Recently, Ethereum developers published a proposal called ERC-4337 which brings the concept of account abstraction into the equation. If successful, it could make decentralized applications (dApps) more flexible, efficient and accessible, both in regards to user experience and implementation in a blockchain network [1] – instead of relying on independent executables such as smart contracts to handle transactions and other operations, ERC-4337 takes a step further and gives users a simplified control panel through which they can perform different crypto activities: smart accounts. The concept behind them, account abstraction, eliminates many entry barriers that have hindered the widespread use of blockchain technology in the past, including high transaction fees, complex user interfaces and limited functionality.
In this article, we look at the potential benefits of account abstraction for the mainstream use of blockchain, such as its capacity to enable new and innovative use cases, boost transaction throughput and improve user experience. We believe that account abstraction has the potential to play a critical role in the ongoing blockchain revolution by enabling the development of truly inclusive and accessible decentralized systems.
What is Account Abstraction?
It’s a new paradigm that makes blockchain accounts "programmable." This idea implies the existence of two different types of Ethereum accounts [4, 5]:
Account abstraction signifies an upgrade for the typical scenario where crypto users depend on the wellbeing of their private keys – if they somehow can’t access them, they lose their accounts and all their funds. This represents an issue on many levels, even with alternatives like the Gnosis Safe wallet, which employs multiple smart contracts and smart signatures, and the user has access to a saved history if they lose their private key. It’s not a perfect solution, and the same applies to services like Coinbase, which act like centralized systems – the user is just at the mercy of a hacker or system failure.
ERC-4337 therefore brings a major improvement when it comes to specific additions to the status quo of the accounts. First, it unifies contract accounts and EOAs, making user accounts more programmable (thus ‘smart accounts’). The proposal removes the logic that requires accounts to sign transactions, abstracting such a mechanism. This change will free up a lot of room for other enhancements, such as implementing multi-sig, 2-factor authentications, withdrawal limits and expiration on keys, similar to what we know from virtual cards [1, 2].
Self-custody models, which allow users to connect to decentralized apps and have complete control of their assets, are indeed an attractive option for a mainstream audience that probably wouldn’t have an easy foray into blockchain.
Interaction with Private Keys
Account abstraction is a paradigm that involves exclusively holding assets in smart contracts rather than externally-owned accounts (EOAs). As a result, various contract implementations can be developed, each potentially having a unique solution to different challenges.
Several critical factors must be considered regarding key storage in this new system. For instance, if users lose their key, it cannot be recovered. However, a smart contract can be configured to allow for the takeover of another key if the initial key has not interacted with the contract for a specified period of time [1,3]. This makes for an enticing possibility if the user is interested in keyless wallets since different secure authentication methods can be supplied through smart contracts.
Communal wallets, where anyone can execute any action, can also be implemented through this paradigm. What’s more, users could create new wallets with a single seed phrase very easily, as in Metamask’s “Add Account” feature.
The Ethereum team presented the ERC-4337 proposal [1] a few days ago at the WalletCon in Denver, US, introducing smart accounts to the world. These are expected to boost mainstream adoption of blockchain by making it user friendly. Account abstraction has been in the works for over nine years, which evinces how big the iceberg is below the surface. It’s hard to reach a point such as this one in any industry, where there’s consensus and a protocol capable of supporting it and bringing it to us, let alone one that is based on technology.
Smart accounts will remove the complexity of seed phrases or the technical process of setting up a wallet. As Yoav Weiss said: "The next billion users are not going to write 12 words on a piece of paper. Normal people don't do that." [...] "We need to give them better usability, and they should not need to think about cryptography keys." [5]
The process is simple: a smart wallet signs a "user operation," which is then dispatched to a special mempool, which is simply a queue of transactions (albeit a different queue from Ethereum's conventional mempool).
Bundlers are similar to miners or validators in that they take user activities from the mempool and return the desired result to the wallet. Bundlers are reimbursed by the user's contract account or a third party known as a "paymaster" for the necessary gas (transaction cost). This may be a decentralized application or a wallet provider.
The proposal for account abstraction in blockchain can potentially revolutionize how we interact with decentralized applications. By allowing smart contracts to act as senders of transactions and handle fees on behalf of users, many entry barriers that have hindered the widespread use of the technology will be a thing of the past. With this new paradigm, the development of truly inclusive and accessible decentralized systems becomes a reality.
Although some difficulties and constraints will have to be considered to ensure safety and avoid misuse, account abstraction will allow a growing number of casual internet users to go crypto. It’s an exciting prospect and we can't wait to see how it unfolds in the coming years.
[1]. Vitalik Buterin (@vbuterin), Y. W. (@yoavw). (2021, September 29). ERC-4337: Account abstraction using Alt Mempool [draft]. Ethereum Improvement Proposals. Retrieved March 6, 2023, from https://eips.ethereum.org/EIPS/eip-4337
[2]. Nijkerk, M. (2023, March 2). Ethereum says ERC-4337 deployed, tested, beginning era of smart accounts. CoinDesk Latest Headlines RSS. Retrieved March 6, 2023, from https://www.coindesk.com/tech/2023/03/01/ethereum-activates-account-abstraction-touted-by-founder-buterin-as-key-advance/
[3]. Liu, B. (2023, March 1). Ethereum's ERC-4337 account abstraction smart contract is live. Blockworks. Retrieved March 6, 2023, from https://blockworks.co/news/ethereum-erc4337-account-abstraction-smart-contract
[4]. Batycka, D. (2023, March 6). Ethdenver goes beyond cringe to utility, culture and beyond. CryptoSlate. Retrieved March 6, 2023, from https://cryptoslate.com/ethdenver-goes-beyond-cringe-to-utility-culture-and-beyond/
[5]. Team, P. (2022, November 16). Ethereum Account Abstraction: Everything you need to know! Panther Protocol Blog. Retrieved March 6, 2023, from https://blog.pantherprotocol.io/ethereum-account-abstraction-everything-you-need-to-know/
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