Speaking at the Ethereum Community Conference (ETHCC) in Paris, Ethereum co-founder Vitalik Buterin stated that the planned account abstraction upgrade is “really elegant” since it does not necessitate modifications to the fundamental Ethereum protocol, unlike previous upgrades.
Developers have been working on account abstraction, or variations of it, since 2015, even before Ethereum launched. The concept involves transitioning from Externally Owned Wallets (EOAs) to smart contract-based wallets. If successful, managing a crypto wallet would become as simple as managing an email account.
Account abstraction would enable users to potentially recover their seed phrase, the private key used to authorize transactions, as simply as resetting an email account password.
The most recent proposal is EIP-4337 (Ethereum Improvement Proposal 4337), also called Account Abstraction Using Alt Mempool. This Ethereum upgrade would allow users to generate non-custodial wallets as programmable smart contracts. This would provide various capabilities, including easy wallet recovery, signless transactions – reducing fees, and team wallets with multiple signatures.
Per Buterin, this upgrade could significantly drive global Web3 adoption. He stated, “One of the key properties we want blockchains to have is that they give you money before you register.”
The concept is that users could obtain any token besides Ethereum, like a stablecoin, directly to their smart contract wallet and pay gas fees without needing to hold ETH.
According to Buterin, a key blockchain feature is providing funds prior to registration, and account abstraction could enable this, catalyzing Web3 adoption.
To enable these smart contract wallets and transactions, the account abstraction upgrade would allow “paymasters” – permitting users to pay gas fees with the same token they are transacting.
EIP-4337 also includes signature aggregators, which consolidate multiple signers with only one signature used per transaction.
The latest account abstraction proposal enables smart contract wallets and transactions through “paymasters” to pay fees in the transacted token. EIP-4337 incorporates signature aggregators to combine multiple signers into one signature per transaction.
Buterin stated that account abstraction is a major advancement, especially for rollups, since signatures have a large footprint in these layer 2 solutions. Rollups like Arbitrum and Optimism batch transactions off the Ethereum mainnet for improved efficiency. Account abstraction enables signature aggregation, combining multiple signatures into one for each transaction. In simple terms, this allows greater data compression, reducing computing costs. According to Buterin, signature aggregation can decrease costs by 86 times in rollups.
Account abstraction is not the only Ethereum improvement in development. Proto-dank sharding, also known as EIP-4884, is also underway. It has become a primary focus for Ethereum due to establishing a new data structure that will substantially decrease costs and optimize data usage.
Along with account abstraction, proto-dank sharding is an Ethereum upgrade in progress, rapidly growing as a top development priority by laying the groundwork for major gas fee reductions and data efficiency gains.
