Understanding the Limitations of transferFrom() for ETH and How to Simulate Escrow Functionality

Discover how to manage ETH transfers safely without the `transferFrom()` function and implement an escrow contract for native token handling. --- This video is based on the question https://stackoverflow.com/q/70964042/ asked by the user 'Kuly14' ( https://stackoverflow.com/u/15067763/ ) and on the answer https://stackoverflow.com/a/70964210/ provided by the user 'Petr Hejda' ( https://stackoverflow.com/u/1693192/ ) at 'Stack Overflow' website. Thanks to these great users and Stackexchange community for their contributions. Visit these links for original content and any more details, such as alternate solutions, latest updates/developments on topic, comments, revision history etc. For example, the original title of the Question was: TransferFrom() function for ETH(as native token not ERC20)? Also, Content (except music) licensed under CC BY-SA https://meta.stackexchange.com/help/licensing The original Question post is licensed under the 'CC BY-SA 4.0' ( https://creativecommons.org/licenses/by-sa/4.0/ ) license, and the original Answer post is licensed under the 'CC BY-SA 4.0' ( https://creativecommons.org/licenses/by-sa/4.0/ ) license. If anything seems off to you, please feel free to write me at vlogize [AT] gmail [DOT] com. --- Understanding the Limitations of transferFrom() for ETH When working with Ethereum and smart contracts, developers often encounter situations where they need to handle transactions involving various tokens. For ERC20 tokens, the transferFrom() function is a commonly used method to transfer tokens on behalf of users, provided they have previously approved the action. However, this raises a critical question: can we implement a similar functionality for ETH, which serves as Ethereum's native token? In this post, we will explore why the transferFrom() function does not work for ETH and how we can effectively handle its transfer with a custom approach, specifically using an escrow contract. The Challenge with transferFrom() for ETH Unlike ERC20 tokens, where token approvals and balances are contained within the token contract, ETH operates differently. Here are the main reasons why transferFrom() cannot be simulated for ETH: Absence of Approval Mechanism: In an ERC20 token contract, the approval mechanism allows tokens to be allocated for transfer by a delegated account. For ETH, no such tracking mechanism exists on the Ethereum layer. There is no database that stores approval for using native ETH. Centralized Balance Control: ETH balances are maintained directly in the wallets associated with each address, hence there is no flexibility to grant or revoke permissions for its use on the protocol level. Essentially, without a way to approve ETH transfers, developers are left with limited options for managing how ETH is used within their applications. Implementing Escrow Functionality for Native ETH While you cannot use transferFrom() for ETH, there is an alternative solution: an escrow contract. This contract allows users to deposit ETH securely and specify conditions under which it can be withdrawn. Below is a simple example of how an escrow contract can be implemented in Solidity. Example: Escrow Contract Here's a Solidity contract that illustrates a basic escrow mechanism: [[See Video to Reveal this Text or Code Snippet]] Explanation of the Code Contract Initialization: The Escrow contract initializes with a designated holder and an admin account. The holder can be the user who deposits the ETH, while the admin can be a case manager or a smart contract responsible for overseeing the transaction. Receive Function: The receive() function enables the contract to accept incoming ETH transactions. This allows users to deposit their ETH into the escrow contract. Withdrawal Function: The withdraw() function allows either the holder or the admin to withdraw funds from the escrow. The require statement ensures that only authorized users can perform this action, adding an extra layer of security. Advantages of Using Escrow Contracts Security: Funds deposited are held securely within the contract, minimizing the risk of direct access by unauthorized parties. Controlled Withdrawals: By regulating who can withdraw the funds, an escrow contract can facilitate complex transactions and agreements between parties without the need to trust one another outright. Scalability: While the provided example caters to a single user, the logic can be adjusted to handle multiple users by tracking individual deposits and permissions. Conclusion In conclusion, while the transferFrom() function is not available for ETH due to the way it operates on the Ethereum network, utilizing an escrow contract provides a viable alternative for managing ETH transfers. By implementing a custom contract that governs the deposit and withdrawal of funds, developers can handle native ETH securely and effectively. As Ethereum continues to evolve, understanding these mechanisms is crucial for designers and d