Account Abstraction represents a significant advancement in the Ethereum ecosystem, enhancing its security and value. It introduces a new paradigm that enables blockchain accounts to become programmable, which has far-reaching implications for decentralized application (dApp) development. In this article, we will delve into the intricacies of Account Abstraction , how Ethereum ERC-4337 currently simulates Account Abstraction, and explore the future prospects of how AA can help build a new generation of WEB3 DApps.
The Ethereum network features 2 types of accounts: Contract Accounts and Externally Owned Accounts (EOAs).
- A balance representing the available ETH,
- A nonce to ensure transaction uniqueness,
- An address for network identification.
Each account on Ethereum is linked to a cryptographic object called a signer, which serves as authorization to protect the account’s ETH from unauthorized use.
A signer, also known as a keypair, consists of a private and public key. The private key signs digital messages, while the public key verifies that the signature corresponds to the private key.
However, the current system exposes account owners to risks such as losing their accounts and funds due to minor errors. This vulnerability stems from the private keys, which, if lost, lead to the loss of the account and its contents.
How does Account Abstraction help?
Account Abstraction is a revolutionary approach that enhances account authorization by decoupling it from traditional private key ownership. With this paradigm, every account can be transformed into a smart contract, enabling users to deploy and utilize accounts with custom authorization logic to suit their unique requirements.
By abstracting the authorization logic, Account Abstraction brings Contract Accounts and Externally Owned Accounts together into a unified system, making user accounts more programmable. It eliminates the need for signing transaction logic to be hard-coded into an account, allowing it to be abstracted out. This is the primary reason it is called Account Abstraction.
How does Account Abstraction interact with private keys?
● Is it possible to recover a lost private key?
No, it is not possible to recover a lost private key. However, a smart contract can be programmed with specific logic to handle lost keys. For example, it could be designed to allow another authorized key to taking over if the original key has not interacted with the contract for a certain period of time.
● Can someone have a keyless wallet with Account Abstraction?
With Account Abstraction, it is possible to authenticate users without requiring a private key. Smart contracts can be designed to implement alternative authentication methods for user safety, eliminating the need for a private key.
What is EIP-4337 and how does it improve smart contract wallets?
EIP-4337 represents a significant advancement in smart contract wallets on Ethereum. It simplifies the process of writing and operating smart contract wallets by enabling multi-calling of some of the on-chain and off-chain infrastructure required.
Instead of making transactions, users can utilize UserOperations to operate on a higher-level mempool. This advancement makes it possible for developers to write custom smart contract wallets with minimal coding effort and without having to worry about subsidizing transaction fees.
Until recently, wallets were mainly traded through external accounts (EOA). The current development trend is to trade through smart contract wallets in the form of AA (Account Abstraction), which is expected to significantly improve the UX of Web3（User Experience）； EIP-4337 was designed to emulate account abstraction without requiring any changes to the ethereum protocol, The essence is a standardized smart contract wallet. However, it does not eliminate externally owned accounts, and wallets built on top of EIP-4337 are still considered second-class citizens on the Ethereum network.
The complete ERC-4337 specification can be found at https://eips.ethereum.org/EIPS/eip-4337 and the future front-end and back-end improvements that ERC4337 may bring are summarized in the table below.
Account Abstraction offers several benefits to the Ethereum ecosystem, some of which are as follows:
- Multicall：In traditional dApps on Ethereum, every off-chain transaction requires a new transaction, which can be time-consuming and expensive due to high gas fees. With Account Abstraction, multiple transactions can be bundled into one atomic transaction called a multicall. This approach saves time and reduces transaction costs for users.
- Session Keys：Session keys represent a significant breakthrough for user experience (UX). Sessions can be defined in various ways, including a given duration, a maximum amount of gas, a maximum transaction volume, or a particular function. This feature makes it easier for users to manage their accounts and execute transactions without having to worry about the complexities of the underlying technology.
