What Is Account Abstraction and How It Transforms Web3

Account abstraction (AA) is a huge development in Web3 as it lets programmers build more user-friendly apps. The term "abstraction" is used in computer science and means breaking down complex details into simple concepts. This provides more flexibility and simplifies processes for users.

This article digs into the meaning of account abstraction and why it's the key to onboarding more users to Web3.

Today's decentralized apps have several limitations from the point of user experience. It can be hard for Web3 apps to attract people as onboarding isn't similar to traditional apps.

To start with a dapp, users need to learn about crypto wallets, private keys, how to make transactions, etc. Often, they lost the keys and, therefore, access to wallets. AA deals with this issue. It's a method for managing wallet accounts through logic coded in smart contracts.

Account Abstraction allows Ethereum-based wallets to operate like smart contracts. For this reason, AA is also called smart accounts. It is focused on replacing typical user accounts, called Externally Owned Accounts (EOAs), where users are responsible for managing their wallet seed phase (mainly 12 random words) and access.

Simply put, in the case of smart accounts, the wallet has two sides: the application side and the contract side. The application side is responsible for delivering information to users and receiving requests, while the contract side is where transaction verification happens. The contract calls relevant contracts and performs transactions on chain.

Account abstraction places control over private keys in a contract. Users will no longer have to worry about losing their private keys as access is managed through the rules and conditions within the code.

Here's how Externally Owned Accounts and contract accounts differ from each other

AA-related proposals started with the launch of Ethereum. Over time, the developer community has been working on ways to provide flexibility to EOAs. The challenge with contract accounts was to find a solution that didn’t require core protocol changes or centralized parties to pay for the gas. The ERC-4337 proposal offers a decentralized practical standard to solve these problems. It introduces a higher layer infrastructure, completely avoiding changes to the consensus layer.

ERC-4337 is already active. The launch was announced by the co-author Yoav Weis at EthDenver 2023. The developer community received the news with excitement, and we are seeing a growing number of smart contract wallets deployed on the chain.

ERC-4337 is available on Optimism, Polygon, Arbitrum, Base, BNB Chain, Avalanche, and other EVM-compatible chains. According to Dune Analytics, the number of ERC-4337 wallets from different EVM networks exceeds 1,000,000.

Due to AA, new features and user-tailored security measures become possible. Here are some common use cases:

Account recovery

With Account Abstraction, writing down or saving private keys is no longer necessary. Users can add devices to their smart accounts and have backup instead of managing the keys. They can add guardians, like trusted friends or relatives, to give them access in case they forget their password or lose a device. This is a big win for both beginners and more experienced users.

Biometric verification

Account abstraction enables wallet owners to authenticate with biometrics. This makes different access models possible. Users can choose to sign transactions on their phones using face or fingerprint verification. Smart accounts provide extra security because the cryptographic keys are stored on the smartphone as a trusted device. This way, a smartphone can act as a hardware wallet with high security. Because users can set two-factor authentication and spending limits, security risks become minimized.

Automatic Payments

Smart wallets open a new era for dapps where transactions can be automated. Unlike typical wallets, where users need to start and sign transactions separately, in contract wallets, they can specify conditions that will trigger processes automatically. This creates new use cases for decentralized payments and subscription-based dapps. So, users can set up monthly payments for services such as games, social media, streaming and music, dating, and more.

Numerous operations at once

Another possibility is batching several transactions and approving them altogether. In blockchain, simple processes can require several transactions to do, and a user needs to pay a gas fee every time. For example, it takes two transactions to swap tokens on a DeFi platform: one to approve the token and the other to do the exchange. Due to the programmability of smart accounts, users can make fast transactions and save on fees.

Flexible gas payments

Another thing enabled by account abstraction is flexible gas payments. This means anyone can pay for the gas used by an account. A dapp can cover its users' transactions. Also, payments don't need to be exceptional in ETH; any ERC-20 token can be used. The contract will convert assets to Ether automatically. It's useful for cross-chain transactions as users can manage their assets across multiple networks easily.

Shared Accounts

Smart accounts provide users with the option of having and managing a common wallet with roles-based authorization. This level of customization wasn't possible before. There were two ways to choose from: sharing full access or not sharing the access. Smart accounts allow advanced features with signing responsibilities. The account holder can add or remove signers, give and take usage roles, and define spending limits and requirements. For example, transactions may require approvals from certain parties.

Account abstraction brings greater usability, security, and more features to Web3. Huge developments are taking place in this regard to transform the space and onboard more users. Among notable projects are Safe, Argent, Biconomy, and others. The innovation drives change not only for Ethereum but also for other networks.

At Definme, our technical team is actively researching account abstraction development tools and implementing new solutions. It's crucial for our team to keep up with recent developments and follow security best practices to contribute to a safe and mainstream future.