During Eth Denver's WalletCon event, The Ethereum Foundation made a surprise announcement: ERC-4337 was live on the mainnet.
ERC-4337 allows for account abstraction which is also known as Smart Accounts
There's a huge host of features that make life easier and safer for crypto users: bundling, account recovery, configurable/optional daily spending limits, and many more.
tl/dr this user-friendly innovation will allow crypto newbs to sign up with iOS or Android and enjoy almost the exact same security as a hardware wallet.
If you own any cryptocurrency, you know this terrifying truth: you are ALWAYS one misclick away from opening up the floodgates to a scammer. Sure, if you’re internet perfect, always vigilant whilst surfing, and never commit human error, you can safely self-custody your assets. But does anyone live mistake free? Perfection is too high a bar of user excellence for any industry to expect of its customers!
Just ask paragons of web3 such as Kevin Rose, NFT God, and CryptoNovo. All three of these blockchain big wigs made the same mistake of mousing through a scammer’s hyperlink. The result was millions in stolen funds and NFTs. This situation is untenable… but it’s about to change.
Charging to the rescue is the grandaddy of Ethereum himself, Vitalik Buterin. He and the Ethereum Foundation made a surprise announcement at EthDenver’s WalletCon on March 1st. The solution to this account security problem is live on Eth’s mainnet: ERC-4337.
The rumors are true... ERC-4337 has been deployed on mainnet 🚀— erc4337 (@erc4337) March 2, 2023
🔍 Security audit by @OpenZeppelin
🛠️ Bundlers and paymasters by @stackup_fi, @AlchemyPlatform, @biconomy , @etherspot, @candidewallet, @blocknative & more
🏗️ $300K in grants by @ethereum pic.twitter.com/WOjMvaZe6M
This is not a new token standard, like the familiar ERC-20s or 721s, this is a new Account Abstraction Standard. What this means from a cryptographic standpoint is that hackers won’t see an account with your funds; that’s because using ERC-4337 will put your assets into a smart contract that users access through a conventional private key or seed phrase wallet. Any nefarious actor trying to look up your wallet will see an abstract coded mess of a contract! On the other end, users will have a seamless, user-friendly experience. Thus, there is a push within the industry to refer to Account Abstraction as Smart Accounts.
The features of Smart Accounts are exciting and could lead to a major wave of crypto adoption by brand-new users! Some of the benefits include bundling transactions, paying fees with ERC-20 tokens, an easy and cheap way to create multi-sig wallets, setting up spending limits, easy account recovery and recurring payments/subscription functions.
Bundling transactions is one of the more convenient features for regular crypto users. For example, bundling will make stablecoins easier to use–like using USDC to convert to Eth and buy an asset priced in Eth. The way things work now, users have to make one transaction to swap USDC for Eth, then make a second transaction to swap Eth for the desired asset. The Smart Account bundles these steps into one seamless and less gas-intensive action!
By far the most important feature of Smart Accounts is improved security and recovery options for users. Remember that the Smart Account is controlled by a conventional wallet. If one loses their access to this controlling wallet, have no fear! You can regain access to a Smart Account by using the multi-sig recovery features on the Smart Account. The recovery features allow you to switch which conventional wallet accesses the Smart Account. Thus, the other signatures in your account can help you recover access. Users can elect trusted friends or employ a third party to assist in this process.
Spending limits are another important piece to this improved security picture. If one somehow hands over access of their Smart Account to a scammer, spending limits can dispel disaster. In the unlikely event that all of your security is bypassed, the biggest haul a hacker can get is the daily limit set up in the Smart Account. This means users can set the limits well below the price of certain grail NFTs–or ensure that they can’t lose life-changing money in an instant.
Perhaps the biggest development from an industry perspective is how ERC-4337 will allow new users to set up crypto accounts safely on their smart phones. Smart Account tools are being developed based on the Apple and Android-friendly WebAuthn standard. This standard is a uniform code for all public apps employing public-key cryptography. The big picture: new crypto users will soon be able to use 2fa on their smart phones to create crypto wallets that are almost as safe as a hardware wallet. This will end the era of paper seed phrases and all the technical hangups that prevent many people from diving into crypto trading!
The future is always bright for blockchain and web3. Despite the long, dark crypto winter, faith in the technology of web3 is never misplaced. ERC-4337 will prove to be one of the biggest achievements in crypto history!