ERC4337, the Epicenter of UX Innovation

Research Analyst/
Aug 25, 2023

1. Introduction

2. Blockchain's UX Issues and the Emergence of Account Abstraction (AA)

2-1. Poor UI/UX and the onus of self-custody hinder mainstream Web3 adoption

2-2. AA introduced as a solution

3. ERC4337: A Simplified Solution for AA

3-1. ERC4337 offers AA without the need for a hard fork

3-2. Key components of ERC4337: UserOperations, Bundler, Entrypoint, SCW, Paymasters, Aggregator

4. Rollups Forecasted as the Prime Beneficiary of ERC4337

4-1. UserOperations are most active within rollups

4-2. The primary reason for heightened on-chain ERC4337 activity on rollups is high gas fees

4-3. Blockchain UX is expected to rapidly improve, centered around the rollup ecosystem

5. Conclusion





1. Introduction

Following the EthCC event, a debate has surfaced regarding which sector, between infrastructure and dApps, must evolve for blockchain to achieve mainstream acceptance. It is undeniable that the present Web3 market is wanting in sustainable dApp services with genuine users, and there has been a comparatively lesser emphasis on service areas vis-à-vis infrastructure. Viewing it from this perspective, the argument for pivoting the focus from infrastructure to services certainly carries weight.

However, independent of this viewpoint, it's the author's conviction that blockchain technology still has numerous areas necessitating advancements. It's only with the maturity of such infrastructural development that a killer service, capable of serving hundreds of millions of users, can emerge. The current priorities in the Web3 market are scalability and improvement in the developmental environment. Nonetheless, from a user's standpoint, the UI/UX of blockchain services is equally pivotal. To address such challenges, the Ethereum community has turned its attention to Account Abstraction (AA). After extensive discussions and trial and error, the ERC4337 proposal has been adopted and integrated in the roadmap. This report delves into the concept of AA, explores the structure and significance of ERC4337, and scopes out its potential applications.

2. Blockchain's UX Issues and the Emergence of Account Abstraction (AA)

2-1. Poor UI/UX and the onus of self-custody hinder mainstream Web3 adoption

Two primary factors contribute to the perception of Web3 services as cumbersome and challenging from the user’s standpoint: 1) Suboptimal UI/UX, and 2) The inherent burdens associated with self-custody. The limited user experience in blockchain services isn't solely attributed to scalability constraints but fundamentally stems from the way blockchain mandates users to employ Externally Owned Accounts (EOA).

EOAs are non-programmable, restricted to a predefined mode of usage. This not only poses significant constraints but also necessitates users to possess an understanding of blockchain for seamless use. For instance, EOAs require transactions to be executed individually and necessitate personal key signatures for each transaction (instead of batching the transactions and signing it all at once). Consequently, even straightforward processes like NFT purchases can be time-consuming (refer to the provided illustration). Furthermore, without holding ETH in the wallet for gas fees, even basic transactions like transfers become infeasible. This stands in stark contrast to the Web2 environment, where users can effortlessly register with a single click through platforms like Kakao, Naver, or Google, and subsequently integrate with various apps to enjoy a plethora of services. Thus, for users accustomed to the Web2 service modality, the perceived intricacy and cumbersome nature of Web3 services are unsurprising.

*EOA - Blockchain accounts are divided into EOA and CA (Contract Account). EOAs are externally owned and used for initiating transactions, message signing (verification), and smart contract execution. Wallet services like MetaMask, Coinbase, and Phantom rely on EOAs, which are managed with a private key to only grant access to its possessor. If the private key is compromised, the EOA becomes vulnerable. So wallet users must be cautious not to lose or disclose their private key or seed phrase because once the private key is lost, it’s impossible to recover it. On the other hand, CAs are Ethereum accounts in the form of smart contracts, operating based on embedded code logic and lacking private keys. Therefore, CAs cannot issue transactions on their own and require relevant data from EOAs or other contracts to execute transactions.

