ERC-948

What Is ERC-948?

ERC-948 is an Ethereum token protocol specifically designed for subscription-based transactions. It aims to facilitate the integration of blockchain technology and business models.

As the adoption of blockchain technology increases, there is a demand for a protocol that supports subscription models. ERC-948 provides developers with an opportunity to build a reliable platform for businesses, leveraging a proven and current economic model.

While there are already several Ethereum-based token and digital asset standards available, ERC-948 introduces the concept of an opt-out feature. This feature allows users to withdraw tokens by ratifying a smart contract, opening up possibilities for subscription-based systems.

Let’s delve into how the opt-out protocol in ERC-928 operates:

Economically, an opt-out strategy aligns the incentives of customers and suppliers. The protocol can be summarized as follows:

• The user gives permission for a specific firm to deduct a certain number of tokens from their wallet at regular intervals.
• The user has the option to withdraw this permission at any time.
• At each interval, the firm can deduct the specified number of tokens from the user’s wallet, provided that the tokens are available and the user’s consent is active.

Using the power of smart contracts on the Ethereum blockchain, an opt-out smart contract for a subscription service based on ERC-948 would appear as follows:

• The service implements a smart contract that enables users to withdraw tokens.
• The user approves the contract for an infinite allowance and an unlimited duration.
• The user invokes the createSubscription() method of the contract, allowing the service to deduct a certain number of tokens from their wallet at regular intervals.
• The service executes the withdrawSubscription() function at each interval, using transferFrom() to collect the approved tokens, subject to the availability of funds and the user’s consent.

Despite the challenges, ERC-948 offers a highly attractive and profitable environment for subscription service providers. The adaptability of blockchain technology ensures that solutions can be found for any obstacles that may arise.

If a standardized approach to subscriptions is established, it could attract even more consumer-facing enterprises to adopt blockchain technology. While there is often a focus on the new and a dismissal of the old in the blockchain industry, it is important to recognize the effectiveness of existing incentive structures, particularly in the subscription economy.