Paper 2021/766

Etherless Ethereum Tokens: Simulating Native Tokens in Ethereum

John Andrews and Michele Ciampi and Vassilis Zikas

Abstract

Standardized Ethereum tokens, e.g., ERC-20 tokens, have become the norm in fundraising (through ICOs) and kicking off blockchain-based DeFi applications. However, they require the user’s wallet to hold both tokens and ether to pay the gas fee for making a transaction. This makes for a cumbersome and counterintuitive—at least for less tech-savvy users—user experience, especially when the token creator intends to switch to their own blockchain down the line, or wishes the flexibility of transferring the token to a different smart-contract enabled blockchain. We formalize, instantiate, and analyze in a composable manner a system that we call Etherless Ethereum Tokens (in short, EETs), which allows the token creator to allow its users to transact in a closed-economy manner, i.e., having only tokens on their wallet and paying any transaction fees in token units rather than gas. In the process, we devise a methodology for capturing Ethereum token-contracts in the Universal Composability (UC) framework, which can be of independent interest. We have implemented and benchmarked our system and compared it to another solution for obtaining similar functionality in Ethereum, i.e., the Gas Station Networks (GSN); in addition to being the first system with a rigorous security analysis, we demonstrate that EETs are not only far easier to deploy, but are also far less gas intensive than the GSN.