what is an account abstraction in smart contracts

Account abstraction (AA) is the process of customizing certain features of smart contract accounts, such as fee payment options and transaction approval systems, to make it simpler for users to interact with the blockchain.

The Ethereum community has engaged in extensive discussion on account abstraction, and Vitalik Buterin has put up a number of proposals, including ERC-4337 and EIP-2938, that describe ways to make transactions easier for users. So, before diving deep into AA, let’s take a moment to understand some basics about Ethereum accounts. There are two types:

  • External Owned Accounts (EOA): These are the traditional accounts created with a wallet like MetaMask. An EAO has a hidden private key and a derived public address. Most users use EOAs to interact with a blockchain.
  • Smart Contracts accounts: Smart contracts are programmable apps that can execute transactions. However, they do not have an associated private key. Most DeFi apps on Ethereum are designed for contract accounts.
Understanding Account Abstraction (AA)

Under the EOA paradigm, the idea of the signer and the concept of the account are combined. The signer, who has the authority to spend your tokens, is also the entity in custody of them (the account). This presents a difficult situation. if a holder of an EOA account loses their signer (private key), they also lose their account. EOA accounts are difficult to secure and recover.

EOAs are challenging because, as individual accounts, they can issue single transactions that must be verified. This costs gas each time. In the end, there isn’t much flexibility or customization because users can’t build their own logic to add new signers or allow various keys to sign on to their accounts. As a result, the range of transactions is severely constrained.

Account abstraction can resolve all of these challenges by converting an EOA into a smart contract with its own logic for selecting what counts as a validated transaction. This will lead to the decoupling of the signer and the account and open up more potential for account use.

AA, for instance, might enable the EOA to carry out a variety of operations, like authorizing transactions with zero or many keys or rotating the account’s signer each week.

So, account abstraction also allows for smooth interactions, and has a positive impact on security and user experience (UX). It has several use cases and resolves some problems, particularly those related to project scalability and onboarding.

Account Abstraction (AA) and Social Recovery

AA will heavily improve social recovery as it will avoid the problem of a single point of failure with the private key. This would offer some UX improvements. Account abstraction can help set up a stronger security perimeter with multi-signers.

Developers can also leverage account abstraction to build enhanced blockchain games with micro-economies. Although the play-to-earn gaming format is widely adopted, there are still some drawbacks. For example, the number of microtransactions required to maintain gaming with numerous NFT in-game assets among thousands of users slows down the play-to-earn model. So, account abstraction can remedy this via a mechanism of collective signers.

Account Abstraction and Security

Account abstraction does not only simplify user interaction with dApps and the Web3 experience. It also boosts security. It enables you to modify your accounts so that they only function under specific circumstances, such as the presence of a specified number of signers. The fact that this may be customized across accounts gives consumers more control than, say, a traditional multi-sig.

So, setting transfer caps and using two-factor authentication are a couple of examples of customization. Furthermore, AA increases usability through its flexible possibilities without compromising security.

Account Abstraction and Better Transactions

Atomic (batch) transactions enabled by account abstraction can allow users to pay fees using a native token rather than ETH. This makes communicating with L2s easier and reduces the amount of user buy-in needed before using a chain.

Meta-transactions are also possible with account abstraction. They function as a butler, carrying out signed transactions on behalf of the original signer. This process eliminates complications and gas costs on public blockchains. It will allow a relayer network to manage the process while the user only needs to sign the transaction with a single click. Meta-transactions simplify the transaction process by abstracting the payment from the user and giving it to the dApp.

Already, L2 chains are starting to implement their own variations of account abstraction. AA will surely be a guide for what the next generation of wallets will be like.

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