VeChain enables fee delegation feature for DeFi mass adoption

  • VeChain’s Fee-Delegation as a Service (DaaS) feature will facilitate interaction with smart contracts.
  • DaaS module will be released as open-source to be used by other platforms.

In a Medium post, VeChain‘s CTO Peter Zhou revealed a new feature called Fee-Delegation as a Service (DaaS). Integrated into the VeChainThor blockchain’s native fee delegation protocol, the feature will allow reducing the complexity of interacting with decentralized applications (dApps) by facilitating transaction payments.

Zhou explained that one of the biggest obstacles in the DeFi sector is that users must cover network transaction costs to invoke the features in a smart contract. Therefore, they have to use their private keys and pay with the cryptocurrency or token used by the public blockchain.

For example, to interact with a smart contract on Ethereum it is necessary to use gas (Gwei) to validate the transactions. This creates difficulties for users and hinders the mass adoption of dApps. Zhou believes it’s already hard enough that users have to buy and store cryptocurrency, deal with the volatility of the token price. So calculating transaction costs is an unnecessary burden.

On Ethereum, these can be worth hundreds of dollars depending on the number of transactions and the congestion on the blockchain. In contrast, VeChain seeks to implement an infrastructure layer that allows for the delegation of fee payments to third parties to reduce “user exposure” to the potential risks and difficulties of interacting with a smart contract. Zhou added:

As an analogy, if Amazon users were asked to pay for computational resources any time they placed an order, it would significantly impact the usability of the platform by placing constraints on users.

How does VeChain’s DaaS work?

VeChain’s goal is to become a “powerhouse” for dApps. Therefore, it was necessary to complement the fee delegation protocol with the DaaS. Thus, the user experience will be improved and “real demand will be created for the relevant token for DeFi services”.

As shown in the image below, when a user interacts with a smart contract’s function, the dApp will ask for the user’s signature. In parallel, the request will be sent to the DaaS provider who will cover the cost of the transaction.

VeChain VET


The dApps will collect both the vendor and user keys and issue the transaction on the blockchain VeChainThor. The cost of the fee will be reduced from the DaaS provider’s account. VeChain’s CTO clarifies that the DaaS can be handled by a third party dedicated exclusively to the service or by the team that operates the dApp. Furthermore, Zhou explained:

In this new arrangement, communication between the dApp and the DaaS module is now standardized by the newly proposed VIP-201. It is a communication protocol that allows any dApp and DaaS service provider to seamlessly work together, as long as they both apply the protocol.

VeChain expects that the use cases will be expanded beyond the crypto ecosystem. In addition, the DaaS module to be released in the future will be open source. Therefore, it could be leveraged by other platforms, creating greater adoption for dApps.

About Author

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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