The network aims to “foster collaboration to improve payment flows within the ecosystem” with its ERC1257 implementation.
Kyber Network, a decentralized exchange, allows for ERC20 tokens to be used as payment on the blockchain in a decentralized manner. In its latest Medium post, Kyber explains its new Ethereum Improvement Proposal (EIP), ERC1257, which seeks to standardize the reporting of transactions through a proof-of-payment system. Initially floated in July by Kyber co-founder Victor Tran and CTO Yaron Velner, the proposed standard would help track payments made by both humans and EDCCs (aka smart contracts).
The Problems Kyber Wants to Solve
The post specifies the difficulty online merchant have when it comes to tracking user payments as payment receipts. Currently, vendors can use transaction hashes and unique deposit addresses for tracking purposes, but Kyber makes the argument that this strategy is inefficient when applied to payments done by EDCCs due to the “difficulty in tracing and parsing payments done by ‘internal transactions.'”
Secondly, the Medium post notes that simply tracking the amount and transaction hash may not be all a vendor needs, as the payment may have to reflect the order ID as well. Kyber finds that in order to fix this problem, merchants often open unique deposit addresses where one order ID corresponds to one deposit address. According to Kyber, however, this method:
“becomes a hassle due to gas issues, where the merchant needs to pay gas for 1. Sending ETH to these deposit addresses which will be used to pay for gas for step 2; and 2. Making ETH/ERC20 token transfer to a consolidated wallet address once payment is made.”
As a result, merchants end up suffering from payment of gas fees when utilizing multiple addresses.
How the Proposal Works and What It Means for Kyber’s Platform
The ERC1257 proposal essentially “standardizes a set of basic parameters to log payments through an EVM log.” The parameters of the log will include the information for who made the payment, who received the payment, what token the payment was made in, the amount paid in the token’s units, and the application-specific auxiliary data.
Kyber plans to implement the standardization in its own widget – as well as in both current and upcoming network tools – meaning that users of the exchange will no longer need to open unique deposit addresses just to reflect one order ID for each address. The log will also record the decentralized token payments for both humans and EDCCs.
The network already allows users to manually trade one token for another at close to market rates (not deviating more than 1.5 percent from the prices on centralized exchanges) and lets merchants automatically accept payment in any supported token. The ERC1257 proposal to standardize and simplify receipt and order ID information seems to only add to Kyber’s hope of “different stakeholders work[ing] together seamlessly … increase[ing] adoption of decentralized token payments.”
Nicholas Ruggieri studied English with an emphasis in creative writing at the University of Nevada, Reno. When he’s not quoting Vines at anyone who’s willing to listen, you’ll find him listening to too many podcasts, reading too many books, and crocheting too many sweaters for his dogs, RT and Peterman.
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