Understanding Ethereum ERC-20 Meta Transactions

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In this comprehensive guide, we’ll dive into the concept of gasless transactions in the context of ERC-20 tokens—commonly known as meta transactions—where users can interact with blockchain applications without paying gas fees. This innovation is transforming user experience in decentralized applications (dApps), removing one of the biggest barriers to mainstream adoption.

The Gas Problem on Ethereum

If you've ever received an airdropped token but couldn’t transfer it because your wallet had no ETH for gas, you're not alone. This frustration is all too familiar to many blockchain users.

On Ethereum, gas is essential. Think of it as the fuel that powers every operation on the network—just like gasoline powers a car. Every transaction, whether sending ETH or transferring a token, requires computational resources, and thus incurs a fee.

This gas fee is paid in ETH, Ethereum’s native currency. The price per unit of gas is typically quoted in gwei, a subunit of ETH where 1 gwei = 10⁻⁹ ETH. For example, instead of saying "0.000000001 ETH," we simply say "1 gwei." The term gwei stands for giga-wei, and wei—named after cryptographer Wei Dai—is the smallest denomination of ETH (1 wei = 10⁻¹⁸ ETH).

But why do gas fees exist? They help secure the network by preventing spam and abusive behavior. Without cost, malicious actors could flood the network with meaningless operations. However, requiring users to hold ETH just to use dApps creates friction—especially for new users who may only want to interact with token-based systems.

👉 Discover how blockchain platforms are solving gas barriers for new users.

What Are Meta Transactions?

Here's the breakthrough: meta transactions allow users to sign a transaction off-chain while a third party—called a relayer or forwarder—submits it to the blockchain and pays the gas.

This means:

The core idea? Decouple transaction signing from transaction broadcasting.

A user signs a message (representing their intent) using their private key. That signed data is sent to a relayer, which wraps it into a regular Ethereum transaction, pays the gas, and submits it to the network. A smart contract verifies the signature and executes the intended action.

ERC-20 Limitations and the Need for Permit

Standard ERC-20 tokens rely on two key functions: approve and transferFrom. To let a smart contract spend your tokens, you must first call approve(msg.sender, amount)—a transaction that requires gas.

This creates a two-step process:

  1. Approve the contract to spend tokens (gas required).
  2. Call the contract function, which then uses transferFrom internally.

Even simple actions like paying someone else require holding ETH for gas—defeating the purpose of a seamless, token-centric experience.

Enter permit: Signature-Based Approval

The solution? Extend ERC-20 with the permit function (defined in EIP-2612), which allows users to authorize token spending via a digital signature—off-chain—instead of a blockchain transaction.

With permit, users sign a message specifying:

No approve transaction needed. No ETH required. The relayer submits both the signature and call data to a forwarding contract, which validates and processes the request.

This dramatically improves UX and opens doors for mass adoption.

EIP-712: Structured Data Signing

For permit and meta transactions to work securely, we need a standardized way to sign structured data. That’s where EIP-712 comes in.

EIP-712 defines a method for hashing and signing typed data in Ethereum. It prevents phishing attacks by ensuring signatures are bound to specific domains and types (e.g., “TransferRequest” or “Permit”), making them non-reusable across different apps or chains.

Wallets like MetaMask support this via eth_signTypedDataV4, allowing users to review structured fields before signing—enhancing security and clarity.

Forwarder Contracts: Enabling Meta Transactions

A forwarder contract acts as a relay hub. It receives signed meta transactions, verifies their authenticity, and executes them on behalf of users.

One such implementation is Forwarder.sol, which complies with EIP-2770 (a standard for generalized meta transactions). Key features include:

Core Functions

verify(ForwardRequest, signature)

Checks if the signature matches the sender and request data using _hashTypedDataV4.

function verify(ForwardRequest calldata req, bytes calldata signature) 
    public view returns (bool) {
    address signer = _hashTypedDataV4(keccak256(abi.encode(
        _TYPEHASH,
        req.from,
        req.to,
        req.value,
        req.gas,
        req.nonce,
        keccak256(req.data)
    ))).recover(signature);
    return _nonces[req.from] == req.nonce && signer == req.from;
}

execute(ForwardRequest, signature)

Executes the meta transaction after verification.

function execute(ForwardRequest calldata req, bytes calldata signature) 
    public payable whenNotPaused() returns (bool, bytes memory) {
    require(_senderWhitelist[msg.sender], "Relayer not whitelisted");
    require(verify(req, signature), "Invalid signature");
    
    _nonces[req.from] = req.nonce + 1;

    (bool success, bytes memory returndata) = req.to.call{gas: req.gas}(req.data);
    
    if (!success) {
        assembly {
            returndatacopy(0, 0, returndatasize())
            revert(0, returndatasize())
        }
    }

    assert(gasleft() > req.gas / 63); // Prevent reentrancy risks
    emit MetaTransactionExecuted(req.from, req.to, req.data);
    return (success, returndata);
}

Security Measures

These safeguards ensure resilience against abuse while maintaining decentralization principles.

FAQ: Common Questions About ERC-20 Meta Transactions

Q: Do meta transactions eliminate gas fees entirely?
A: No—they shift the cost from the user to the relayer. Gas is still paid in ETH; it's just subsidized by another party.

Q: Can anyone become a relayer?
A: In open systems like GSN (Gas Station Network), yes—but forwarders often enforce whitelists for security.

Q: Are meta transactions secure?
A: Yes, when implemented correctly with EIP-712 and replay protection. Signatures are cryptographically secure and domain-specific.

Q: What happens if a relayer goes offline?
A: Users can switch to another relayer or submit transactions manually. Decentralized relayer networks mitigate this risk.

Q: Is permit supported by all ERC-20 tokens?
A: No—only tokens that implement EIP-2612 (like DAI). Legacy tokens still require on-chain approvals.

👉 See how leading platforms enable seamless token interactions without upfront gas.

Beyond Basic Meta Transactions: The Future

While basic forwarders solve immediate UX issues, they introduce centralization risks—the relayer becomes a trusted intermediary.

Projects like the Gas Station Network (GSN) offer decentralized solutions where multiple relayers operate in parallel, enabling trustless, scalable meta transactions across dApps.

Moreover, account abstraction (as seen in ERC-4337) takes this further by enabling full smart contract wallets with built-in meta transaction support—ushering in a new era of user-friendly blockchain experiences.

Final Thoughts

Meta transactions are not just a technical curiosity—they're a critical step toward democratizing access to Web3. By removing the need for users to hold ETH for gas, we open doors for billions who would otherwise be excluded.

Core keywords:
ERC-20 meta transactions, gasless transactions, EIP-712, permit function, forwarder contract, signature-based approval, user experience in blockchain, decentralized relayers

While current implementations like Forwarder.sol provide solid foundations, continuous auditing and community collaboration remain vital. Remember: 100% test coverage doesn't guarantee security—the quality of tests does.

As blockchain evolves, expect meta transactions to become standard—not an exception.

👉 Explore how next-gen wallets are integrating meta transactions today.