With the blockchain industry constantly evolving with mass adoption into the ecosystem, there’s a surge in the usage of blockchain in DeFi.
The latest upgrade in Ethereum’s ecosystem is account abstraction. It focuses on better smart contract wallets by making them safer to use and simpler to construct. Let’s see how account abstraction will help revolutionize Ethereum to automate transactions.
What is Account Abstraction?
Account Abstraction enables you to program smart contracts to initiate transactions automatically. Any functionality that the user wants to implement can be integrated into the smart contract wallet on Ethereum. For example, if you want to pay your rent monthly to the landlord at a fixed rate with your wallet.
So, you can set up a smart contract to automatically send the specific amount each month. This way, you won’t need to log into your wallet to process the transaction every time. Here is an interesting X thread on how this feature is implemented with Visa:
Source: X
The biggest change is that it enables us to turn the externally owned accounts into smart wallets. So, instead of controlling an externally owned account, you control a smart contract that controls your wallet.
This further enables features & benefits. For example, social recovery and whitelisting other wallet addresses to make transactions only with them.
Benefits of Account Abstraction
First and foremost, account abstraction would make self-custody available. It would enable you to define your own flexible security rules, allowing users to custom authorize and build logic as per their needs.
- Social recovery: Set up trusted contacts for wallet recovery.
- Share your account security across trusted devices.
- Batch transaction: Approve & execute a swap in one go.
- Permission Controls: Enables 2FA.
- Automated transactions: Set up transactions that do not require constant manual approvals.
Source: X
Here are other benefits:
- Social Recovery: With account abstraction, users will be able to recover their accounts without using seed phrases. Or, with the help of previously whitelisted addresses, such as trusted individuals.
- Session keys: With session keys, users might give smart contracts temporary access to their wallets in exchange for a set amount of gas fees for a fixed time.
- Batch transactions: Instead of approving & navigating through multiple transactions to get one action done, users can swap with account abstraction. Also, with transaction execution and approval.
- Permission controls: This feature enables you to keep a list of scam addresses and block transactions to and from them. Also, it allows you to set transfer limits on accounts.
- Automated transactions: With account abstraction, you can set up recurring transactions that do not require constant manual approvals.
The above upgrades come with the ERC – 4337 the latest one. It enables account abstraction without changing the Ethereum protocol.
What is ERC-4337?
ERC – 4337 is an Ethereum improvement proposal that brings us account abstraction features. It enables non-custodial wallets to function as programmable smart contracts with logic.
As a result, ERC-4337 gives conventional web3 wallets cutting-edge capabilities like social recovery, multisig, two-factor authentication, and much more using effective and simpler signature algorithms.
Source: X
What are Ethereum Wallets?
To enter into the Ethereum ecosystem and the tools built into it, a user requires a wallet. Wallets serve as the entry point through which you can keep the funds, swap, lend, borrow, and a lot more. In Ethereum there are two main types of accounts:
- Externally owned accounts (EOA): Users interact with Ethereum using EOA, the only way to start a transaction or execute a smart contract, these are like the regular wallets like MetaMask wallets, used to send & receive tokens and interact with the smart contracts, which requires remembering the secret or store the secret phrase to have access of the wallet and keep the money safe.
- Contract accounts/smart accounts: These are programmable and self-customizable codes that enable you to perform fixed functions like buying tokens when you execute a code, something that EOA can’t. The fun fact is even if you lose the secret phrase you will still be able to recover your account.
Some wallets supporting account abstraction are:
Conclusion
The next step in the Ethereum user experience is smart contract wallets, which provide more security, customization, and flexibility to set your own rules along with self-custody.
Smart contract wallets are made possible by account abstraction, which has many advantages for Ethereum users. It enables security adjustment, transaction batching, social recovery, and much more. These advantages improve Ethereum’s usability and security in terms of managing the funds over the wallets.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted risk tolerance levels of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
