What you will understand by the end

By the end of this article, you will clearly understand:

• Why ERC-20 approvals were a UX problem

• What EIP-2612 actually changes

• Why EIP-2612 depends on EIP-20 and EIP-712

• Why EIP-712 itself depends on EIP-155 and EIP-191

• How off-chain signatures replace on-chain approval transactions

• The benefits and drawbacks EIP-2612 introduces to Ethereum

The problem EIP-2612 set out to solve

Before EIP-2612, approving ERC-20 tokens always required two on-chain transactions:

1. approve() – give permission

2. transferFrom() – actually use the tokens

This caused several problems:

• Users had to pay for gas twice

• Users needed ETH before using tokens

• UX was slow and confusing

• Onboarding new users into DeFi was harder than necessary

The core issue was simple:

ERC-20 approvals could only happen on-chain, and on-chain actions cost gas.

EIP-2612 exists to fix this.

EIP-20 (ERC-20): the foundation

EIP-2612 builds directly on EIP-20, so we need to understand one thing clearly:
How ERC-20 approvals work.

In ERC-20, approvals are stateful.

function approve(address spender, uint256 amount) external returns (bool);

When a user calls approve:

• The allowance is stored on-chain

• The transaction must be mined

• The user must pay for gas

Then, later:

function transferFrom(address from, address to, uint256 amount) external returns (bool);

The spender consumes that allowance.

This model is simple and secure—but expensive and inconvenient.

The key idea: approvals do not need to be on-chain

Here is the insight behind EIP-2612:

Approvals are permissions, not actions.
Permissions can be expressed as signed messages.

If a user can cryptographically sign:

• Who is allowed

• How much is allowed

• Until when is the permission valid

Then the approval itself does not need to be a transaction.

This is where EIP-712 enters.

EIP-712: typed structured data signing

EIP-712 defines a standard method for signing structured data on Ethereum.

Before EIP-712:

• Wallets signed opaque byte strings

• Users could not read what they were signing

• Phishing and ambiguity were common

EIP-712 fixes this by:

• Structuring the data

• Displaying readable fields in wallets

• Ensuring signatures are unambiguous

Permit(
  owner: address,
  spender: address,
  value: uint256,
  nonce: uint256,
  deadline: uint256
)

Now users can clearly see:

• Who they are approving

• For how much

• For how long

But EIP-712 itself relies on two earlier standards.

EIP-191: signed data standard

EIP-191 defines how signed data is prefixed.

Why this matters:

• Prevents signatures meant for one context from being reused in another

• Adds domain separation at the message level

In short:

A signature should only be valid for the exact purpose it was created for.

EIP-155: replay protection across chains

EIP-155 introduces chain IDs into signatures.

Why this matters:

• Ethereum has multiple networks (Mainnet, testnets, forks)

• Without chain IDs, a signature could be reused on another chain

EIP-155 ensures:

• A signature created on one chain

• Cannot be replayed on another

This is critical for permit security.

EIP-2612: Permit for ERC-20 tokens

Now we can finally talk about EIP-2612 properly.

EIP-2612 adds a new function to ERC-20 tokens:

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

What this function does:

• Verifies an off-chain signature

• Updates allowance on-chain

• Without the owner sending a transaction

Key components:

• Signature: created off-chain by the token holder

• Nonce: prevents replay attacks

• Deadline: limits how long the permission is valid

How Permit works step by step

1. User signs a permit message off-chain

2. The signature follows EIP-712 rules

3. Anyone (often a dApp or relayer) submits permit()

4. The token contract verifies the signature

5. Allowance is updated

6. The next action (e.g. transferFrom) can happen immediately

Approval and usage can now occur in a single transaction.

What EIP-2612 improves

EIP-2612 brought real improvements to Ethereum UX:

• Gasless approvals for users

• No ETH required to approve tokens

• Fewer transactions

• Better onboarding for new users

• Enables meta-transactions

This is why permit is now common in modern token contracts.

Why EIP-2612 matters today

EIP-2612 changed how users interact with ERC-20 tokens.

Today:

• Many DeFi protocols assume permit support

• Gasless UX is becoming the standard

• Understanding permit is essential for modern Ethereum development

Even if you never write a token contract, knowing how permit works helps you:

• Design better dApps

• Avoid security mistakes

• Understand modern DeFi flows

Conclusion

EIP-2612 exists because Ethereum learned from its own friction.

ERC-20 approvals were secure but inconvenient.
EIP-712 made signatures safe and readable.
EIP-155 and EIP-191 made them non-replayable.
EIP-2612 combined all of this into a practical improvement.