Kyber Network, token running on top of the Ethereum [ETH] blockchain, has a new proposal for the Ethereum community. Kyber network allows for payments on the blockchain in a decentralized manner through other ETH-based tokens and ETH.
In its latest Ethereum Improvement Proposal (EIP), the network seeks to standardize the reporting of transactions through a proposal named ERC-1257. The EIP proposes a standard called Proof of Payment that will help track the payments of different parties on the ETH blockchain, i.e., humans and smart contracts.
The reason behind the proposal was that Kyber discovered that it is difficult to track payments on the blockchain especially those made by smart contracts. There are more than 150,000 smart contracts registered on the Ethereum network whose records need to be maintained and tracked to improve efficiency and security.
Kyber also feels that it is important to differentiate between payments made by humans from those made by smart contracts. According to Kyber, this difficulty in tracking payments is causing a bottleneck in the adoption of decentralized token payments.
In a blog post published yesterday, Anton Buenavista, a developer working with the Kyber Network team gave an outline of some of the issues that prompted the network to design the EIP and how the EIP would actually benefit not just Kyber but also the entire Ethereum ecosystem.
Apart from the need to solve the difficulty experienced in tracking payments made by smart contracts and having to differentiate between those made by smart contracts and human beings, Anton believes that there is also a need to remove the need for multiple deposit addresses when processing payments.
This especially applies to merchants who accept payments in ERC-20 tokens and would like to keep better track of their payment records. More often than not, it is better to create unique addresses for each transaction to improve record tracking. However, this creates a situation where the merchant has to make another transaction of transferring these funds from multiple addresses to a single address. In terms of costs, this is not economical and the merchant suffers from payment of gas fees which could pile up after a while.
Anton believes that adopting the ERC-1257 standard for processing payments that involve smart contracts will beneficial to several parties including protocols, merchants, and applications developers. By pushing for the adoption of the Proof of Payments standard, Kyber aims to “foster collaboration to improve payment flows within the ecosystem.”