Global payments giant Visa delved further into the world of Ethereum, this time experimenting on the blockchain's Goerli testnet with smart contracts aimed at transaction-free payments with the help of account abstraction.
Visa deployed two sets of "Paymaster" smart contracts to leverage account abstraction, which expands the capabilities of such contracts to user accounts and allows wallets to autonomously perform complex tasks and manage transaction costs on behalf of other accounts. The company detailed their testing in a report.
The primary objective of these contracts is to simplify user interaction with the Ethereum network by eliminating the need for end-users to hold ether (ETH), the native cryptocurrency of Ethereum, for transaction or “gas” fees or letting users pay with any token. According to Visa’s report, this methodology provides a more flexible alternative to the standard fee structure on the Ethereum mainnet.
The move by Visa is the latest in a relationship with Ethereum that dates back to at least 2021 when it announced it was settling payments in the USDC stablecoin on the blockchain. In doing so, it became the first major payments network to use the stablecoin as a settlement currency.
Interest in account abstraction
Visa initially expressed its interest in account abstraction in a blog post in December 2022. However, at that time, the functionality for account abstraction had not been implemented on Ethereum. Subsequently, in March 2023, developers made significant progress and introduced ERC-4337, code that enabled account abstraction on Ethereum through specialized smart contracts.
Catherine Gu, head of CBDC and protocols at Visa, stated in a Wednesday tweet, “We tested two core user operations: paying with ERC-20 tokens using ERC-4337 Paymaster; and sponsoring transaction fees for users (aka gasless txs) with ERC-4337 Paymaster.”
As Visa settles the USDC stablecoin on the Ethereum blockchain, the company can potentially employ account abstraction scenarios to facilitate more user-friendly stablecoin transactions. This includes taking care of transaction fees for users or offering users the option to pay with any token of their choice including stablecoins.
“Paymasters assess whether to accept a UserOperation during the verification stage and implement any required fee logic during the execution phase. By doing so, they can sponsor transaction fees for users and enable users to pay for gas in ERC-20 tokens, like dollar stablecoins,” Visa highlighted in its report.
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