Member-only story
Understanding Ethereum ERC-20 Meta-Transactions
In this guide, we will explore the concept of gasless transactions — also commonly called meta-transactions — in the context of ERC-20 tokens, where the user does not need to pay for their gas fees.
“Oh boy, a really cool project airdropped a token on my Ethereum wallet and now unfortunately I cannot transfer it to my main wallet because I do not have any ether on this address. That really sucks!”
If this sounds familiar to you, you can skip the next section. However, if the whole thing sounds cryptic to you, here is a brief explanation of the gas challenge on Ethereum.
Gas is pivotal in the Ethereum world. To make the analogy, it is the fuel that allows it to operate, in the same way, that a car needs gasoline to run.
In summary, gas refers to the unit that measures the amount of computational effort required to execute specific operations (e.g. sending ether (ETH) or a token) on the Ethereum network.
Since each Ethereum transaction requires computational resources to execute, each transaction requires a fee (=commonly known as the multiple of gas price and gas consumed by the transaction).
Gas fees are paid in Ethereum’s native currency ETH. Also, gas prices are usually denoted in a unit called gwei, which itself is a denomination of ETH — each gwei is equal to 0.000000001 ETH (or 10⁻⁹ ETH).
For instance, instead of saying that your gas costs 0.000000001 ETH, you would usually say that your gas costs 1 gwei. The word gwei itself means giga-wei and it is equal to 1’000’000’000 wei (1 wei = 10⁻¹⁸ ETH). Wei itself — named after Wei Dai, the inventor of b-money — is the smallest unit of ETH.
But why do gas fees actually exist? In short, gas fees help keep the Ethereum network secure. By requiring a fee for every computation executed on the network, we prevent bad actors from spamming the network. For a further deep-dive into this topic, I can recommend this reference.
