Custom Gas Tokens Explained: What Rollup Operators Need to Know

Custom gas tokens can give rollup operators more control over their chain’s user experience and token utility. Over the last year, they’ve also become more and more popular for rollups, as cheaper data availability (DA) options have made them more economically feasible.

Conduit-powered rollups using custom gas tokens include:

• Blackbird: $F2 token
• Jetstream (formerly known as CVEX): $CVXG token
• Gravity: $G token 
• DIA Lasernet: $DIA
• Plume: $PLUME token 

Below, we’ll explain what custom gas tokens are, why they can be beneficial for rollups, and how they’re implemented.

What are custom gas tokens? Using ERC-20s for transaction fees

In the Ethereum ecosystem, the standard architecture is for gas fees on rollups to be paid in ETH – just like on Ethereum mainnet. But that doesn’t have to be the case. With a custom gas token, rollup operators can choose a different ERC-20 token for users to pay gas fees. Many teams opt to use their project or ecosystem’s native token, but others choose existing tokens or create a new, separate gas token specifically for this purpose.

Custom gas tokens have become much more economical recently with the embrace of cheaper alt-DA solutions. Why? Rollup operators have to convert their custom gas token earnings into ETH in order to pay for DA. If DA is expensive, as it historically has been on Ethereum mainnet, then they can lose money swapping their custom gas token for ETH during periods of volatility. But with solutions like Celestia, EigenDA, and AnyTrust, DA costs are practically negligible, so volatility isn’t as much of a concern.

As we’ll explore below, custom gas tokens can improve rollup UX by letting users pay for gas in a token they already hold as a result of using your chain, without the need to constantly acquire more ETH. Custom gas tokens can also boost tokenomics by giving the token inherent utility. However, there are several factors to consider when deciding when and how to implement a custom gas token. 

Benefits of a custom gas token

Custom gas tokens can improve UX, tokenomics, and day-to-day operations for rollup owners in several ways.

Better tokenomics

There’s a growing consensus that projects’ tokens need some kind of utility or value accrual mechanism to be worth launching. Using your project token as a custom gas token is an easy way to provide that. Gas payment is an obvious utility that gives users a reason to hold and transact with your token. If your DA costs are low and your chain is profitable, you also won’t need to swap the tokens you receive as gas revenue for ETH very often. You can just let the token pile up in your sequencer, creating a demand sink that pushes the token’s value upward. 

Improved UX: Users don’t need to keep ETH onhand 

A custom gas token also means that users don’t need to hold ETH on your chain at all times in order to transact. This is especially beneficial for appchains that don’t have any organic need for ETH – many onchain games would fall into this category. If gas payments are the only reason users would need ETH on your chain, then a custom gas token – especially one that has other uses on your chain – can be more convenient for them.

Airdrop-based onboarding

Rollups can airdrop their custom gas token to potential new users to incentivize them to try out their chain. In addition to subsidizing new users, the airdrop tactic also makes onboarding easier by ensuring they have gas money as soon as they bridge over. If your chain is profitable, you could easily use sequencer revenue to do this and accelerate growth.

Permissioning and compliance

Permissioning mechanisms such as ERC-3643 allow token issuers to decide who’s allowed to hold and spend their token. If you implement that kind of rule on your custom gas token, you can effectively control who’s allowed to bridge to your chain. This presents an opportunity for traditional financial institutions and other projects operating in regulated areas to put up compliance guardrails by controlling who can use their rollup.

Native yield

If you use a yield-bearing asset as your custom gas token, you can enable users to earn yield on the funds on the assets bridged to your rollup. This lowers the opportunity cost of using your chain, giving users more incentive to try it out. While some chains like Blast have implemented native yield while still using ETH as a gas token, setting a yield-earning token as the gas token provides a simpler, more direct path.

