Having your cake and eating it too is an adage that most people have heard of — and gotten confused by. Tracing its origins as far back as the 1500s, the phrase has been attributed to royalty, writers, and was even instrumental in the apprehension of the Unabomber.
Behind the simple phrase is the even simpler meaning: you can’t have the best of both worlds. While most people may consider this to be a reasonable approach, the folks at Ethereum sure missed the memo, because ERC-4337 not only seeks to eat cake and have it, it wants the cake hassle-free.
What does ERC-4337 address?
Before we get into that, we have to familiarize ourselves with a few terms: externally owned accounts (EOAs) and account abstraction.
EOAs are regular user accounts on the Ethereum blockchain. Currently, there are two types of accounts on Ethereum: smart contract accounts and externally owned accounts — anything that happens on the blockchain must be initiated and paid for by an EOA.
In a blockchain system, account abstraction refers to separating the control of an account from its associated private key — this is where ERC-4337 comes in. Proposed by Vitalik Buterin in 2021, ERC-4337 seeks to combine features of the protocol’s two existing account types.
Why is ERC-4337 important?
Because the Ethereum protocol uses an account-based model, most crypto wallets on Ethereum are EOAs — meaning they are limited by the rules set around EOAs. This makes setting up the wallet and private key security measures complex, and users lose access to the wallet if they lose their seed phrase.
Account abstraction allows for more secure self-custodial wallets and wallet recovery as it can be leveraged to allow a smart contract to validate alternative private keys like the secure elements stored in a mobile phone.
How does ERC-4337 work?
As if combining features from two accounts into one weren’t enough, you obviously aren’t thinking big enough, because ERC-4337 does all that without requiring a consensus-layer change.
It does so via a higher-layer pseudo-transaction object called a UserOperation, a type of transaction that is sent on behalf of a user. Bundlers package these objects into a transaction, which gets included in a block. The bundlers pay gas for the bundled transactions and get compensated in fees by the individual UserOperation executions.
What does ERC-4337 aim to achieve?
The entire point of ERC-4337 lies on the premise of separating control of an account from its private key, thus opening up opportunities for more developments on the Ethereum blockchain.
Account abstraction provides a better overall user experience, on top of improved security since it adds support for smart contract wallets at the protocol level.
Because the smart contracts do all the interacting, there is no need for centralized actors; everything is done through a peer-to-peer mempool.
Enable faster adoption
The feature that gave ERC-4337 the edge over a similar EIP (EIP-2938) was the fact that it required no consensus-layer changes, thus allowing focus to shift to scalability upgrades.
Creative wallet designs
Account abstraction opens up room for creative wallet designs that could include aggregated signature, setting daily transaction limit, emergency account freezing, whitelisting, and privacy-preserving applications.
Save time & gas
Bundlers work in similar ways as Validators, and bundle UserOperation objects based on fee-prioritization logic. Bundlers pay gas for the bundled transaction instead of individual transactions.
Why should you care about ERC-4337?
The noble answer is that whenever a new technology or upgrade is introduced to a blockchain, the entire crypto community benefits from the step taken toward widespread adoption. But on a personal level, it could spell the beginning of the era for easy-to-use wallets that are simple to recover if the need ever arises.
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Disclaimer: All writers’ opinions are their own and do not constitute financial advice. As a company, we do our best to provide information that is accurate and valuable. The contents of this blog post are intended for educational purposes only. Individuals are advised to perform due diligence before purchasing any cryptocurrencies as these assets are subject to high volatility, and understand the risks associated with trading cryptocurrencies.