Global payments giant Visa has deployed experimental smart contracts on Ethereum’s Goerli testnet to pilot gasless transactions through account abstraction.
The two sets of smart contracts, dubbed Paymaster, will simplify user interaction with the Ethereum network by performing complex tasks and managing transaction costs on behalf of other accounts.
Account abstraction is a proposal to increase flexibility in the management and behavior of Ethereum accounts by separating the control of an account from its associated private key, allowing it to be controlled by a smart contract. The mechanism is enabled by ERC-4337, a new Ethereum standard launched in March.
Visa seeks to leverage the ERC-4337 standard to implement an intermediary currency conversion service. The first version of the Paymaster contract explores whether users can pay transaction fees with alternative tokens like dollar-pegged stablecoins or central bank digital currencies (CBDCs).
The contract can collect any ERC-20 token from users and convert them into ether (ETH) based on the current exchange rate to pay for gas fees on the users’ behalf, thus removing the need to acquire ETH only for transaction fees.
“This sample contract contains the governing logic for both the Paymaster and its custom ERC-20 token. To this contract, we introduced an allowlist and a function to update the token-to-ETH conversion rate. This allowed us to better simulate real-life conditions where the exchange rate between ETH and a token is dynamic,” Visa said in a report.
The payments giant believes the Paymaster concept can incentivize adoption by allowing users to only fund the gas cost at the time of the transaction without any pre-funding requirements to optimize their cash-flow management.
The second Paymaster contract seeks to eliminate the need for users to cover gas fees by themselves, just like in web2 peer-to-peer (P2P) transactions, by using a solution proffered by account abstraction, which allows third parties, such as fintech wallet providers, to handle the costs.
In this case, the third parties can act as Paymasters, completely sponsoring transaction fees for users. The experiments are based on the starter code provided by the Ethereum Foundation and ERC-4337 core team.
We tested two core user operations: 1) paying with ERC-20 tokens using ERC-4337 Paymaster; 2) Sponsoring transaction fees for users (aka gasless txs) with ERC-4337 Paymaster
— Catherine Gu (@catgu_) May 17, 2023
The post Visa Deploys ‘Paymaster’ Contracts on Ethereum Testnest for Gasless Transactions appeared first on CryptoPotato.
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