Global payments giant Visa has deployed experimental smart contracts on Ethereum’s Goerli testnet to test gasless transactions through account abstraction.
The two sets of smart contracts, called Payerwill simplify user interaction with the Ethereum network by performing complex tasks and managing transaction costs on behalf of other accounts.
Paymaster trial visa for frictionless transactions
Account abstraction is a proposal to increase flexibility in the management and behavior of Ethereum accounts by separating 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 released in March.
Visa seeks to take advantage of 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 such as dollar-pegged stablecoins or central bank digital currencies (CBDCs).
The contract can collect any ERC-20 tokens from users and convert them into ether (ETH) based on the current exchange rate to pay gas fees on behalf of users, thus eliminating the need to acquire ETH just for transaction fees. .
“This sample contract contains the governance logic for both Paymaster and your custom ERC-20 token. In this contract, we introduced an allowlist and a function to update the conversion rate from token to ETH. 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.
Enabling transactions without gas
The payments giant believes that the Paymaster concept can incentivize adoption by allowing users to finance only the cost of gas at the time of the transaction without any prior financing requirements to optimize their cash flow management.
The second Paymaster contract seeks to eliminate the need for users to cover gas fees themselves, just like in web2 peer-to-peer (P2P) transactions, by using a solution offered by the abstraction of account, which allows third parties, such as fintech wallet providers, to manage costs.
In this case, third parties can act as Paymasters, fully sponsoring transaction fees for users. The experiments are based on the startup code provided by the Ethereum Foundation and the ERC-4337 core team.
We tested two main user operations: 1) pay with ERC-20 tokens using ERC-4337 Paymaster; 2) User Sponsorship Transaction Fees (aka no gas txs) with ERC-4337 Paymaster
— Catalina Gu (@catgu_) May 17, 2023
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