- Social Recovery：Social recovery is a mechanism for protecting users in case they lose their accounts. Unlike seed phrases, the typical recovery method for wallets such as MetaMask, social recovery enables users to authorize a new key as the legitimate wallet owner, eliminating the need to remember or retrieve a lost private key. This feature enhances the security and usability of Ethereum accounts.
The Future of Account Abstraction
In March 2023, Ethereum ERC-4337 was released, paving the way for creating a similar traditional Internet Web2 user experience (login, re-engagement, account recovery...) through account abstraction. When can we really improve the WEB3 user experience, achieve higher re-engagement rate and lower churn rate?
Wallets and DApps take at least three months to develop, three months to roll out, and one month to create measurable user data for iterative improvements. According to this estimate, by the fourth quarter of 2023, we should be able to witness major changes in Web3 user indicators; of course, this change may also appear earlier in other areas, such as Web3 social applications such as Lens.On the other hand, ERC-4337 is an excellent advancement of Web3 UX and will also be a fertile ground for Web3 messaging. ERC-4337 will significantly improve the general user experience of Web3 applications and create an environment for more native Web3 conversations. Related protocols include XMTP, PUSH, etc...
A. Wallet Users:
To date, wallets have been mandated to prioritize decentralization and self-custody over user experience, as necessity is the mother of invention. But we have an open question: "Now that ERC-4337 makes it possible, can wallets move to a better user experience?" Considering the poor user experience to date, there are benefits to developing better user experience and more secure wallets. Opportunity to gain newly expanded market share.
In terms of convenience and security, we see that SafeVault as a pioneer, launched the first AA contract safe, including a series of interesting features, trying to solve the traditional problems of WEB3 wallets, such as: time-based account recovery function (solve help The problem of forgetting and losing words), the isolation security function of the contract vault (to help solve the problem of mnemonics being stolen), the wallet authorization function based on NFT (Solve the problem that wallet management authority cannot be shared and transfer ).... This is just a case of integrating some of the abstract features of AA accounts. We expect to see more innovative wallets with excellent user experience this year.
Web3 does not have its first billion users yet, because there isn’t yet an “iPhone moment” or “killer app” to attract and retain the first billion users. Web3 is sitting at 100m users, and wallets and blockchains may not get us there, considering the anemic 2.5% re-engagement rate. It might take a new mass consumer app to drive mass appeal, such as:
- Decentralized social media protocols like Lens or Farcaster
- Decentralized Gaming apps akin to “The fortnight of Web3.”
- Decentralized shopping apps akin to “The Amazon of Web3.”
We predict that Web3 Social will win 100 million recurring users before a wallet will, and wallets have many years of a head start. This belief is predicated on the viral behavior of social networks. Just because your friend buys and sells cryptocurrencies via a wallet doesn’t mean a network effect will emerge and extend the same behavior to your friend’s full social circle. In contrast, if a new social network were to appear (Web2 or Web3), it would require some network effects to succeed; essentially, Social is a mass adoption vertical. Defi is a critical early adopter vertical in Web3, but Defi is not a mass adoption vertical, at least not yet.
Vertical dApps could attract many more users than wallets, and if that were to transpire, you would see more vertical d’Apps developing wallets to improve user retention. For example, UniSwap, a leading decentralized exchange, just announced the launch of its own wallet. While Coinbase is a centralized exchange, they also launched their own wallet in 2022, This proves that if wallets do not improve the user experience, vertical dApps will try to replace them.
In conclusion, Account Abstraction is a significant advancement for Ethereum, allowing for programmable blockchain accounts and customizable authorization logic. Features like multicall, session keys, and social recovery make Ethereum more user-friendly and efficient.Whether it's in vertical dApps or between wallets. Those vendors who are first to deploy a better UX will gain a first-mover advantage.
At the same time, ERC-4337 is also one of the important updates of the Ethereum protocol in March 2023. EIP-4337 further simplifies the process of writing and operating smart contract wallets (AA). AA account abstraction is bound to be a promising and important direction in the future of Ethereum and blockchain technology.