Account abstraction (ERC-4337) is a new type of crypto wallet

Introduction

We often talk about the mass introduction of cryptotechnologies into the lives of ordinary people. What can they bring?

• Cheap, fast and secure transactions.
• Creation of reliable trust systems.
• The possibility of optimizing the complex bureaucratic state apparatus.
• The creation of a new economy for all of humanity.

The basic element for a cryptoecosystem is cryptowallets, which not only allow you to store funds and make transactions, but also to get a full-fledged account.
The account can become a user ID in the future cryptoeconomy, opening the possibility to access services, services and a new decentralized financial system (DeFi).

Mass adoption implies a huge number of people using the technology. One of the biggest obstacles to this growth is the complexity of working with the current cryptoecosystem, as well as constant hacks and lack of flexibility in customization.

Let's imagine the path of a new user who wants to work with any cryptoecosystem. To work, the user must do a large number of preliminary steps:

1. Create an account through a cryptocurrency wallet.

Which cryptocurrency wallet to choose? Is it reliable, did you not download a copy of the attackers? Reviews are not good, friends said that their assets were stolen.

2. Figure out where to store your private key.

The main problem that ordinary people are not familiar with. To access the classic service, you need to register an account, where you enter a login (e-mail) and a password. Most often the password is entered and immediately forgotten, the user always knows that he can recover it through "password reset". Blockchain technology by nature does not allow to introduce such a possibility, as there is no centralized intermediary in the form of a service where you register. Your account is your wallet, which requires a private key to access. Without it, you lose access to your account and funds.
Constantly losing your password and making sure it can be recovered creates the problem of losing your private key.

According to analytics service Chainalysis, about 20 percent of the currently unlocked BTC tokens (currently $115 billion) are lost or locked to cryptocurrency wallets.

3. To deposit funds.

What to choose for the transfer? Exchange, P2P, bot, payment system, maybe buy hand-to-hand from a friend?
Additional problem. There are a huge number of networks in the crypto ecosystem and transactions from one to another cannot be directly conducted. Even experienced crypto market users often make a mistake when choosing a transfer network. A new user does not even realize about such peculiarities of the system.

4. Transfer funds.

Which wallet to copy, how to copy it. Use a QR code or enter it manually?
Problems exist at this step as well. To transfer funds to another wallet, you need to choose the right network. And here the new user can not even guess about it.

5. Confirm the transaction.

When confirming a transaction on a scam page, attackers can gain access to the entire cryptocurrency wallet. How can a new user distinguish a real service from a fraudulent copy?

6. Pay the commission (gas).

Everyone is used to the fact that in the bank you just make a transfer to the card and even if the transfer is not to an account in a single currency, the money will be converted. For this, the bank charges a fee in whatever currency is supported.

In a crypto ecosystem, a feature of the technology forces the use of a native network token. Without this token, no transaction will go through. For example, you have USDT and you want to transfer it on the Tron network, without the TRX token the transaction will not go through. Yes, centralized marketplaces solve this problem. They take a portion of your token and pay for the transaction with a native token from their reserves, while converting a portion of your token. But this is a crutch, not a basic technological solution.

7. Wait for the transfer.

8. Start working with your funds.

Now you fully realize what questions a new user has to answer and what problems he/she may face. Do you think there is a high probability that a newcomer will overcome all this and will not make a mistake that will lead to loss of funds, despair and complete denial of the crypto market in the future? Most likely it is very low.

Types of accounts

There are currently two types of accounts on the Ethereum network:

External accounts (EOA - Externally-owned account) - ordinary user accounts, the classic version that each of you have gone through. For a transaction to take place, it must be signed with a private key.
External-owned accounts (EOA) - any modern cryptocurrency wallet. For example, MetaMask. This is exactly what we discussed earlier. External accounts will never drive mass adoption. The complexity of using EOA and DeFi is a major barrier to adoption, especially for non-technical users.

Every external account on Ethereum has two elements:

• A public key.
• Private key.

The public key is something like a login. It is your identifier. You give it to anyone who wants to send you transactions. A private key is like a password. If the password is lost, the assets become inaccessible. We talked more about the structure of modern cryptocurrencies in the tutorial video "Cryptocurrencies: What are they and how do they work?".

Contract accounts (SMW - Smart ContractWallet) - contract accounts do not have a private key. They are smart contracts controlled by the code logic within them, without the user having full control. Smart contracts can do anything you can write in the code, while external accounts (EOA) can simply sign transactions.

Account Abstraction (AA - Account Abstraction) is a new concept that allows blockchain accounts to be programmed.

The concept was first described in 2020, in the Ethereum Improvement Proposal (EIP-2938). It was refined and a new proposal, EIP-4337, was published in 2021. In March 2023, the concept was put into practice by implementing the ERC-4337 technical standard.

The concept was described in detail by Vitalik Buterin in the article "ERC 4337: account abstraction without Ethereum protocol changes" on Medium.

Abstraction means that each account is a smart contract containing logic and inherent functions, thus opening up much more flexibility for operation by making accounts programmable. For example, account recovery, two-factor authentication, withdrawal limits, access expiration, multi-access and more.

How does AA make things better? The account abstraction combines contract accounts (SMW) and external accounts (EOA). This makes user accounts more "programmable." You remove the transaction signing logic from the account and simplify the work for regular users.

Examples of existing projects

An entire ecosystem is being built around the concept of account abstraction, allowing users and developers to improve their user experience.

Braavos

The project has launched a Hardware Signer feature that allows a user to cancel a transaction request if a mnemonic phrase has been stolen.

Argent

The project allows the user to protect their account with two-factor authentication via email.

Ambire Wallet

The project offers the full set of AA benefits: no mnemonic phrase, with reduced gas usage (commissions).

Whether account abstraction (ERC-4337) is useful: CRYPTOLOGY team opinion

ERC-4337, or account abstraction, is a standard designed to simplify cryptocurrency wallets. It is particularly useful for beginners as it avoids unnecessary expensive mistakes.

The main goal of ERC-4337 is to simplify interactions with cryptocurrency wallets by hiding technical details and complexities that may confuse newcomers. Instead of requiring users to store and manage private keys and addresses, ERC-4337 offers a more intuitive approach.

For beginners, this means a simpler and more straightforward way to get started with cryptocurrencies. They can create wallets, send and receive payments, and interact with DeFi without having to dive into the complexities of the technical aspects.

ERC-4337 plays an important role in facilitating the mass adoption of cryptocurrencies and makes working with crypto wallets more accessible and attractive to all categories of users.