The Benefits Of Account Abstraction And Smart Contract Wallets
Account Abstraction has become a heightened topic of discussion in the Ethereum community in recent months.
Account Abstraction is the missing key to driving mass adoption and making interactions with the blockchain easier.
What Exactly Is Account Abstraction?
To fully understand Account Abstraction, it is essential to understand how accounts function on Ethereum. There are two primary types of accounts on Ethereum, externally owned accounts (EOAs) and contract accounts. Most personal wallets use externally owned accounts that are secured by complex, often difficult-to-guess numbers called a “private key.” The second type of accounts, contract accounts, are controlled by computer code deployed on the Ethereum blockchain. This is why it is capable of implementing any type of logic.
Externally owned accounts are typically controlled by a key pair consisting of a public and private key. These help to initiate various actions with the account and establish ownership. On the other hand, in most cases, smart contract accounts cannot initiate actions on the Ethereum Virtual Machine. This is where Account Abstraction comes into the picture. Account Abstraction looks to decouple accounts that are within the Ethereum Virtual Machine (EVM) with key pairs that are outside the EVM. This removes the requirement for a seed phrase, converting them into smart contracts.
Self-Custody Is More Than Just Key Pairs
Ethereum founder Vitalik Buterin and others in the Ethereum community realized that private keys are not the answer when it comes to self-custody. This is because a seed phrase can easily be misplaced. Instead, they believed that personal wallets could fulfill the role of contract accounts, thus enabling them to be secured by any custom logic, allowing new onboarding methods such as simply creating an account with an email or password, and enabling seamless account recovery.
Why Is Account Abstraction Important?
Account Abstraction is considered essential for a variety of reasons. It is cited as the missing link to enable mass adoption, making interactions with the blockchain easier, paving the way for increased security and self-custody, and reducing the risks arising from a lost seed phrase or hack. Decreasing such risks is critical for users and also improves the image and usability of the crypto and DeFi ecosystems as a whole.
It also better facilitates onboarding by enabling account creation through social logins, thus improving the experience for less experienced users. Account Abstraction also enables better flexibility, making smart contracts more compatible with other protocols and decentralized applications.
Benefits Of Smart Contract Accounts
Smart contract accounts offer users a host of benefits. Users can simply create an account without requiring a seed phrase. They can also recover accounts by simply using their email address. Let’s look at an example using the Ambire wallet. Users can sign up for the Ambire wallet using their email address and password. Alternatively, users can also use other Web3 or hardware wallets.
They can also pay transaction fees using ERC-20 tokens, meaning users would no longer require ETH, or any chain’s native token for that matter, for any action they need to perform. This is particularly important when it comes to driving the adoption of crypto. Suppose you hold a particular asset like USDC and wish to deposit it on Aave; you can pay the required transaction fee in USDC without swapping it for or acquiring ETH. The Ambire wallet makes it possible for users to choose which currency they wish to use to pay the transaction fees. Users can also save on the fees involved by paying in $WALLET tokens or using Ambire’s Gas Tank feature.
Users can also batch transactions, allowing them to perform multiple transactions simultaneously and save gas fees. The Ambire wallet allows you to transfer funds to a new account or wallet, approve, and then complete the swap simultaneously. This means users pay the gas fee only once instead of thrice. Furthermore, they also enable session keys, meaning users no longer need to sign in multiple times. Smart contract wallets also would allow users to add or remove signers, giving them far more control over a wallet’s security than an EOA wallet. For example, Ambire wallet users can create an account using their username and password and also add a hardware wallet as a signer to confirm transactions, increasing the overall security of the account. Other benefits include allowing users to time delay their transactions and create custom rules.
What Lies Ahead?
While promising, smart contract accounts still require some improvements. Currently, they require an additional relayer service. However, the implementation of EIP-4337 eliminates the need for such a service, making smart contract account transactions native to the blockchain. EIP-4337 is critical because it is the first Account Abstraction proposal that does not require core protocol changes. Instead, it takes the transaction validation out of the protocol and moves it to the smart contract level.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.