A smart contract that processes meta transactions. Does not require token smart contracts to upgrade.
Important: This smart contract does not need the ERC20MetaBatch standard to operate. Instead, it relies on having an approval to spend user's tokens.
If a token contract does not have the permit() function (see EIP-2612: permit – 712-signed approvals), then a user would need to first give the smart contract a on-chain permission to spend their tokens:
The disadvantage of this process is that a user first needs to do an on-chain transaction, before being able to do off-chain meta transactions.
But luckily, the on-chain transaction needs to be made only once per token (if the allowance amount is unlimited, of course).
permit() is a very nice function that provides a new functionality to the ERC-20 standard - Basically it means that a user can give a token-spending approval to someone else using a meta transaction (off-chain).
This solves the problem from the previous chapter (a user having to make an on-chain approval transaction first).
For more information see EIP-2612: permit – 712-signed approvals.
There are two ways of using permits:
- Sending a permit meta tx and a transfer meta tx in two separate on-chain txs
- Sending a permit meta tx and a transfer meta tx in the same on-chain tx
More often it would be better to do it in a single on-chain tx (lower tx cost), but there may be cases where two separate on-chain txs make more sense.
Lending platforms (like Aave and Compound) give you an interest-bearing token when you deposit some (approved) ERC-20 token with them.
It should be researched who receives an interest-bearing token in case the deposit is made as a meta transaction via a relayer. It shouldn't happen that the relayer would receive the interest-bearing token instead of the meta tx sender.