Ethereum Improvement Proposals (EIPs) describe standards such as core protocol specifications and contract standards for the Ethereum platform. Ethereum Request for Comment (ERC) is a type of EIP that sets application-level standards such as contract and token standards. An EIP can only become an ERC after on-chain governance authorizes the change.
ERC-4337 is the latest ERC standard deployed on the Ethereum mainnet to achieve the long-awaited goal of account abstraction. Some places still refer to ERC-4337 by its original term EIP-4337. However, EIP-4337 was initially proposed in 2021 and has been authorized to become ERC-4337 in 2023.
ERC-4337 introduced by Vitalik Buterin allows “Smart Contracting” of crypto wallets to simplify the user experience. This is a big proposal that would make your wallet a Smart Contract Wallet without any changes to the consensus layer, which would give users the ability to diversify transactions with variable capabilities. Operate transactions as needed.
What is ERC-4337?
ERC-4337 is a token standard proposed by Vitalik in 2021, and deployed in March 2023, to create an easy-to-use and user-friendly smart wallet that optimizes management Account and transaction information management. This is an important step forward in the development of blockchain technology, especially in improving user experience and increasing system security.
Difficulties in using crypto wallets today
Currently, using wallets when interacting with DeFi Dapps such as swapping tokens or adding liquidity is causing some difficulties and limitations for users. Users must interact with two different types of addresses. The first is their wallet address, also known as externally owned accounts (EOA) such as MetaMask, Zerion,… and accounts programmed through smart contracts called Contract Accounts. . Each time such an interaction occurs, users need to sign the transaction confirmation on the EOA wallet address and pay gas fees in the coin of the blockchain they interact with (ETH, AVAX, BNB, …).
A seed phrase, also known as a recovery phrase, is a string of words used to restore a user’s wallet address when they forget or lose their password or have to use a new device. However, the problem occurs when users do not ensure the safety of their seed phrase. If the seed phrase is stolen or falls into the wrong hands, they can gain access to the user’s account and perform unauthorized transactions, threatening the safety and security of the user’s digital assets.
In that context, a user-friendly smart contract wallet following the ERC-4337 standard can help solve these problems. ERC-4337 allows the creation of an Account Abstraction (AA) or All-in-one Address mechanism, helping users interact with smart contracts through a single wallet address, instead of having to interact with the entire address. wallet EOA and Contract Account as before. This reduces complexity and cost, while improving the user experience.
What is the goal of ERC-4337?
The goals that ERC-4337 wants to achieve include:
Account abstraction: Allows users to enjoy a single account with smart contract and EOA functions.
Decentralized: Allows anything called a packer to participate in the process.
Avoid consensus changes: Faster adoption is possible because the Ethereum consensus layer focuses on scalability-oriented upgrades.
Open up innovative use cases: These can include synthetic signatures, setting daily transaction limits, emergency account freezes, priority list creation, and rights protection applications private.
Save time and gas: Since the bundler can wrap UserOperation objects into a transaction, it can save time and gas.
How does ERC-4337 work?
The Ethereum community has been researching ways to achieve account abstraction for a long time. Before EIP-4337, the community put forward another proposal to achieve account abstraction called EIP-2938. EIP-2938 is similar to ERC-4337 but requires a change to the consensus layer. ERC-4337 broke this.
It does so by introducing a higher-layer pseudo-transaction object called UserOperation, which is quite similar to rollups because they both involve different versions of the package concept. In ERC-4337, different users deposit UserOperation objects into a separate memory.
The packer wraps these objects into a transaction, and this transaction is included in a block. The packer pays gas for bundled transactions and is paid per individual UserOperation executions. The packer works in a similar way to the validator, choosing which objects to include based on charge priority logic.
New functions, including validateUserOp, are also being added to allow a wallet to simultaneously become a smart contract. A new contract called EntryPoint is also being introduced to serve as a secure gateway to implement these new functions.
What does ERC-4337 mean for users?
The ERC-4337 standard will likely help end complicated cryptocurrency wallet experiences, and in doing so, cryptocurrency wallets may become more commonly used. Here are some highlights of what ERC-4337 can unlock:
Wallet setup: No need to write down seed phrases. Setup can be quick and easy with just a few clicks.
Worry-free account recovery: Users no longer have to worry about losing their mnemonic phrases, as multi-factor authentication and account recovery are now possible.
User-friendly wallet functionality: Users can enjoy a wide range of customized services including automatic payments, pre-approved transactions, and bundled transactions. There are no more limits, anything is possible.
Better security: Wallets are potentially more secure because the possibility of human error is reduced — no more hiding mnemonic phrases under your mattress! In theory, ERC-4337 should provide a more seamless and user-friendly experience, thus removing a major barrier to mass adoption.
Gas Flexibility: Wallets powered by ERC-4337 can now pay gas fees in any ERC-20 token or higher. Developers can build wallets that help pay gas fees in any token and even fiat.Summary of ERC-4337
Terms like “seed phrases”, “private keys”, and “public keys” can make it difficult for new users to use e-wallets. ERC-4337 provides developers with a technical basis to build innovative digital wallets, making it easier for everyone to use. Provides bank-like features without the need for bank trust. Simplifying the process of using crypto makes the market ready to welcome millions of new potential users.
In August, the number of active accounts for multi-chain smart contract wallets (ERC-4337) reached 443,600, continuously setting a new historical high. Among them, Arbitrum accounted for 213,100, Optimism accounted for 153,500, Polygon accounted for 49,700, and Base accounted for 22,900. In August, the number of multi-chain smart contract wallet accounts accumulated over 840,000 successful transactions (UserOps), a month-on-month increase of 45.6%. Unlike July, where 96% were concentrated on Polygon, August UserOps blossomed across chains like Optimism, Arbitrum, Polygon, Avalanche, and Base. Multi-chain Paymasters represented users paying over $360,000 in UserOp Gas fees, a month-on-month increase of 742%.
The smart contract wallet was first launched by Argent. The account abstraction ERC-4337 officially established the smart account as a branch of the contract wallet. Unlike the EOA address generated by general wallets, Argent deploys a smart contract to represent the user’s address. Users can generate/recover Argent private keys through social means to sign transactions, which are then sent to the Argent relay for submission using the private key. However, the Argent relay is still an EOA address, used to call the smart contract wallet with the signed transaction. Account abstraction ERC-4337 makes a deeper division in the relay structure. In theory, anyone can create their own validation structure, which can realize transaction bundling (bundler) and Gas payment on behalf (Paymasters).
As of September 7th, the number of multi-chain smart contract wallet accounts has exceeded 778,000, with over 1.6 million transactions executed. Among them, the number of Polygon smart accounts reached 372,000, accounting for 47.7%; Base accounted for 235,000, Arbitrum accounted for 215,000, and Optimism accounted for 163,000.
Terms like “seed phrases”, “private keys”, and “public keys” can make it difficult for new users to use e-wallets.. ERC-4337 provides users with bank-like features without having to trust the bank. Simplifying the process of participating in crypto, ERC-4337 prepares the crypto market for millions of new potential users.