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config-custom-gas-token

One key feature is the ability to use an ERC-20 token (other than ETH) as the native gas token for transaction fees.

Pros​

  • Enhanced token utility and demand: Using a custom ERC-20 token for gas fees creates inherent utility and constant demand for the project's native token, driving value accrual through practical use rather than speculation. This utility is particularly beneficial for ecosystems like gaming or DeFi, where it can support in-app economies and incentivize network participation.
  • Internalized economic value: Retention of transaction fees within the ecosystem, creating a sustainable model where the community captures the value generated by network activity, rather than relying on external tokens like ETH.
  • Improved user experience and onboarding: Users can pay fees with a single native token, eliminating the need to manage multiple assets (e.g., acquiring ETH separately). Using a single token can reduce friction, simplifying fee estimation, and enabling features like gas subsidies where projects pay fees on behalf of users, which is ideal for mainstream adoption in gaming or social platforms.
  • Unified brand and ecosystem identity: Interactions stay within the project's token economy, reinforcing branding and immersion (e.g., in-game currencies handling all fees).
  • Stability and predictability (with stablecoins): Using a stable token like USDC mitigates volatility in transaction costs compared to ETH, providing consistent and affordable fees.
  • Integration with existing tools: Native implementation in Arbitrum Orbit ensures compatibility with EVM tooling, deterministic gas accounting, and seamless deployment.

Cons​

  • Limited Flexibility (Native Implementation): Once deployed, it's difficult to support multiple gas tokens or switch tokens, requiring users to acquire the specific ERC-20 token, which can complicate onboarding and limit ecosystem diversity.
  • Potential sell pressure and economic risks: Fees must be converted to the parent chain's token (e.g., ETH) for data availability costs, creating systematic sell pressure on the custom token. Significant price declines (e.g., 50%) could lead to operational deficits, necessitating advanced economic modeling for forecasting, hedging, and reserve management.
  • Compatibility issues: May not work well with applications or tools expecting ETH, potentially impacting integration with broader Ethereum ecosystems.
  • Increased complexity (account abstraction implementation): This adds infrastructure, such as paymasters and bundlers, which complicates gas estimation, transaction flows, and tooling configuration (e.g., for explorers or indexers), with the risk of inconsistent adoption.
  • Migration challenges: Changing or migrating the gas token post-deployment involves high technical risks, including contract updates, chain pauses, and potential loss of funds.
  • Requirements and limitations: The token must meet specific criteria (e.g., standard ERC-20). While supported in Orbit, it relies on chain-wide adoption, which may not be suitable for all cases.