Understanding EIP-2612 and ERC20 Permit

A path to Gasless Token Transfers

Ethereum Improvement Proposal (EIP) 2612 introduces a novel feature to ERC20 tokens called the permit function. This addition allows token holders to authorize token transfers through off-chain signatures, enabling gasless transactions by delegating gas costs to another party.

What is permit

The permit function is part of the ERC20 Permit extension, as defined in EIP-2612. It enables token approvals via signatures, allowing a user to approve a spender without having to perform an on-chain transaction themselves. This process is referred to as a "gasless" transaction because the user does not need to spend ETH to approve the transfer.

Why use permit

• User Experience: Users can approve token spending without holding ETH (or any native currency).
• Efficiency: Reduces the number of transactions needed to approve and transfer tokens.
• Composability: Simplifies interactions with smart contracts by reducing the need for preliminary approval transactions.

How permit works

The permit function takes a signature from the token holder, which authorizes the spender to transfer tokens on their behalf. This signature can be created off-chain and then submitted to the blockchain by any party, paying the gas fee for the actual transaction.

Integrate Permit using MetaMask and Web3.js

Once you created your ERC20 token (maybe using our predefined PermitERC20 template), you can build a React app that integrates MetaMask and Web3.js to allow users to sign and send permit transactions for an ERC20 token.

The app guides users through connecting their wallet, specifying transaction details, and sign the transaction. The signature will be sent to a server which will take care of signing the transaction and sending it to the blockchain by paying for the gas.

The server will execute the transaction using the permit function, facilitating gasless token transfers.

Conclusion

This setup creates a complete solution for handling ERC20 permit transactions in a React frontend with a Node.js backend. Users can connect their wallet, sign a permit transaction using MetaMask, and the backend will handle sending the signed transaction to the Ethereum network. This allows for gasless transactions where the backend server pays for the gas fees.

Create your PermitERC20 on Token Generator.