Visa's Approach to Simplifying Ethereum Transactions Through Account Abstraction
Payments giant Visa has a plan to leverage account abstraction and ERC-4337.
The complexity of transactions on platforms like Ethereum has hindered mainstream adoption. A significant obstacle is the "gas" fee required for every transaction on the Ethereum network, which compensates for the computational energy needed to process and validate transactions. The volatile nature of these fees can be a significant inconvenience for users, who must maintain a balance of ETH solely for these fees.
While the decentralized nature of these platforms offers unparalleled security and transparency, it also introduces challenges, especially when it comes to the often volatile and unpredictable gas fees. Visa recognizing these challenges has taken a pioneering step to address them.
Visa's Solution: Leveraging Account Abstraction and ERC-4337
Visa's experimental solution seeks to streamline this process. By leveraging account abstraction technology and the ERC-4337 standard, Visa aims to eliminate end-users need to keep ETH for gas fees. Instead, users can pay these fees with other tokens, such as USDC or USDT. Visa even offers to cover these fees, adding an extra layer of convenience.
How It Works
The core of this setup is a "Verifying Paymaster" (currently deployed on goerli testnet), a smart contract that works with an off-chain component to authorize and pay gas fees using public-key cryptography. Here's how it works:
User Initiation: When a user starts a blockchain operation, their wallet sends the operation details and Visa card credentials to the paymaster web service.
Payment Calculation: This service calculates the fiat cost based on the gas fee information and processes the payment.
Digital Signature: Once the payment is approved, the service creates a digital signature containing essential data from the operation and sends it to the user's wallet.
Signature Verification: The wallet adds the digital signature to the operation data and sends it to the blockchain. The paymaster contract, following the ERC-4337 standard, examines the data. If the signature is verified, the contract covers the gas costs, allowing smooth execution.
A Seamless User Experience
Visa's approach aims to make blockchain transactions as straightforward as traditional card payments and the solution will appear to users like regular card-based payments. This focus on user experience is crucial as crypto continues to grow and attract a more diverse user base.
The Future of Blockchain Transactions
With the introduction of the ERC-4337, which enabled account abstraction on Ethereum, the stage was set for innovations like Visa's experimental solution. As blockchain technology continues to evolve, it's clear that the focus will increasingly shift toward improving user experience and accessibility. Solutions like Visa's, bridging the traditional and digital financial worlds, will be key in driving adoption.
By abstracting the complexities of gas fees, Visa's initiative paves the way for a future where blockchain transactions are as straightforward as swiping a card.