Auto-Create Hedera Accounts with HBAR and Token Transfers
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Oct 25, 2022
by Abi Castro

Currently, as defined in HIP-32, a user can auto-create a Hedera account by sending HBAR to an alias that does not exist on the network. When HBAR is sent to an alias, the account creation fee is deducted from the HBAR sent and the account is auto-created. The new account’s balance is the remaining HBAR. However, if you were to send an HTS token to an alias, auto-account creation does not work because it can not deduct the account creation fee from an HTS token.

HIP-542 outlines the motivation and rationale behind auto-account creation through HTS tokens. This is done by charging the account creation fee to the payer of the transfer transaction.

What does this mean?

This means that sending an HTS token to an alias that does not exist on the network will create a Hedera account and the sender will pay for the account creation fee. In addition, one auto-association slot will be included. This is necessary for the new account to associate with the HTS token.

This will allow a hedera builder to send an NFT to an alias.

Rather than a dApp operator creating an account, associating with the token, and transferring the token, they will be able to send native tokens to an alias in a single transaction.

It is important to note that HIP-542 changes where the account creation fee is being deducted from. Rather then deducting the account creation free from the sent HBAR it will be deducted from the payer of the transfer transaction. The newly created account will receive the full HBAR sent.

Ethereum contracts allow ERC-20 and ERC-721 assets to be transferred before an account has been created. Supporting auto-creation with HTS token allows the network to meet the expectations of Ethereum users, raising interoperability.

Hip 542 updated

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