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Letter 36: All about ERC-4337
One small step for Ethereum; One giant leap for crypto adoption
ERC-4337 is, to my mind, potentially on par with The Merge in terms of aiding mass adoption for crypto. Yet it’s being spoken about less than 1% as much so far.
I wrote a few months ago on How We Onboard Billions to Web3 and identified 3 key areas we needed to focus on:
A Mentality & Perception Shift
The Merge was obviously an extremely significant event and made it so that environmentally conscious individuals & corporations alike would be a lot more inclined to use Ethereum. It helped tremendously with #3 (also #2 ofc).
ERC-4337 is almost a silver bullet for #2 though.
Let’s dive in and look at what all this ERC-4337 hubbub is about.
What is ERC-4337?
At a high level, ERC-4337 is about introducing Smart Accounts (think Smart Contracts) to the Ethereum Blockchain. The goal of it is to aid adoption and make interacting with Ethereum significantly more user-friendly.
The technical term for ERC-4337 is "account abstraction", but we non-geniuses probably don't need to refer to it this way. I like Smart Accounts.
It was first proposed in September 2021. I find it ironic / funny / “sounds-about-right” that while so many of us degens were flinging jpegs during the peak bull, Vitalik and other core contributors of the Ethereum Foundation were heads down building and pushing the space forward. As always.
Here’s a link to the original proposal if anyone is interested: https://eips.ethereum.org/EIPS/eip-4337.
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What can these “Smart Accounts” do?
SO MUCH! It’s actually insane. A few things:
Alternative Wallet Recovery
It introduces a better option for wallet recovery — an alternative to seed phrases, basically. We have all known that asking “regular folk” to write down and securely store 12-24 words is an impossibly uphill battle. ERC-4337 allows for “more normal” recovery options, closer to traditional banking.
For instance you could nominate a group of certain people (a lawyer, a family member, a trusted friend) who, if they all agree, could gain access to the account. Obviously there are some security risks here too, but it seems like a worthy tradeoff for adoption. You can also use standard smartphone features like biometrics to gate access to your account - again, security issues, but soooo much better in terms of adoption.
Most of us probably already have our credit cards and banking access stored on our phones and gated by our faces and fingerprints, so making this option available for crypto wallets is going to go a long way for mainstream adoption.
In addition, 2FA can be easily enabled for these smart accounts - something a tonne of people have been calling for, for a long time.
“Bundling” is a big part of ERC-4337. I won’t go into the technical details (it’s beyond my pay grade, anyway) but effectively it allows multiple transactions to be bundled together, and to only require a single signature.
Think about how things work currently with NFTs or ERC-20 tokens: if you want to use an application/website, you first have to give them permission (a signature), and then execute whatever it is you want to do like converting tokens via Uniswap or listing an NFT via a marketplace (another signature). ERC-4337 can bundle these together, so you would only need to sign once.
Actually why not take it a step further - you probably could also revoke access in the same bundle. It might not make sense for all use-cases, but it certainly would for some - and it’s a leap forward for security.
The tl;dr here is that someone else can pay the gas/transactions fees for your transaction. This is HUGE for adoption. Imagine being able to mint NFTs or participate in an ecosystem without ever having to actually fund your wallet. There are infinite “free” NFTs out there atm, but almost all of them require claiming (which requires gas). Sponsoring transactions solves this in a big way.
You will also be able to pre-approve transactions for a certain period of time, within a certain application. The example I am thinking of is: imagine you’re playing a blockchain game (likely on an L2). Instead of having to sign via a wallet every time you want to buy or sell something in-game or interact with the blockchain, you could maybe sign one transaction at the start to last for x amount of time and play to your hearts content. Seamless.
Subscriptions are about to be changed in a significant way too. Subscription models on ETH have always been a tricky nut to crack, because usually you would have to approve a transaction each time you send the ETH (or send a set amount of WETH to a smart contract that then executed things). Smart Accounts will allow for this to be natively integrated in a streamlined fashion.
VISA of all freaking companies released a really excellent document on this a few months ago: https://usa.visa.com/solutions/crypto/auto-payments-for-self-custodial-wallets.html.
If you want to take part in a discussion about this, join us on Monday for our ZenDaily Twitter Space where the main topic will be ERC-4337:
Additional Reading / Resources
If I got anything wrong in this newsletter, please comment and let me know! I will gladly correct anything. I admittedly do not understand this at a deep technical level. I only scratched the surface here, so I encourage everyone interested to take a bit more time to dig into everything to do with ERC-4337.
Here are a few excellent resources I stumbled across:
I should also mention that I know there have been a lot of people tackling this issue from different angles. ZenGo comes to mind as an alternative wallet solution to MetaMask and what many of us are used to. I am not technical enough to know the differences between wallets like ZenGo and what ERC-4337 makes possible, but I wanted to mention them for completeness.
This is a HUGE accomplishment for the entire industry. Most people don’t know the people who worked on this (aside from Vitalik), because they’re not your clout-chasing, engagement-farming, neighbourhood-influencers. They deserve our thanks more than almost anyone in this space, so, thank you.
I don’t know them all by name but I can at least list the authors of the ERC-4337 proposal:
I’m sure many many many more people all made this a reality too. Thank you, thank you, thank you.
Disclaimer: The content covered in this newsletter is not to be considered as investment advice. I’m not a financial adviser. These are only my own opinions and ideas. You should always consult with a professional/licensed financial adviser before trading or investing in any cryptocurrency related product.