Demystifying EIP-3074: Sponsored Transactions and the Path to Enhanced Ethereum EOAs

3 min readApr 25, 2024

The Ethereum blockchain constantly evolves and is now introducing a game-changer: EIP-3074. This article is your guide to understanding its technical intricacies, potential benefits, drawbacks, and key considerations.

EIP-3074, suggested by Sam Wilson, Ansgar Dietrichs, Matt Garnett, and Micah Zoltu, also known as AUTH and AUTHCALL, is a proposed Ethereum Improvement Proposal to introduce sponsored transactions to the Ethereum network. This article delves into the technical details of EIP-3074, explores its potential benefits and drawbacks, and examines the broader implications for the future of Ethereum Externally Owned Accounts (EOAs).

Source: EIP-3074 GitHub

What are Sponsored Transactions?

Users who interact with the Ethereum network initiate a transaction from their EOA. This transaction includes the gas fee and the amount of ETH paid to miners to incentivize them to process the transaction. Sponsored transactions, as proposed by EIP-3074, introduce a new dynamic:

The Sponsor

A separate entity (smart contract or another user) can cover the gas fees associated with a user’s transaction.

The User

The user initiating the transaction signs it without specifying the gas price or limit.

The Network

The network processes the transaction as usual, with the gas fees deducted from the sponsor’s account instead of the user’s.

Technical Implementation of EIP-3074

EIP-3074 introduces two new EVM (Ethereum Virtual Machine) opcodes:

AUTH

This opcode allows users to sign a transaction while delegating the responsibility for the gas fee to a designated sponsor.

AUTHCALL

This opcode enables a smart contract to act on behalf of a user (whose transaction was signed with AUTH) by calling another contract on the network. However, the smart contract cannot initiate transactions itself.

Essentially, EIP-3074 paves the way for sponsored transactions. Here’s how it works:

Transaction Initiation

A user signs a transaction message without specifying the gas price or gas limit.

Sponsorship

A third party (sponsor) can inject the necessary gas fees and submit the transaction on the user’s behalf, leveraging the user’s signature provided through the AUTH opcode.

Execution

The AUTHCALL opcode allows the sponsored transaction to be executed within the context of the user’s account (the “authorized” account).

Benefits of EIP-3074

Reduced User Friction

Eliminates the need for users to calculate gas prices and limits, simplifying the transaction process.

Enhanced dApp Functionality

dApps can leverage sponsored transactions to offer features like free or subsidized transactions for specific user interactions, potentially attracting a wider user base.

Improved Scalability

IP-3074 could improve network scalability by reducing the number of on-chain transactions (as some sponsored transactions might be bundled together).

Improved Accessibility

Allows users with limited crypto holdings to interact with the network by leveraging sponsorship.

The Road Ahead for EIP-3074

EIP-3074 is still under discussion and has yet to be officially implemented on the Ethereum mainnet. The Ethereum community is actively debating the proposal, weighing its benefits against drawbacks.

Conclusion

EIP-3074 presents a novel approach to transaction processing on the Ethereum network. While it offers promising advantages for user experience and accessibility, careful consideration of security implications and potential centralization concerns is essential. As the Ethereum community continues to evaluate EIP-3074, the future of sponsored transactions and their impact on the user experience remains intriguing.

Additional Resources

EIP-3074 GitHub Repository: https://github.com/ethereum/EIPs/blob/master/EIPS/eip-3074.md

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