Using a stablecoin as a custom gas token

Variability in the price of a custom gas token can lead to volatile fees. Using a stablecoin as the native token means that fees are predictable and easier to forecast. It's also much simpler from an accounting perspective, since paying for gas using a non-stablecoin incurs a taxable event for each transaction.

Possible drawbacks of a custom gas token

The biggest potential drawbacks of a custom gas token have to do with infrastructure constraints: namely around DA and rollup frameworks.

• DA: As we’ve noted above, a custom gas token becomes more difficult to manage economically if you use Ethereum for DA. Since it’s more expensive, you may lose money during periods of volatility or if your token is trending down in value versus ETH. You would likely need to project future volatility and hedge the holdings of your token and ETH in order to manage this. Overall, you’re much better off using alt-DA solutions if you want a custom gas token, which some builders may not want to do.
• Rollup frameworks: We’ll cover this more below, but not all rollup frameworks support custom gas tokens, so your architecture options are slightly limited.

Beyond that, some chains simply won’t benefit as much as others from implementing a custom gas token. If your rollup’s use case naturally lends itself to users holding ETH, it may actually be easier for them if you stick with using ETH as the chain’s gas token.

Implementing a custom gas token

While the specifics can vary between rollup frameworks, implementing a custom gas token generally requires the developer to configure the rollup’s genesis parameters to specify the token’s ERC-20 address on L1 as the chain’s gas token instead of ETH. The rollup will then validate all transactions against the user’s balance of that ERC-20, calculate gas costs in terms of that ERC-20, and deduct fees from the user’s balance of that ERC-20. It’s important to note that under this configuration, the custom gas token setting is immutable once the rollup is deployed and cannot be changed.

If you run your rollup on Conduit however, implementing a custom gas token is as easy as entering the gas token’s ERC-20 address where specified on our deployment page.

Alternative approach: Account abstraction-based custom gas token

Rollup operators can also use account abstraction to implement a custom gas token without modifying the core chain architecture. Under this approach, the chain’s gas fees are still paid in ETH, but a paymaster contract lets users pay in the token you choose. Under the hood, the token is then swapped for ETH before the gas is actually paid.

This approach is more flexible, in that it can be implemented post-deployment and also changed later to support other tokens or return to standard ETH gas payments. However, the need for swaps on all gas payments makes gas fees less predictable, and requires more infrastructure.

Which rollup frameworks support custom gas tokens?

Custom gas tokens on Arbitrum Orbit

Arbitrum Orbit supports custom gas tokens. In fact, Arbitrum has been a leading platform for custom gas token adoption, encouraging developers to implement it as needed. Currently, Arbitrum requires rollups deploying a custom gas token to be using Arbitrum AnyTrust for DA.

Custom gas tokens on OP Stack

As of June 2025, the OP Stack has deprecated support for custom gas tokens. However, rollups can still use account abstraction to implement custom gas token functionality, albeit with the caveats we described above.

Custom gas tokens on Agglayer CDK (formerly known as Polygon CDK)

Custom gas token support on Agglayer CDK depends on which version of Agglayer CDK you’re building on.

• Agglayer CDK-opgeth: Agglayer CDK-opgeth does not support custom gas tokens, as it is a modified version of the OP Stack. However, builders can still use the account abstraction-based implementation.
• Agglayer CDK-erigon: Agglayer CDK-erigon supports custom gas tokens.

Custom gas tokens: An important consideration for rollup operators

Custom gas tokens can improve rollup UX and tokenomics, while also enabling unique growth and compliance strategies. Before implementing, developers should think carefully about their use case, how a custom gas token can help, and whether or not their users will actively hold and use their token when interacting with the chain – if not, there are fewer UX benefits. 

If you’re thinking about implementing a custom gas token, Conduit can help. We support dozens of rollups with custom gas tokens, and can guide you on whether or not it would be beneficial for your chain. If so, we can also implement it for you quickly and painlessly.

Talk to Conduit about deploying a rollup with a custom gas token.