Modes of Use

Stateless smart contracts have two basic usage scenarios; as a contract account or as a delegated signature. These modes are used to approve transactions in different ways which are described below. Both modes make use of Logic Signatures.

Logic Signatures

Logic Signatures, referenced as LogicSig, are structures that contain the following four parts.

Logic Signature Structure
Logic Signature Structure

Before a LogicSig can be used with a transaction, it first must be a valid Logic Signature. The LogicSig is considered valid if one of the following scenarios is true.

  • Sig contains a valid Signature of the program from the account that is sending the Transaction
  • Msig contains a valid Multi-Signature of the program from the Multi-Signature account sending the Transaction
  • The hash of the program is equal to the Sender's Address

The first two cases are examples of delegation. An account owner can declare that on their behalf the signed logic can authorize transactions. These accounts can be either single or multi-signature accounts. Account delegation is described in further detail below.

The third case is an account wholly governed by the program. The program cannot be changed. Once Algos or assets have been sent to that account, Algos or assets only leave when there is a transaction that approves it. This usage case is considered a contract account which is described below.

Contract Account

For each unique compiled stateless smart contract program there exists a single corresponding Algorand address, output by goal clerk compile. To use a TEAL program as a contract account, send Algos to its address to turn it into an account on Algorand with a balance. Outwardly, this account looks no different from any other Algorand account and anyone can send it Algos or Algorand Standard Assets to increase its balance. The account differs in how it authenticates spends from it, in that the logic determines if the transaction is approved. To spend from a contract account, create a transaction that will evaluate to True against the TEAL logic, then add the compiled TEAL code as its logic signature. It is worth noting that anyone can create and submit the transaction that spends from a contract account as long as they have the compiled TEAL contract to add as a logic signature. Contract accounts are great for setting up escrow style accounts where you want to limit withdrawals or you want to do periodic payments, etc. For example, Alice sets up a contract account and funds it with tokens. The TEAL logic is written to allow Bob to remove up to 200 tokens every 10000 rounds from the contract account. Bob submits a transaction to remove 201 from the contract account and the transaction is rejected. Bob submits a transaction to remove 150 tokens and the transaction is successful. Bob immediately resubmits the same transaction and it is rejected.

Contract Account
TEAL Contract Account

Delegated Approval

Stateless smart contracts can also be used to delegate signatures, which means that a private key can sign a TEAL program and the resulting output can be used as a signature in transactions on behalf of the account associated with the private key. The owner of the delegated account can share this logic signature, allowing anyone to spend funds from his or her account according to the logic within the TEAL program. For example, if Alice wants to set up a recurring payment with her utility company for up to 200 Algos every 50000 rounds, she creates a TEAL contract that encodes this logic, signs it with her private key, and gives it to the utility company. The utility company uses that logic signature in the transaction they submit every 50000 rounds to collect payment from Alice. The logic signature can be produced from either a single or multi-signature account.

Delegated Signature
TEAL Delegated Signature