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Global payments leader Visa has implemented experimental smart contracts on Ethereum’s Goerli testnet to test gasless transactions via account abstraction.
The two sets of smart contracts, referred to as Paymaster, aim to enhance user engagement with the Ethereum network by executing intricate tasks and managing transaction expenses on behalf of other accounts.
Visa Evaluates Paymaster for Seamless Transactions
Account abstraction is a proposal designed to enhance flexibility in the management and functionality of Ethereum accounts by decoupling the control of an account from its corresponding private key, enabling control through a smart contract. This mechanism is facilitated by ERC-4337, a new Ethereum standard introduced in March.
Visa intends to utilize the ERC-4337 standard to establish an intermediary currency conversion service. The initial version of the Paymaster contract investigates whether users can settle transaction fees using alternative tokens such as dollar-pegged stablecoins or central bank digital currencies (CBDCs).
The contract is capable of collecting any ERC-20 token from users and converting them into ether (ETH) based on the prevailing exchange rate to cover gas fees on the users’ behalf, thereby eliminating the necessity to obtain ETH solely for transaction fees.
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“This sample contract encompasses the governing logic for both the Paymaster and its custom ERC-20 token. We incorporated an allowlist and a function to adjust the token-to-ETH conversion rate into this contract. This enabled us to more accurately simulate real-world scenarios where the exchange rate between ETH and a token fluctuates,” Visa stated in a report.
Facilitating Gasless Transactions
The payments leader believes the Paymaster concept can promote adoption by permitting users to fund the gas cost only at the moment of the transaction without any pre-funding obligations to enhance their cash-flow management.
The second Paymaster contract aims to remove the necessity for users to personally cover gas fees, similar to web2 peer-to-peer (P2P) transactions, by employing a solution provided by account abstraction, which allows third parties, such as fintech wallet providers, to manage the costs.
In this scenario, third parties can serve as Paymasters, fully covering transaction fees for users. The experiments are based on the foundational code supplied by the Ethereum Foundation and the ERC-4337 core team.
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