread on X: "The next major upgrade of Ethereum will allow users to pay transaction fees with stablecoins instead of ETH."

The comment section immediately exploded, with Ethereum community member Leo Lanza responding within an hour with a key correction: "The protocol layer will not accept USDC as Gas. Ethereum's Gas settlement remains ETH; it's just that from the user's perspective, they are paying with USDC."

What is the truth?

Frame Transactions: What is a transaction broken down into?

At the Ethereum Core Developers Meeting (ACDE) on August 27, EIP-8141 officially upgraded from "Considered for Inclusion" (CFI) to "Scheduled for Inclusion" (SFI), entering the official schedule for the 2027 Hegotá hard fork. This is the next major protocol upgrade for Ethereum following Glamsterdam later this year.

EIP-8141 is fully named "Frame Transactions," jointly proposed by ten authors including Vitalik Buterin. Its core change can be summarized in one sentence: breaking a transaction from "a whole indivisible operation" into up to 64 programmable "frames," each responsible for different logic, verifying identity, paying Gas, executing operations, all independently yet atomically bound.

Once broken down, the most direct change is: the account sending assets and the account paying Gas no longer have to be the same.

A payment application can cover Gas fees for users; a DeFi protocol can include Gas costs in its service fees; a wallet can deduct an equivalent amount from the user's stablecoin balance and then settle on-chain fees with its own reserves of ETH.

The user's experience is "paid Gas with USDC," but what the protocol layer receives, from start to finish, is still ETH.

The inherent cost of each frame transaction is about 12,000 gas, with an additional approximately 475 gas for each added frame. This overhead is negligible compared to the flexibility it releases.

Vitalik wrote in a post on X on September 6 that the work on Frame has "quietly progressed over the past few months." However, it should be noted that EIP-8141 is still in draft status, and the specific design of the specifications may still change, with at least a year until actual activation.

How is this different from ERC-4337?

If you think "Gas payment on behalf" sounds familiar, your intuition is correct.

ERC-4337 was deployed on the Ethereum mainnet back in March 2023. It achieves a user experience similar to EIP-8141 through a combination of smart contract wallets, Bundlers, and Paymasters: users sign UserOperations, Bundlers package and submit them, and Paymasters pay ETH Gas fees on behalf of users. As of now, ERC-4337 has supported over 40 million smart accounts and over 100 million UserOperations.

EIP-8141 aims to replace the architectural flaws of ERC-4337, with both having highly overlapping functional goals.

The problem with ERC-4337 is that it is "external," with the entire system operating outside the Ethereum protocol: UserOperations go through an independent alternative memory pool (alt-mempool), Bundlers are off-chain roles, and the EntryPoint contract is a singleton central node. This means that every operation executed through ERC-4337 incurs Gas costs about 20%-40% higher than ordinary EOA transactions, and the Bundler ecosystem is highly centralized, with the top three operators (Pimlico, Stackup, Coinbase) handling about 78% of UserOperation volume.

EIP-8141's goal is to move this capability from "an additional layer above the protocol" to "the protocol itself." Frame Transactions are a native transaction type of Ethereum (type 0x06), requiring no Bundlers, no alternative memory pools, and no EntryPoint contracts. Gas payment on behalf, key rotation, multi-signature, social recovery, and even quantum-resistant signature schemes can all become native capabilities of the Ethereum account system, rather than peripheral functions implemented by wallet vendors.

Will the demand for ETH really be weakened?

Now to the core issue.

The reason that tweet sparked anxiety is that many people's subconscious reasoning chain is as follows: Users no longer need to hold ETH → Users no longer need to buy ETH → The demand side for ETH collapses.

Each arrow in this chain does not hold up to scrutiny.

EIP-8141 changes the distribution structure of ETH demand, not the total amount.

Under the current model, every user who wants to perform any operation on Ethereum must first buy a little ETH to keep in their wallet for paying Gas. This means that the demand for ETH as Gas is dispersed across millions of individual accounts, each with ETH balances that may only be a few dozen dollars, with a large amount of funds locked up as "inactive Gas reserves."

EIP-8141 (and the already operational ERC-4337 Paymaster) changes this: these scattered Gas demands are aggregated into the hands of a few wallet operators, Paymaster service providers, and application developers. They need to hold large amounts of ETH to fulfill payment obligations, and since their Gas consumption frequency is much higher than that of ordinary users, their ETH turnover rate is also higher.

To put it another way: it's like switching a highway from manual toll booths to an ETC system. Before the switch, every driver entering the highway had to carry change; after the switch, drivers no longer need to carry cash, but ETC operators need to settle large amounts with the highway group. The total toll revenue of the highway remains unchanged, but the distribution of "who holds the coins" shifts from millions of wallets to the funds of a few operators.

What validators ultimately receive is still ETH. This aspect has not changed at the protocol level. The base fee destruction mechanism of EIP-1559 is also unaffected; the base fee for each transaction is still denominated in ETH and destroyed.

So a more precise description is: EIP-8141 may reduce the retail demand of "each user must buy a little ETH," but at the same time concentrates this demand into the hands of professional infrastructure operators, forming larger and more frequent wholesale purchases.

Real Value Capture Migration

If EIP-8141 is activated as planned in 2027, the Gas value chain on Ethereum will become a four-layer structure:

Users hold stablecoins or other ERC-20 assets → Wallets or Paymaster service providers collect users' stablecoins and aggregate ETH purchases → Applications cover Gas costs with their own revenue or user payments → Validators receive ETH and execute destruction.

In this chain, who are the beneficiaries and who are the losers?

The biggest beneficiaries are at the application layer.

A DeFi protocol or payment application previously had a step in its user conversion funnel called "first go buy some ETH and put it in your wallet," which deterred many potential users who already held stablecoins. EIP-8141 eliminates this friction point, directly improving the conversion rate from "registration" to "first transaction." The Ethereum official estimates that ERC-4337 alone brought 20 million new smart accounts in 2024, with a 7-fold annual growth rate, and the native EIP-8141 may further accelerate this trend.

Stablecoin issuers also benefit. If Gas payment on behalf becomes the norm, users can complete all on-chain operations by default holding USDC or USDT, upgrading stablecoins from "passive storage assets" to "active Gas fuel." During the process of Paymasters purchasing ETH on-chain to pay Gas, a continuous exchange flow from stablecoins to ETH is effectively created.

For ETH, this represents a structural migration "from retail holdings to institutional holdings." Total demand may not necessarily decrease (and could even increase due to improved user conversion rates), but the profile of holders will fundamentally change. Previously, millions of ordinary users each held a small amount of ETH; in the future, dozens of Paymasters and wallet operators will hold large amounts of ETH.

This means that the price formation mechanism for ETH will also change. Scattered retail purchases are like a drizzle, continuous but weak, and will not create price shocks; concentrated institutional purchases are like bulk orders, which may create more significant buying pressure during Gas demand peaks, but may also lead to more concentrated sell-offs during demand troughs. The volatility structure of ETH may thus change, becoming more similar to the wholesale pricing model of commodities.