A few days ago, I shared an article about the AA wallet, the definition of "account abstraction" and the role of ERC-4337. To make the research results more persuasive and comprehensive, I have recently searched for some industry views on AA wallets and the actual development of ERC-4337, combined with the three popular public chains in the current market, BSC (Binance Smart Chain), OKC (OKEX Chain), and KCC (KuCoin Community Chain), and summarized the attitudes of AA wallets and the ERC-4337 protocol respectively. The aim is to look into the AA wallet's future development through their specific measures towards it.
As I mentioned earlier, in March of this year, Vitalik Buterin, co-founder of Ethereum, and his team proposed and developed a new Ethereum standard called ERC-4337, which can achieve account abstraction on the protocol without any changes to the consensus layer. It was successfully deployed on the Ethereum mainnet. This makes it possible to trade and create contracts in a single contract account. It opens the door to user-friendly encrypted wallet design and may promote wider adoption.
Account Abstraction (AA) is a core roadmap of ETH 2.0 that aims to replace externally owned accounts (EOAs) with smart contract wallets or smart accounts. In Ethereum, account abstraction aims to combine the features of the two existing account types in the protocol: externally owned accounts (EOAs) and smart contract accounts. The result is a single contract account that can transact with tokens and create contracts at the same time. This change makes creative wallet designs possible, such as social recovery, customization, and upgradability. For example, wallet developers can offer automated features in their products, while application developers can selectively integrate these features to improve their own products and user experience (UX). Behind the scenes, new infrastructure will be required to ensure a clean workflow from start to finish.
It can be said that the emergence of AA has greatly narrowed the distance between Web3 and Web2 because wallets are seen as the entry point into the Web3 or crypto world, so the form and functionality of Web3 wallets also determine the industry's development process. Currently, the core contract of ERC-4337, "Account Abstraction", has passed the audit by Open Zeppelin and will be compatible with every Ethereum Virtual Machine (EVM). Compatible networks include Polygon, Optimism, Arbitrum, BNB Smart Chain, Avalanche, and Gnosis Chain. However, there is little attention from public chain projects, which are one of the important infrastructures of Web3, towards the development of AA. Why is this? Everything needs to start with the working principle of ERC-4337.
The core components of ERC-4337 are divided into 6 parts: accounts (which are user's smart contract wallets), UserOperations, Bundlers, EntryPoint contracts, Paymasters, and Aggregators. Its working principle is as follows: ERC-4337 was implemented using a higher-layer pseudo-transaction object called a UserOperation, which is similar to rollups. Users send UserOperation objects into a separate mempool, and bundlers package these objects into a transaction that gets included in a block. The bundlers pay gas for the bundled transactions and get paid fees by the individual UserOperation executions.
To give you a concrete example of how this might work, let's say you have an Ethereum account with a balance of 10 ETH. Normally, this balance would be stored on the blockchain, and every time you make a transaction, the blockchain would need to update your balance to reflect that transaction. But with account abstraction using an alternate mempool, your balance would be stored outside of the blockchain, in the alternate mempool instead. When you make a transaction, the alternate mempool would update your balance and handle the transaction, without having to involve the blockchain at all.
Among the six core components, accounts, UserOperations, Bundlers, and EntryPoint Contract are essential, but smart contract wallets are inherently more expensive than EOA wallets. Recent AA developments allow these costs to be offloaded from end-users (for example, through the Paymaster feature). However, ultimately someone still has to pay. Both end-users and applications subsidizing user activity are very expensive on Ethereum L1. On the other hand, from the technical perspective, according to the design of ERC-4337, anyone can participate as a Bundler, but participants require specialized infrastructure and technical knowledge.
Based on the above two concerns, as well as potential security risks that may exist with this new form of wallet, even though many projects are optimistic about the development of the AA wallet, many have not rushed to expand the ERC-4337 protocol and instead chose to adopt a wait-and-see approach, such as OKC. In contrast, BSC and KCC, which are also leading exchange public chains, have chosen a more proactive strategy when addressing the issues with AA.
As the market continues to see new features and functions of AA, such as packaging these different solutions into logical groups (such as Entry Kit, Relay Kit, Multichain Kit, etc.) to create an app store model for users, many excellent smart contract wallet applications have seen opportunities, such as MetaMask, Unipass, and Safe. Unipass, as a pioneer of ERC-4337 wallets, has built highly specialized and integrated user experiences for specific niche markets based on AA features and functions. Based on the service concept of providing a unique interactive experience and lowering the user's usage threshold, Unipass coincides with KCC's vision. Therefore, after collaborating with BSC, Unipass completed the deployment on the KCC mainnet and testnet on April 24 and connected to projects on the KCC chain, aiming to become the infrastructure of the AA track on the KCC chain.
Apart from that, as a product of Web 2.5, AA can effectively reduce the entry barriers to Web3 and is expected to become a keyword in the cryptocurrency industry in 2023. Opportunities always favor the prepared. KCC sees the potential of the AA wallet and announced the launch of the ERC-4337 Bundler service and V6.0 EntryPoint contract even before collaborating with Unipass. It thinks that this service will help developers focus more on the development of AA wallets, while also helping Web2 users better enter the Web3 world.
In general, KCC is currently ahead of BSC and OKC in terms of its focus on the ERC-4337 protocol and the development of AA wallets. If KCC continues to deepen its involvement in the AA field, it is expected to become the entry point for the KuCoin ecosystem to enter the web3 world. Of course, I also hope that more excellent project teams and black horse public chains will take action to support the development of AA or smart contract wallets, rather than just watching or waiting for opportunities to arise. After all, AA is an important milestone for the future development of the industry, and there is a need for a sense of responsibility from practitioners beyond mere interests.
The entrance of Web 3.0: https://www.kcc.io/
The official website of Unipass Wallet: https://unipass.id/
