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Why choose to use native Ethereum for gas on your Arbitrum chain

Choosing native Ethereum refers to configuring the chain to use ETH—the native currency of Ethereum—as the gas token for paying transaction fees. This is the default option in Orbit deployments, in contrast to selecting a custom ERC-20 token for gas. The choice is set during chain deployment via genesis parameters and is immutable afterward, directly impacting how users pay for gas and how operators handle revenue and costs.

Selecting native ETH means users must hold and spend ETH for all onchain activities, simplifying the fee mechanism without additional layers like token swaps or pricers. For operators, revenue is collected directly in ETH, which can be used seamlessly for data availability (DA) costs on the parent chain (e.g., posting to Ethereum).

This option prioritizes straightforward integration with Ethereum's ecosystem, avoiding complexities associated with custom tokens. It's ideal for chains where ETH is naturally used or where minimal operational overhead is desired, such as general-purpose rollups or those focused on DeFi interoperability with Ethereum.

Key Concepts​

  • Gas and Fees in Arbitrum: Gas measures computational work for transactions and executions, with fees equaling gas used times gas price. These cover sequencer operations, data posting to the parent chain (e.g., Ethereum), and network upkeep. In native ETH setups, all fees are denominated, paid, and settled in ETH.
  • Native ETH as Gas Token: The chain validates transactions against users' ETH balances, deducting fees directly in ETH. No token conversions are needed, aligning the chain's economics with Ethereum's standard model.

How Fees Are Handled​

  • Gas calculations and deductions occur directly in ETH during transaction processing.
  • No conversions or hedging are required for DA payments, as ETH is the native asset on the parent chain.
  • Fees remain subject to ETH's price volatility, which can affect user predictability.

Compatibility with Chain Types​

  • Works with all Orbit DA modes, including Rollup (posting to Ethereum), AnyTrust (DAC-based), and Alt-DA (e.g., Celestia), without restrictions.
  • No special setup beyond standard deployment tools like the Orbit portal or scripts.

How It Differs from Custom Gas Tokens​

  • Custom Tokens: Fees are paid in an ERC-20 (e.g., USDC or a project token), requiring users to hold that token instead of ETH. Operators must convert collected tokens to ETH for DA costs, which introduces volatility risks and necessitates mechanisms like pricer contracts for exchange rates.
  • Native ETH: Eliminates conversions, swaps, and associated risks, but requires users to manage ETH specifically for gas, which may not align with app-specific ecosystems.

Pros of using native ETH​

  • Simplicity and familiarity for users: Native ETH is the default gas token, making it easier for users already in the Ethereum ecosystem to interact with the chain without needing to acquire or bridge a new token. This reduces onboarding friction and leverages existing wallets and tools.
  • Enhanced security and trust: By using ETH, the chain benefits from Ethereum's established security, decentralized, and market liquidity, which can build user confidence as ETH is a well-trusted asset.
  • Seamless interoperability: Intergrates directly with the broader Ethereum ecosystem, including DeFi protocols, exchanges, and bridges, simplifying development and reducing the need for additional custom integrations.
  • Default configuration: As the standard option for Arbitrum chains, it requires no additional setup for custom token configurations, speeding up deployment.

Cons of using native ETH​

  • Price volatility: Gas fees are tied to ETH's market price, which can fluctuate significantly, leading to unpredictable transaction costs for users.
  • Limited customization: You cannot tailor tokenomics (e.g., inflation, rewards, or deflation mechanisms) to fit your chain's specific needs, missing opportunities to incentivize behaviors like staking or ecosystem participation.
  • Potential for higher costs in certain cases: For high-volume applications like gaming or social networks, ETH-based fees might be more expensive compared to a custom token designed for lower costs.
  • Less ecosystem control: Without a custom token, there's no ability to create value capture mechanisms or partnerships centered around a native asset, which could limit long-term growth and user engagement in niche ecosystems.

Examples​

  • Standard Arbitrum chains like Arbitrum One use native ETH for broad Ethereum compatibility and simplicity.
  • In contrast, some Orbit chains opt for custom tokens like bridged USDC for stable fees, but native ETH suits projects prioritizing Ethereum alignment over custom economics.

This default choice emphasizes reliability and Ethereum-native operations within Arbitrum's modular framework. For deployment details, consult the official docs, or your RaaS; a list of RaaSes is on the Third-party providers page.