We are welcoming you to our weekly digest! Here, we discuss the latest trends and advancements in account abstraction, chain abstraction and everything related, as well as bring some insights from Etherspot’s kitchen.
The latest news we’ll cover:
- Ethereum Activates Pectra Upgrade
- Circle Enables Gasless USDC Transactions with Pectra
- Tether’s Wallet Development Kit Aims to Power 1 Trillion Non-Custodial Wallets
- ERC-4337’s Updated Developer Guide for Account Abstraction
- DeFi Wallets Need Programmable Guardrails to Contain AI Agents
Please fasten your belts!
Ethereum Activates Pectra Upgrade
Ethereum Foundation has activated the Pectra upgrade on May 7, 2025, raising the maximum amount that can be staked by a single validator from 32 ETH to 2,048 ETH to streamline staking operations.
The hard fork, triggered at 10:05 UTC and finalized 13 minutes later, consolidates multiple validator keys under a single node, reducing bandwidth use and lowering infrastructure costs for both small and large staking operators.
Central to Pectra is EIP-7251, which increases the validator stake limit, and EIP-7702, enabling wallets to function as smart contracts. This change brings Ethereum closer to full account abstraction, allowing features such as fee payments in stablecoins, automated payments, and social-recovery mechanisms.
Beyond the two headline EIPs, Pectra bundles nine additional proposals, including EIP-2537 to speed up cryptographic operations, EIP-6110 to simplify validator joins, and EIP-7691 for data-blob capacity, enhancing performance, compatibility, and developer tooling.
Despite two failed test runs that impacted earlier testnets, the upgrade has been smoothly deployed across client implementations on the Hoodi testnet and now on mainnet, demonstrating matured coordination among client teams and the Ethereum ecosystem.
By boosting staking efficiency and user-experience capabilities, Pectra aims to maintain Ethereum’s competitive edge against high-throughput alternatives while laying the groundwork for future scalability enhancements and deeper account abstraction innovation.
Circle Enables Gasless USDC Transactions with Pectra
Circle published a blog, explaining how the Ethereum Pectra upgrade’s EIP-7702 enables users to submit gasless USDC transactions directly from Externally Owned Accounts (EOAs) without deploying smart contract wallets.
The blog identifies the persistent friction of requiring native ETH for gas, which complicates onboarding and daily payments for USDC users. Traditional smart contract wallets offer gas sponsorship but incur deployment costs that deter newcomers.
EIP-7702 introduces a new transaction type allowing an EOA to temporarily delegate execution to a contract implementation, such as a wallet kernel or delegation module, enabling ERC-4337-style UserOperations without prior smart wallet setup.
With Circle Paymaster, transactions can now be sponsored in USDC: the Paymaster evaluates UserOps, deducts gas fees in USDC, and pays validators on the user’s behalf, all transparently and instantly. No additional deployments or token swaps are required.
This approach unlocks use cases like USDC-first onboarding, frictionless dApp flows, simplified developer integration, and inclusion of users who lack access to ETH or exchanges, delivering a seamless payments experience.
Tether’s Wallet Development Kit Aims to Power 1 Trillion Non-Custodial Wallets
Tether has detailed its open-source Wallet Development Kit (WDK), which could enable the creation of up to one trillion blockchain wallets.
The WDK, initially announced last year, offers a fully open-source template for non-custodial wallets designed for broad interoperability across nearly any blockchain. It supports seamless cross-chain transactions and includes user-friendly UX features to simplify transfers on decentralized networks.
A standout capability is “gasless transactions,” powered by account abstraction, allowing users to execute transfers without paying native fees. The kit also removes API keys entirely, ensuring only wallet owners control their funds and underscoring Tether’s commitment to user sovereignty.
On May 9, 2025, Tether CEO Paolo Ardoino tweeted, “Testing WDK (Tether’s Wallet Development Kit) Template Non-Custodial Wallet. Great UX with seamless bridging to hide blockchain complexity, gasless txs. No API-KEY. User is in control.”
By providing developers with a plug-and-play wallet framework, Tether aims to drive mass adoption of self-custody solutions and expand its influence beyond stablecoins into core Web3 infrastructure.
ERC-4337’s Updated Developer Guide for Account Abstraction
The ERC-4337 team announced on X that it has published an updated developer guide to help wallet developers leverage the Pectra upgrade’s EIP-7702 alongside ERC-4337 account abstraction.
The guide provides a structured walkthrough of key components, including dedicated sections for Paymasters, Wallets, DApps, and FAQs.
In the Paymasters section, developers learn how to sponsor gas fees with ERC-20 tokens or third parties; the Wallets section covers implementing UserOperation handling and smart-contract wallet support; and the DApps section explains how to build front-ends and backend services around ERC-4337 workflows.
An extensive FAQ addresses topics such as reputation management, throttling, and banning strategies to safeguard bundler networks and prevent denial-of-service attacks, ensuring robust production deployments.
By consolidating code samples, reference implementations, and best practices, the ERC-4337 team aims to lower integration barriers, accelerate developer adoption of account abstraction, and drive innovation in wallet and dApp experiences powered by Ethereum’s next-generation features.
DeFi Wallets Need Programmable Guardrails to Contain AI Agents
Sean Li, co-founder of Magic Labs, warns that AI agents are rapidly becoming essential for decentralized finance but are outpacing the wallets designed to secure them.
Li explains that while AI agents can “manage liquidity, optimize yield, and execute trades at all hours,” most DeFi platforms still rely on externally owned account wallets that require manual approvals, creating a critical infrastructure gap.
He highlights high-profile failures, noting that in September 2024 the Banana Gun trading bot lost 563 ETH through an oracle exploit, and more recently attackers “breached Aixbt’s dashboard” to liquidate 55.5 ETH, underscoring systemic risks in automation.
According to Li, legacy wallets depend on a static workflow — sign, broadcast, repeat — preventing them from understanding “intent,” verifying automation against user rules, or restricting actions by time or asset type.
He argues that smart contract wallets and account abstraction must evolve into a new trust layer, offering session-based permissions, cryptographic verification of agent actions, and real-time revocation to prevent “malicious bots, hallucinating agents and poorly designed automation” from draining funds.
Li envisions a universal keystore protocol that synchronizes permissions across chains, making programmable wallet infrastructure a cornerstone for scalable, secure automated DeFi strategies as institutional interest grows.
🐞 Create a next-level Web3 user experience! Etherspot’s Modular ERC-7579 SDK empowers developers with unparalleled customization for smart accounts.
Start exploring Account Abstraction with Etherspot!
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