Another pivotal concern for Web3 users arises from the self-custody challenges. Traditional financial institutions, like banks, offer built-in safety nets: forgotten passwords can be seamlessly reset after identity verification, and lost cards can be rapidly frozen and reissued through customer support like real-time ARS. In contrast, the Web3 paradigm, anchored by EOAs, doesn't afford such luxuries. The loss of a private key is irreversible. Storing private keys or seed phrases online escalates the risk of cyber-attacks, prompting users to resort to analog solutions like manually jotting them on paper. Even with such precautions, Web3 users are constantly challenged with phishing attempts, scams, and fraudulent schemes. No user, irrespective of their expertise, is immune. A momentary lapse can lead to catastrophic losses, even when the oversight stems not from the individual but from project vulnerabilities. For perspective, as of 2022, the crypto market witnessed an alarming surge in hacking incidents, with damages nearing a staggering $3.8 billion.

2-2. AA introduced as a solution

In computer programming, abstraction refers to the process of distilling the essence of complex data, modules, or systems. Essentially, it masks the technical intricacies of the underlying system behind a simplified API or a high-level interface. This concept is crucial for enhancing user experiences by shielding them from the system's inherent complexities. AA in the blockchain ecosystem embodies this philosophy. At a protocol level, AA ensures that account types remain invisible to the Ethereum protocol. From a user's standpoint, AA conceals the technicalities involved when interacting with Ethereum accounts behind higher-level interfaces. This cloaking act aims to deliver a seamless experience, akin to the user-friendly environments of Web2 platforms. The proposed mechanism to actualize this is the confluence of EOA and CA into a unified entity known as the Smart Contract Wallet (SCW) - sometimes referred to as a Smart Account. This innovative wallet connects the transaction initiation and authorization capabilities of an EOA with the logic execution of a CA. The upshot? A flexible account structure that can embed diverse features to mitigate the complexities of Web3 service usage. However, it's important to note that while AA streamlines protocol interactions, two things remain unchanged: 1) the wallet address that receives funds 2) the personal key granting access to those funds. In other words, while accounts get abstracted from the protocol, they are not abstracted from the user.

The introduction of AA, embodied through Smart Contract Wallets (SCW), unlocks a plethora of features that can significantly elevate the user experience on Web3 platforms. As SCWs can execute arbitrary logic like Contract Accounts (CA), they open up opportunities for custom functionalities tailored to user needs. Let's delve deeper into some potential applications:

  • Transfer Limit Settings: Just as bank accounts have daily transfer limits, users can impose a cap on the amount transferable from their SCW. If a user wishes to transfer an amount exceeding the limit, the verification process can be made more rigorous, requiring additional authentication steps.
  • Key Renewal & Account Freezing: Similar to freezing and reissuing a credit card after its loss, if a signing key is misplaced, users can freeze their account and get a new key.
  • Session Keys: Users can set up temporary keys that can automatically sign transactions for a defined period. This feature could be especially handy for blockchain games, particularly fully on-chain games where micro-transactions might be frequent.
  • Auto-Payments: Drawing parallels with automated bank transfers, SCWs can support regular automatic payments. Once this feature becomes mainstream, we can expect subscription models to gain significant traction in the Web3 market.
  • Multi-Signature (Distinct from MPC wallets): Users can delegate transaction signing authority to trusted entities (friends, family, service providers, etc), enabling Multi-Factor Authentication (MFA) commonly found in Web2 platforms. While this seems akin to Multi-Party Computation (MPC) wallets, there's a fundamental difference: MPC utilize off-chain solutions, distributing keys and aggregating them off-chain for signing. In contrast, the multi-signature feature in SCWs automates key management on-chain via smart contract codes. Given the dichotomy between these two solutions (on-chain and off-chain), they can be viewed as complementary, potentially leading to the development of hybrid solutions that blend the strengths of both technologies.