Visa has embarked on innovative blockchain trials to foster the utilization of ERC-20 tokens for transaction fees or unlocking gasless transactions. The move denotes Visa’s commitment to revolutionize the financial landscape using blockchain technology.
Visa’s Endeavors on Ethereum’s Goerli Testnet
With experimental smart contracts, Visa has strategically positioned itself on Ethereum’s Goerli testnet. Its mission is to pilot gasless transactions through a groundbreaking concept known as account abstraction.
The approach is part of Visa’s proactive strategy to simplify user engagement with the Ethereum network by executing intricate tasks and managing transaction expenses for other accounts.
Dubbed ‘Paymaster,’ these smart contracts are designed to streamline interactions between users and the Ethereum network significantly. Moreover, they will lead the way for the future of blockchain transactions.
Account Abstraction: A Game Changer in Blockchain Technology
The notion of account abstraction is an innovative proposal that aims to augment the flexibility in the management and functionality of Ethereum accounts. It does so by dissociating the control of an account from its corresponding private key, thus enabling it to be manipulated by a smart contract.
Enabled by ERC-4337, account abstraction has sparked a significant shift in how blockchain transactions are conducted. With an eye on the future, Visa is set to harness this new standard’s power to establish a cutting-edge currency conversion service.
Paymaster: Redefining Transaction Fees
The maiden version of the Paymaster contract looks into allowing users to settle transaction fees using alternative tokens such as dollar-pegged stablecoins or central bank digital currencies (CBDCs).
The revolutionary contract can amass any ERC-20 token from users, converting them into Ether (ETH) according to the prevailing exchange rate and using this to cover gas fees on behalf of the users. Consequently, users are no longer required to procure ETH solely for transaction fees.
In a recent report, Visa stated:
“This exemplary contract embodies the governing logic for the Paymaster and its proprietary ERC-20 token. To this contract, we introduced an allowlist and a function to update the token-to-ETH conversion rate, which helped us emulate real-life scenarios where the exchange rate between ETH and a token is dynamic.”
The payments titan envisions the Paymaster model as a key driver for blockchain adoption. Allowing users to fund the gas cost at the moment of transaction without pre-funding obligations is a big step. It also enhances their cash-flow management.
Gasless Transactions: Paymaster Leads the Way
The subsequent Paymaster contract aims to absolve users from covering gas fees individually. That move is akin to web2 peer-to-peer (P2P) transactions. It leverages account abstraction, enabling third parties like fintech wallet providers to shoulder the costs. These third parties serve as ‘Paymasters,’ fully subsidizing user transaction fees.
Visa’s experiments are grounded on the preliminary code furnished by the Ethereum Foundation and the ERC-4337 core team, underscoring their commitment to trailblazing advancements in blockchain transactions.
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