FAQ Answer
Escrow and Trade Protection
How does escrow funding differ for native assets and ERC-20 tokens?
Native assets can be deposited directly into escrow. ERC-20 tokens may require an approval transaction followed by a separate deposit transaction that actually transfers the tokens into the escrow contract.
Answer
Native blockchain assets and ERC-20 tokens use different mechanisms when funding an on-chain escrow. The main difference is that a native asset can be sent directly with the escrow transaction, while an ERC-20 token may first require permission for the escrow contract to transfer it.
Requirement | Native asset | ERC-20 token |
Approval transaction | Not required | May be required |
Escrow deposit | Direct transaction to the escrow contract | Separate transaction transfers the tokens after approval |
Asset used for gas | The same native asset | The network’s native asset |
Required balance | Trade amount plus gas | Token amount plus enough native asset for gas |
Contract verification | Verify the escrow contract | Verify both the token and escrow contracts |
Funding escrow with a native asset
The seller signs one transaction that sends the required native asset directly into the escrow contract. No token allowance is needed. However, the wallet must contain slightly more than the trade amount because part of the native balance is required for gas.
Funding escrow with an ERC-20 token
ERC-20 funding can involve two blockchain transactions:
- Approve the escrow contract. The seller authorizes the contract to spend a specified amount of the token.
- Deposit the tokens. A separate escrow transaction transfers the required tokens from the seller’s wallet into the contract.
Approval does not move tokens into escrow. It only creates or updates an allowance. If the contract already has a sufficient allowance, the approval step may not be required again.
The seller also needs the network’s native asset to pay gas for both transactions. Holding only the ERC-20 token is not enough.
Before signing, verify the network, token contract, escrow address, amount and transaction action. The buyer should not send fiat after seeing only an approval transaction. Payment should begin only after Senpero confirms that the actual asset deposit funded the escrow order.