ERC-7951
Abstract
This ERC proposal introduces an innovative token transfer processing model designed for third parties, enabling seamless use of Ethereum-based tokens (e.g., ERC20) by non-crypto-native actors. The concept allows a third-party payment processor to initiate token transfers on behalf of another party and to cover the associated transaction (gas) fees. The main party (user) always remains the explicit owner of the tokens, which are securely held and referenced under their ownership in the smart contract.
The transfer process is two-phased:
- Initiation: The payment processor proposes a token transfer via the smart contract. This proposal is emitted as an on-chain event, including all relevant transfer details and a unique hash of the transaction (“proposal hash”).
- Approval: The authorized party (owner) reviews the proposal off-chain and, if in agreement, signs the proposal hash with their private key. This signature is sent to the payment processor, who then submits it to the smart contract. There, the contract verifies the signature and, upon approval, carries out the token transfer in the owner’s name.
To increase security and usability, each proposal includes an explicit expiration time. If the signature is not submitted and verified within the defined validity period, the proposal becomes void and the transfer cannot be executed.
To further enhance user safety, the owner is provided with a function that allows transferring all token balances directly to their own address in case the payment processor becomes unresponsive, acts improperly, or if external conditions such as transaction costs change unfavorably.
This model empowers entities to integrate blockchain-based payments into their workflows without directly holding or managing cryptocurrencies. All token movements require explicit owner approval, ensuring security and retaining full user control. The payment processor is compensated “off-chain” (e.g., in fiat currency) and is responsible for gas costs.
By removing the technical and operational burdens of crypto management from the end user, this ERC facilitates broader adoption of tokenized business cases and simplifies enterprise integration.
Motivation
Adoption of blockchain-based payments and tokenized assets in enterprise and conventional business contexts is still often hindered by the need for end-users or business partners to directly manage cryptocurrencies, wallets, and on-chain transactions. For many organizations, the technical, regulatory, and operational burdens associated with self-custody and on-chain fee management present significant entry barriers.
This ERC aims to lower these barriers by introducing a model in which a trusted third-party payment processor can manage all blockchain transactions on behalf of a token owner, including paying transaction fees. The owner maintains full control and explicit on-chain ownership of the assets, and must approve all outgoing transfers cryptographically. Payment for the processor’s services (including gas reimbursement) can take place off-chain and in fiat currency, which aligns with existing financial workflows and compliance expectations.
With an explicit fallback function, owners are further protected, ensuring they can always reclaim direct control over their assets if the processor becomes unresponsive or external conditions change.
In summary, this standard facilitates broader and more secure adoption of token-based processes by offloading complexity from end-users, while preserving security, transparency, and user sovereignty.