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In the context of ERC-4337/account abstraction, we know that paymasters are able to sponsor a UserOperation from a smart contract wallet, we can even allow the use of an ERC20 token in a smart contract wallet (i.e. paymasters transfer the ERC20 token in exchange for the gas paid for the UserOperation).

I tried searching online but it seems like no one talks about using the ether (or any other native token if not in Ethereum) as the gas payment, meaning that paymaster pays for the UserOperation and then smart contract wallet transfers the same amount of ether to paymaster contract. Is this even possible?

I know a smart contract wallet can deposit to EntryPoint directly to pay for the gas, but if there is an ether paymaster, we can skip this step.

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yes it is possible. remember that a smart contract wallet is also like any smart contract. as long as you have implemented the correct interface and make sure to comply with the allowed opcodes for that verifyPaymasterOp call, you should be fine.

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