ERC-948 is a new Ethereum token protocol that is designed to connect subscription businesses with customers and allows for subscription-based transactions.
What Is ERC-948?
ERC-948 is a new Ethereum token protocol
designed exclusively for subscription-based transactions. Blockchain technology is transforming business models
where the interaction of both doesn't seem to end anytime soon. This is where ERC-948 comes in.
As more organizations are integrating blockchain technology, blockchain engineers and enthusiasts aim to guarantee that it can be applied to subscription models. After establishing the economic motivation for subscription-capable coins and the lack of a protocol on which tokens can be created at the moment, ERC-948 can be a good opportunity for developers wishing to construct a platform on which businesses may rely on a proven, current economic model.
There is no scarcity of Ethereum-based token and digital asset standards.
Users would be able to use the opt-out feature and more particularly, a smart contract
can be written to withdraw tokens from users, provided that the users first ratify the contract. Such an idea may undoubtedly open up a plethora of new possible use cases for subscription-based systems
Let’s look at how an opt-out protocol in ERC-928 works:
Economically, an opt-out strategy would be most effective since it would align customer and supplier incentives. The protocol may look something like this:
- The user authorizes "x" tokens to be removed from their wallet by "z" firm every "y" time period.
- The user has the option to withdraw permission at any time.
- Every "y" time period, the owner of "z" firm may remove "x" tokens from the user's wallet. Unless "x" tokens are accessible, the user’s consent is active, and it has been "y" time period since the last withdrawal, the transaction will throw().
Using the Ethereum blockchain's smart contract power, an opt-out smart contract for a subscription service based on ERC-948 may look like this:
- The service implements a smart contract that allows users to withdraw tokens.
- The contract is approved by the user for an infinite allowance and an unlimited length of time.
- The user invokes the contract's createSubscription() method, allowing "x" tokens to be taken from their wallet every "y" time period by "z" service until the user cancels.
- The service runs withdrawSubscription() every "y" time period, which uses transferFrom() to collect the "x" tokens that have been approved for that payment period, subject to funds being available and the user’s consent.
Despite several obstacles, ERC-948 offers a highly attractive and profitable environment for subscription service providers. Because blockchain technology is often quite adaptable, one does not need to be concerned about the issues provided because blockchain frequently discovers suitable answers.
If a uniform standard for subscriptions were developed, it may draw even more consumer-facing enterprises to blockchain technology. While much blockchain rhetoric demonizes the old and extols the new, we should keep an eye on the incentive structures that have proved effective in our existing economy, of which the subscription economy is unquestionably one.