VISA Experiments With Account Abstraction Over Ethereum’s Goerli Testnet
Ethereum has been a testbed for several market players to test new financial products before getting them into the market. Payments giant VISA is making one such smart move by testing accounts abstraction on Ethereum’s Goerli testnet.
VISA is testing smart contracts on the Ethereum Goerli testnet aimed at transaction-free payments. To leverage accounts abstraction, VISA has deployed two sets of “Paymaster” smart contracts.
This will expand the capabilities of such smart contracts to users accounts while allowing wallets to autonomously perform complex tasks as well as manage transaction costs on behalf of other accounts. VISA has detailed in testing in the latest report.
These contracts aim to enhance user experience on the Ethereum network by removing the requirement for end-users to possess ether (ETH) for transaction fees. Additionally, users have the option to pay fees with any token, offering a flexible alternative to the traditional fee structure on the Ethereum mainnet, as highlighted in Visa's report.
This is the latest move from VISA in its relation with Ethereum that dates back to 2021 wherein it announced that it would settle payments in the USDC stablecoin on the Ethereum blockchain. This made VISA the first major payments network to allow settlements in stablecoins.
Last year in December 2022, VISA had first expressed interest in account abstraction. However, back then, it hadn’t implemented the functionality for account abstraction on Ethereum.
Earlier this year in March 2023, developers made significant progress by introducing the ERC-4337 code that facilitated account abstraction on Ethereum using specialized smart contracts.
In her tweet on Wednesday, May 17, Catherine Gu, head of CBDC and protocols at Visa, stated: “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.”
Visa's utilization of the Ethereum blockchain for settling USDC stablecoin opens up possibilities for implementing user-friendly stablecoin transactions. This includes scenarios where Visa can handle transaction fees on behalf of users or allow users to pay with their preferred tokens, including stablecoins.
The report noted: “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”.