Gasless Token Approvals? Let’s Talk ERC-2612 `permit()`

“Web3 and blockchain run on protocols — every improvement is a protocol upgrade, not just a feature update.”
— 0x_scater

Introduction

When building in Web3, understanding protocol-level innovations is critical. One such innovation is ERC-2612, which upgrades the standard ERC-20 token approval mechanism to support gasless approvals.

This blog explores:

Why ERC-2612 exists
How it improves the user experience
How it works under the hood using EIP-712 signatures
Why it’s important for onboarding and adoption

Let’s compare the traditional ERC-20 flow with ERC-2612.

Traditional ERC-20 Flow

ERC-20 token transfers with smart contracts (like staking, DEXs, etc.) require two transactions:

Old Flow (ERC-20):

approve(spender, amount)
- Sent by token owner X
- Requires ETH to pay for gas
transferFrom(owner, recipient, amount)
- Called by the contract Y

    participant X as User
    participant T as Token Contract
    participant Y as Protocol Contract

    X->>T: approve(Y, amount)
    Note right of X: Pays gas
    Y->>T: transferFrom(X, Y, amount)

Drawbacks:

Requires two on-chain transactions

1.Users must own ETH to approve

2.Onboarding becomes harder (especially for new users who don’t have ETH yet)

Introduce ERC-2612: The permit()

ERC-2612 introduces a new function:

function permit(
    address owner,
    address spender,
    uint256 value,
    uint256 deadline,
    uint8 v, bytes32 r, bytes32 s
) external;

This allows a user (owner) to sign a gasless approval off-chain and any relayer (spender or someone else) to submit it on-chain.

#### Flow (ERC-2612):

1.X signs an EIP-712 message off-chain

2.Y (or any relayer) calls permit() + transferFrom()

Single transaction and No ETH required from X

    participant X as User
    participant Y as Relayer
    participant T as Token Contract
    X->>X: Sign permit message (EIP-712)
    Y->>T: permit(X, Y, amount, ...)
    Y->>T: transferFrom(X, Y, amount)

Query raises:How does it work?

The permit() function uses the EIP-712 standard to verify typed data signatures.

EIP-712 Typed Data Signature:

EIP-712 allows for secure and human-readable signing by hashing a structured payload. This avoids generic sign() messages, enabling wallet providers (like MetaMask) to show readable content.

Example of payload:

{
  "types": {
    "EIP712Domain": [
      {"name": "name", "type": "string"},
      {"name": "version", "type": "string"},
      {"name": "chainId", "type": "uint256"},
      {"name": "verifyingContract", "type": "address"}
    ],
    "Permit": [
      {"name": "owner", "type": "address"},
      {"name": "spender", "type": "address"},
      {"name": "value", "type": "uint256"},
      {"name": "nonce", "type": "uint256"},
      {"name": "deadline", "type": "uint256"}
    ]
  },
  "domain": {
    "name": "MyToken",
    "version": "1",
    "chainId": 1,
    "verifyingContract": "0xYourTokenAddress"
  },
  "message": {
    "owner": "0xX...",
    "spender": "0xY...",
    "value": "1000000000000000000",
    "nonce": 0,
    "deadline": 1742680400
  }
}

### Real Permit() code:

 / Token contract includes this:
function permit(
    address owner,
    address spender,
    uint256 value,
    uint256 deadline,
    uint8 v, bytes32 r, bytes32 s
) external {
    require(block.timestamp <= deadline, "Permit: expired deadline");

    bytes32 digest = keccak256(
        abi.encodePacked(
            "\x19\x01",
            DOMAIN_SEPARATOR,
            keccak256(abi.encode(
                PERMIT_TYPEHASH,
                owner,
                spender,
                value,
                nonces[owner]++,
                deadline
            ))
        )
    );

    address recoveredAddress = ecrecover(digest, v, r, s);
    require(recoveredAddress == owner, "Invalid signature");

    _approve(owner, spender, value);
}

Why need ERC-2612?

Gasless UX: New users can approve tokens without ETH — just sign a message.
One-Tx Flow: Only one transaction to complete an approval and usage, improving developer and user experience.
Relayer-Friendly :Projects can sponsor gas fees for onboarding using relayers.
Protocol-Level Upgrade: It’s not just a frontend trick — it changes the way ERC-20 tokens behave at the contract level.

Real-World Applications

DEXs (like Uniswap) use permit() to enable one-click swaps
DAOs allow gasless voting setups
DeFi protocols onboard users without forcing them to buy ETH

Building With Protocols In Mind

ERC-2612 is a great example of how protocol-level upgrades make real impact.

If you’re building in Web3, always ask:

Can I make this process more user-friendly at the protocol level?

Final Thoughts — SCATERLABs

Gasless approvals aren’t a feature; they’re a shift in the ERC-20 interaction model.

They show what’s possible when we treat protocols as products.

Let’s keep building with protocols in mind.

— 0x_scater, Founder @ SCATERLABs

Resources i used:

EIP-2612: https://eips.ethereum.org/EIPS/eip-2612
EIP-712: https://eips.ethereum.org/EIPS/eip-712
I use chatgpt for understanding the protocols

Gasless Token Approvals? Let’s Talk ERC-2612 permit()