Everything About Account Abstraction: The role of smart accounts, EIP-1153, Visa expands crypto access, ETH self-staking & Alchemy report

By Pillar | Pillar Blog | 8 Feb 2024

We are welcoming you to our weekly digest! Here, we discuss the latest trends and advancements in account abstraction, as well as bring some insights from Etherspot’s kitchen.

Please fasten your belts!

Smart accounts: Gateway for mass crypto adoption

Managing crypto accounts is notoriously challenging, involving complex tasks like gas fee estimation, signatures, and account recovery, which complicate the user experience.

Jason Windawi, a protocol specialist, highlights the introduction of account abstraction as a solution to simplify this process by creating “smart accounts” that offer a Web2 sign-on experience with the autonomy of Web3. The goal is to boost user adoption by making login processes simpler and enabling account recovery.

Account abstraction allows users to log in with a username and password instead of a seed phrase, mitigating the risk of losing access due to a forgotten word.

It also enables protocols to cover transaction fees for users, addressing another barrier to adoption.

A smart contract deployed last March facilitates smart accounts on any Ethereum-compatible blockchain, with over 9.3 million transactions made using this standard since its debut.

Despite these advances, smart accounts face limitations, such as slightly higher costs than standard transactions, and remain less common on Ethereum itself, primarily appearing on Polygon and through apps focused on user engagement incentives.

The future of account abstraction may involve embedding it into layer 2 blockchains to bypass Ethereum’s high fees and simplify implementation, though integrating it directly into Ethereum’s codebase presents challenges due to the complexity and need for consensus.

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EIP-1153 faces scrutiny for potential smart contract wallet issues

The upcoming Ethereum upgrade, known as the Cancun fork, is set to include EIP-1153, which introduces a new storage type called “transient storage.”

This type of storage offers two key advantages: it’s cheaper to use and automatically cleared at the end of a transaction. Transient storage simplifies complex processes like KYC contracts and allowlisted tokens by reducing gas costs.

However, there are concerns that the current implementation of transient storage may not align with Ethereum’s vision of account abstraction.

AA aims to make smart contract wallets more versatile and user-friendly with features like key rotation, gasless transactions, and multisignatures. EIP-1153 primarily benefits EOAs but falls short when it comes to batched transactions within smart contract wallets.

One major issue is the risk of data contamination between different user operations when using transient storage within smart contract wallets.

This can lead to vulnerabilities, particularly in scenarios like reentrancy locks, single transaction ERC-20 approvals, and fee-on-transfer contracts.

While developers can clear transient storage manually, there’s no guarantee this will happen consistently, and users may not have an incentive to do so.

To ensure compatibility and avoid potential issues, it’s suggested that transient storage’s behavior be normalized across both EOAs and AA wallets.

This would help prevent the creation of smart contract patterns that work for EOAs but fail with AA wallets, ultimately hindering the adoption of the latter.

Visa’s global push for crypto-fiat conversion via debit cards

Visa has expanded its cryptocurrency services by enabling crypto withdrawals to debit cards in 145 countries in partnership with Web3 infrastructure provider Transak.

This integration allows MetaMask users and others to directly sell crypto to their Visa card, bypassing centralized exchanges.

The service, leveraging Visa Direct, facilitates real-time withdrawals of cryptocurrencies like Bitcoin to fiat currency, usable at over 130 million merchant locations globally.

Users in countries such as Cyprus, Malta, Singapore, Turkey, Portugal, and the UAE can convert at least 40 cryptocurrencies directly to fiat without the need for centralized exchanges.

Transak’s collaboration with Visa benefits users of decentralized platforms and wallets, including MetaMask, Ledger, and Trust Wallet, by enhancing the practicality of digital assets.

The integration is supported by Transak’s compliance with regulatory standards, including Know-Your-Customer and Anti-Money Laundering requirements, across multiple jurisdictions.

Alchemy 2023 Web3 Development Report

According to Alchemy's latest report, Web3 developer activity reached unprecedented highs amid challenges like corporate scandals and regulatory pressures. Despite these, developers deployed projects at record rates, with Ethereum and wallet SDK installations increasing by 31% and 126% YoY, respectively.

The creation of EVM smart contracts on networks like Ethereum Mainnet, Arbitrum, Optimism, and Polygon soared by 303% YoY in 2023.

This growth fueled innovations in rollup frameworks and account abstraction, enhancing transaction efficiency and user experience.

Notably, account abstraction introduced features like sponsored gas and social login, leading to over 960,000 new ERC-4337 accounts by Q4, showcasing significant adoption.

Ethereum’s rollup-centric roadmap realized its potential as new frameworks enabled the launch of L2s and L3s, with notable projects like Base emerging to explore new use cases in gaming and music.

Big brands and institutions integrated Web3 features, improving customer experiences with examples like Pudgy Penguins’ collaboration with Walmart, zkSync, and Franklin Templeton launching a blockchain-based mutual fund on Polygon.

Ethereum self-staking touted as the path to “atomic generational wealth”

Staking ETH from home is seen as the ultimate standard for creating “atomic generational wealth,” according to an Ethereum community developer known as Superphiz.

He emphasizes the potential for families to operate validators and secure the Ethereum network for over a century through home staking.

Superphiz’s advocacy for solo staking gained renewed attention when Geth, one of Ethereum’s execution clients, reached an 84% network share among validators. He argues that while third-party staking solutions offer easier entry, they centralize control over funds.

Despite the high upfront cost of 32 ETH (approximately $73,000), Superphiz believes that solo staking will pay off by enhancing Ethereum’s decentralization and long-term value.

In contrast, third-party solutions prioritize short-term profits and contribute to centralization.

While not everyone can afford solo staking, Superphiz suggests that many ETH investors and stakers can transition.

Home staking is viewed as a means to increase Ethereum’s long-term value, ensuring that the Ethereum community’s voice extends globally and fostering true decentralization, which inspires confidence among governments, corporations, and citizens to trust and engage with the Ethereum network.

Start exploring Account Abstraction with Etherspot!

  • Learn more about account abstraction here.
  • Head to our docs and read all about the Etherspot SDK.
  • Skandha — developer-friendly Typescript ERC4337 Bundler.
  • Explore our TransactionKit, a React library for fast & simple Web3 development.
    For a plug & play integration, review the BUIDLer react component.
  • Follow us on Twitter and join our Discord.

❓Is your dApp ready for Account Abstraction? Check it out here: https://eip1271.io/

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Pillar Blog
Pillar Blog

Pillar Wallet is a self-custodial smart contract wallet enabling low fees, cross-chain swaps & stablecoin gas payments, all in a unified multichain DeFi experience. Powered by Etherspot - Account Abstraction SDK for frictionless Web3

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