Permit (EIP-2612)

Permits enable complex, multi-step DeFi operations in a single transaction, improving composability and reducing gas costs. A user can sign a single permit that allows a smart contract to execute a sequence of actions atomically.

• Use Case: Deposit into a lending market and borrow against the collateral in one click.
• Use Case: Approve and provide liquidity to a Uniswap V3 position in a single bundle.
• Mechanism: The signed EIP-712 structured data is passed as a parameter to a function that executes the entire bundle.

Account Abstraction (ERC-4337) wallets and smart contract wallets integrate permits to enhance security models. Since the wallet itself holds the assets, traditional approve is impossible. Permits allow the wallet to verify an off-chain signature from its authorized signer and then grant allowance to a specific spender.

• Mechanism: The user signs the permit, the bundler includes it in a UserOperation, and the wallet's validateUserOp method verifies the signature and sets the allowance.
• Benefit: Maintains self-custody while enabling gasless experiences and batched actions.

Permits streamline the bridging process between Layer 1 and Layer 2 networks or across different chains. A user signs a permit on the source chain, and the signature is relayed to a bridge or messaging protocol, which mints a representative token on the destination chain after verifying the signature's validity.

• Benefit: Avoids the need for two separate transactions (approve, then bridge) on the source chain, reducing cost and time.
• Architecture: Relies on signature verification via precompiles or off-chain verifiers on the destination chain.

A signed permit message is valid until its deadline. Key risks include:

• Cross-chain replays: A signature for Chain A could be maliciously submitted on Chain B if the same token contract exists on both.
• Contract upgrades: A new contract version that doesn't invalidate old signatures could be vulnerable.
• Mitigation: Always include the chainId, token contract address, and a user-specific nonce in the signed data to bind the signature to a specific domain.

Users sign off-chain messages, not on-chain transactions, which can be confusing. Threats include:

• Spoofed interfaces: Malicious dApps can trick users into signing a permit for excessive allowances or to the wrong spender.
• Hidden deadlines: A very long deadline (type(uint256).max) creates a permanent allowance if signed.
• Best Practice: Wallets should clearly display the spender address, allowance amount, deadline, and domain details before signing.

The standard permit flow is susceptible to MEV extraction and race conditions.

• Allowance theft: A malicious actor can frontrun the user's actual transaction, seeing the signed permit in the mempool, and submit it first to set themselves as the spender.
• Mitigation: Use EIP-2612 with EIP-712 signatures, which include a nonce. While the signature can still be frontrun, the nonce prevents replay after the user's legitimate transaction is mined.

The EIP-712 domain separator is critical for preventing cross-domain signature replay. It includes:

• name and version of the contract
• chainId of the originating blockchain
• verifyingContract address
• A compromised or incorrectly computed separator (e.g., using block.chainid incorrectly) invalidates all security. Contracts must use DOMAIN_SEPARATOR() correctly and ensure it's immutable after construction.

Each account has a permit nonce that increments after each successful use. Issues arise from:

• Transaction ordering dependence: If two permits with the same nonce are signed, only the first one executed will succeed.
• Blockchain re-orgs: A reorg could invalidate a permit transaction, but the nonce has been consumed, requiring a new signature.
• Design Consideration: Applications should not assume a signed permit is permanently valid and should handle IERC20Permit revert reasons gracefully.

The ERC-20 standard defines the foundational interface for fungible tokens on Ethereum. EIP-2612's permit function is an optional extension to this standard, adding a signature-based approval mechanism. It does not replace the standard approve and transferFrom functions but provides a gasless alternative for setting allowances.

EIP-712 is a standard for hashing and signing typed structured data, as opposed to raw bytes. It is the cryptographic foundation for EIP-2612 permits. It enables:

• Human-readable signatures: Users see a clear representation of what they are signing.
• Enhanced security: Protects against signature replay attacks across different domains and contracts.
• The DOMAIN_SEPARATOR in a permit is constructed using EIP-712 rules.

A meta-transaction is a pattern where a user signs a message (like a permit) and a separate relayer submits and pays for the on-chain transaction. EIP-2612 is a key enabler for gasless UX. Common implementations include:

• Gas stations networks: Relayers that sponsor transactions.
• Smart contract wallets: Executing bundled actions after a permit.
• dApp-specific relayers: Applications covering fees for their users.

A critical security consideration for any signature-based system. EIP-2612 incorporates multiple layers of protection:

• Nonce: A per-account incrementing number, making every signature unique.
• DOMAIN_SEPARATOR: Unique to the contract chain ID and address, preventing cross-chain/contract replays.
• Deadline: A timestamp after which the signed permit is invalid. This prevents stale signatures from being executed unexpectedly.

This contrasts the traditional approval flow with the permit extension.

Standard approve:

• Requires an on-chain transaction from the token holder (spender).
• User must hold ETH to pay gas.
• Approval is set immediately upon transaction confirmation.

EIP-2612 permit:

• Requires only an off-chain signature from the token holder.
• Can be submitted gaslessly by a third party.
• Approval is only granted when the signed permit is submitted to the contract.

The typical front-end flow for integrating EIP-2612 involves several steps:

1. Request Permit Signature: Use a library (like ethers.js signTypedData) to prompt the user to sign the EIP-712 structured message.
2. Relay Transaction: Send the signature (v, r, s), nonce, and deadline to a backend relayer or submit directly in a bundled transaction.
3. Contract Execution: The relayer calls permit on the token contract, then uses the new allowance to execute the desired action (e.g., transferFrom). This pattern decouples fee payment from user intent.