A new technical standard called ERC-4337 has been proposed by prominent developers in the blockchain space, aimed at advancing account abstraction on the Ethereum network. This standard not only simplifies wallet design on Ethereum but also opens up new possibilities for wallet innovation, including more user-friendly recovery methods, customization, and upgradability.
Account abstraction is the process of integrating the functionalities of two different types of accounts within the Ethereum network: externally owned accounts, which are directly controlled by users, and smart contract accounts, which can execute actions automatically. This transformation not only makes account operations more flexible but also allows for the simultaneous handling of transactions and contract creation through a single account, making the implementation of innovative wallets feasible.
With the implementation of ERC-4337, smart contract accounts can achieve functionalities similar to traditional accounts, such as multi-signature verification and automated payments. This significantly enhances the convenience of service setup and operational efficiency.
Ethereum operates on an account-based system, unlike Bitcoin’s UTXO system, where every transaction confirmation updates the account balance. In Ethereum, regular user accounts and smart contract accounts each have their distinct functionalities. However, traditional cryptocurrency wallets, such as MetaMask, are primarily based on accounts fully controlled by users, which limits their security and usability due to the existing system design.
ERC-4337 aims to manage wallets through smart contract accounts, overcoming the limitations of traditional externally owned accounts. In this way, smart contract wallets like UniPass and Safe can achieve more efficient management and operations while merging the functionalities of both account types to simplify user workflows.
Before ERC-4337 emerged, the Ethereum community was exploring various approaches to account abstraction, including EIP-2938, which required changes to the consensus layer. In contrast, ERC-4337 provides a solution that does not necessitate modifications to the consensus layer.
ERC-4337 achieves account abstraction by introducing a new type of pseudo-transaction called "UserOperation," which bundles multiple user operation requests into a single independent pool for processing. Bundlers collect these requests and pay the necessary gas fees, while users are responsible for the costs associated with their respective operations. Additionally, new smart contract functionalities such as validateUserOp have been introduced to enhance the security and flexibility of wallets.
The primary goal of ERC-4337 is to drive account abstraction, enabling users to experience a unified account that combines the functionalities of externally owned accounts and smart contracts. This standard aims to ensure that the bundling process is completely decentralized while avoiding modifications to Ethereum's consensus layer, facilitating the rapid adoption of applications. ERC-4337 is also designed to enable a variety of innovative use cases, such as aggregated signatures, daily transaction limits, account emergency freeze features, whitelisted operations, and privacy-preserving applications.
Additionally, by allowing bundlers to combine multiple UserOperation objects into a single transaction, ERC-4337 significantly reduces processing time and gas fees, thereby enhancing the overall efficiency and cost-effectiveness of the system.
For users, the implementation of the ERC-4337 standard will greatly simplify the setup and usage of cryptocurrency wallets. Users will no longer need to memorize complex recovery phrases, and account recovery will become more straightforward, supporting multi-signature verification and other recovery options. This standard also improves wallet security, reducing the risks associated with human error.
ERC-4337 further enriches wallet functionalities and makes them easier to customize, including features like automated payments and pre-authorized transactions, significantly expanding the range of possible user operations. Moreover, this new standard supports the use of various ERC-20 tokens and even other currencies for paying gas fees, providing developers with greater flexibility in designing innovative wallets that may use fiat or alternative tokens for gas payments.
The complex terminology and operational processes of cryptocurrency wallets often leave new users feeling confused and apprehensive. By introducing innovative technical solutions for cryptocurrency wallets, ERC-4337 not only simplifies the user interface but also removes barriers to broader cryptocurrency adoption. As developers build more innovative applications on this foundation, ERC-4337 is expected to reshape the way users interact with cryptocurrencies in the coming years, having a profound impact on the entire industry.