In the ever-evolving landscape of blockchain technology, Ethereum has established itself as a leading platform for the creation and exchange of tokens through smart contracts. ERC-20 tokens have become the standard for fungible tokens within the Ethereum ecosystem. However, transacting with these tokens requires users to have a balance of Ether (ETH) to pay for transaction fees, which can be a barrier for new or casual users unfamiliar with the process. To address this issue, the ERC-865 proposal was introduced to simplify token transactions by allowing fees to be paid in the tokens themselves rather than in ETH.

What is ERC-865?

ERC-865 is a proposed standard that extends the functionality of ERC-20 tokens by enabling users to pay transaction fees in the token they are transferring, rather than in Ether. This proposal was designed to improve the user experience by reducing the complexity of transactions for those who may only hold a specific token and not ETH.

The key feature of ERC-865 is the “delegate transfer” function, which allows a third party to submit a user’s signed transaction to the blockchain. The user signs a transaction with a private key, specifying the amount of tokens to send, the recipient, and the fee to be paid to the delegate for submitting the transaction. The delegate then pays the gas in ETH and is compensated in the token being transferred.

Benefits of ERC-865:

1. Improved User Experience: Users no longer need to hold ETH to pay for gas when transferring tokens, making the process more straightforward, especially for those who are new to the Ethereum ecosystem.

2. Increased Adoption: By lowering the entry barrier for token transactions, ERC-865 has the potential to increase the adoption of Ethereum-based tokens among a broader audience.

3. Flexibility for DApp Developers: Developers can create more user-friendly applications by integrating ERC-865, as it allows for a seamless transaction experience without the need for users to manage multiple types of assets.

4. Cost Efficiency: Users can avoid the need to perform two transactions (one to acquire ETH for gas and another to transfer tokens), potentially reducing overall transaction costs.

Challenges and Considerations:

While ERC-865 offers several advantages, there are also challenges and considerations that need to be addressed:

1. Security Concerns: The delegation of transaction submission introduces an additional layer of trust, as users must rely on third parties to process their transactions correctly.

2. Potential for Abuse: Malicious actors could potentially exploit the delegate system by intercepting and altering signed transactions before they are submitted to the blockchain.

3. Network Congestion: If ERC-865 becomes widely adopted, the Ethereum network could experience increased congestion due to the additional transactions from delegates submitting token transfers.

4. Implementation Complexity: Integrating ERC-865 requires changes to existing ERC-20 token contracts, which may not be feasible for all tokens, especially those already widely distributed.