Written by Xiao Bing
On September 7, a tweet spread on X: "The next major upgrade to Ethereum will allow users to pay transaction fees with stablecoins instead of ETH."
The comments section exploded immediately. Leo Lanza from the Ethereum community responded within an hour with a crucial clarification: “The protocol will not accept USDC as gas. Ethereum’s gas settlement still requires ETH; it’s just that, from the user’s perspective, they’re paying with USDC.”
What's the truth?
Frame Transactions: What has a transaction been split into?
At the Ethereum Core Developers Meeting (ACDE) on August 27, EIP-8141 was officially upgraded from "Consider for Inclusion" (CFI) to "Scheduled for Inclusion" (SFI), formally slated for the 2027 Hegotá hard fork—the next major protocol upgrade for Ethereum following Glamsterdam later this year.
EIP-8141, fully named "Frame Transactions," was jointly proposed by ten authors, including Vitalik Buterin. Its core change can be summarized in one sentence: splitting a single transaction from an indivisible unit into up to 64 programmable "frames," each handling distinct logic—such as identity verification, gas payment, and operation execution—while remaining independently functional yet atomically bound together.
After splitting, the most direct change is that the account sending assets no longer needs to be the same as the account paying for gas.
A payment app can cover gas fees on behalf of users; a DeFi protocol can bundle gas costs into its service fees; a wallet can deduct an equivalent amount from the user’s stablecoin balance and use its own ETH reserves to settle on-chain transaction fees.
The user's experience was "paying gas with USDC," but the protocol received ETH from start to finish.
The inherent cost of each frame transaction is approximately 12,000 gas, with an additional ~475 gas per additional frame. This overhead is negligible compared to the flexibility it enables.
Vitalik wrote in an X post on September 6 that work on Frame has been "quietly progressing over the past few months." However, note that EIP-8141 is still in Draft status, and the specific specification design may still change, with at least a year remaining before actual activation.
What is the difference between this and ERC-4337?
If "Gas Fee Sponsorship" sounds familiar, your intuition is correct.
ERC-4337 was deployed on the Ethereum mainnet in March 2023, enabling a user experience similar to EIP-8141 through a combination of smart contract wallets, Bundlers, and Paymasters: users sign UserOperations, Bundlers bundle and submit them, and Paymasters cover the ETH gas fees on behalf of users. To date, ERC-4337 has supported over 40 million smart accounts and more than 100 million UserOperations.
EIP-8141 aims to address the architectural shortcomings of ERC-4337, with highly overlapping functional goals.
The issue with ERC-4337 is that it is "add-on" in nature: the entire system operates outside the Ethereum protocol—UserOperations traverse a separate alternative mempool, Bundlers are off-chain actors, and the EntryPoint contract functions as a centralized singleton. As a result, each operation executed via ERC-4337 incurs gas costs approximately 20%-40% higher than standard EOA transactions, and the Bundler ecosystem is highly concentrated, with the top three providers (Pimlico, Stackup, and Coinbase) handling about 78% of all UserOperations.
The goal of EIP-8141 is to move these capabilities from an "add-on layer above the protocol" into the protocol itself. Frame Transactions are a native Ethereum transaction type (type 0x06), requiring no Bundler, no alternative mempool, and no EntryPoint contract. Gas sponsorship, key rotation, multisig, social recovery, and even post-quantum signature schemes can become native capabilities of Ethereum’s account system, rather than peripheral features implemented separately by wallet providers.
Will the demand for ETH really be weakened?
We've reached the core issue.
That tweet caused anxiety because many people automatically reasoned like this: users no longer need to hold ETH → users don’t need to buy ETH → demand for ETH has collapsed.
Each arrow in this chain falls apart under scrutiny.
EIP-8141 changes the distribution structure of ETH demand, not the total amount.
Under the current model, every user wishing to perform any action on Ethereum must first buy a small amount of ETH and hold it in their wallet to pay for gas. This means that ETH gas demand is scattered across millions of fragmented individual accounts, each holding perhaps only tens of dollars in ETH, resulting in large amounts of capital being locked up as "inactive gas reserves."
EIP-8141 (along with the already operational ERC-4337 Paymaster) changes the fact that these fragmented gas requirements are consolidated into the hands of a few wallet operators, Paymaster service providers, and application developers. These entities must hold large amounts of ETH to fulfill their sponsorship obligations, and because their gas consumption frequency far exceeds that of average users, their ETH turnover rate is also significantly higher.
Think of it like this: it’s as if a highway switched from manual toll booths to an ETC system. Before the switch, every driver had to carry cash; after the switch, drivers no longer need cash, but ETC operators must settle large volumes with the highway authority. The total toll revenue remains unchanged, but the distribution of who holds the coins shifts from millions of individual wallets to the pooled accounts of dozens of operators.
Validators still receive ETH in the end. This remains unchanged at the protocol level. The base fee burning mechanism of EIP-1559 is also unaffected—base fees for every transaction are still priced and burned in ETH.
Therefore, a more precise description is: EIP-8141 may reduce retail demand for small individual ETH purchases, but simultaneously consolidate this demand into the hands of professional infrastructure operators, creating larger-scale, higher-frequency wholesale purchases.
True 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 → Wallet or Paymaster service providers collect users' stablecoins and purchase ETH in bulk → The application covers gas costs using its own revenue or user payments → Validators receive ETH and execute the burn.
Who are the beneficiaries and who are the losers in this chain?
The application layer benefits the most.
A DeFi protocol or payment app previously had a step in its user conversion funnel requiring users to "first 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 estimate suggests that ERC-4337 alone generated 20 million new smart accounts in 2024, representing a sevenfold annual growth rate; the native integration of EIP-8141 could further accelerate this trend.
Stablecoin issuers also benefit. If gas fee sponsorship becomes the norm, users can perform all on-chain operations by simply holding USDC or USDT, elevating stablecoins from "passive store-of-value assets" to "active gas fuel." In the process of Paymasters purchasing ETH on-chain to pay for gas fees, a continuous exchange flow from stablecoins to ETH is effectively created.
For ETH, this is a structural shift from retail holdings to institutional holdings. Total demand may not decline (and could even rise due to improved user conversion rates), but the profile of holders will change fundamentally. Previously, millions of individual users each held small amounts of ETH; going forward, dozens of paymasters and wallet operators will centrally hold large amounts of ETH.
This means ETH’s price formation mechanism will also change. Fragmented retail buying is like light rain—continuous but weak, unlikely to cause price shocks; concentrated institutional buying, however, comes in bulk orders that may create significant buying pressure during peaks in gas demand, but could also lead to concentrated selling during periods of low demand. As a result, ETH’s volatility structure may shift to resemble more closely the wholesale pricing model of commodities.