The big news to come out of WalletCon at ETH Denver was that ERC-4337 is now live on Ethereum Virtual Machine and its compatible networks. ERC-4337 enables account abstraction, or smart accounts. There are many benefits to account abstraction.
Up until now, users had to use EOAs (Externally Owned Accounts) as their primary accounts if they wanted to access the Ethereum mainnet. EOAs use public-private key pairs and require the user to be the custodian of their private key. This has led to a lot of security concerns and sleepless nights over how best to store a seed phrase.
But now, account abstraction enables smart contract accounts to handle transactions. This means a user can recover their account if they forget their password. For example, if the wallet is set up to offer social recovery, the user can reach out to trusted users they’ve given their backup keys to, allowing them to re-secure their account.
The user can also put settings in place that, If a malicious actor did get their hands on the user’s account, they would be prevented from executing certain transactions. For example, they can prevent high value transactions from executing without the signatures of multiple designated signers, ensuring that a scammer can’t steal a large amount of crypto in one fell swoop.
And the benefits extend beyond security improvements. Wallet developers can offer other delightful features, like allowing users to pay for each other’s gas and batch transactions to save money.
How is this possible? Smart contract wallet developers write code for these features (and any others they wish to build in the future),, and then that code is translated into EOA transactions so they can be processed by Ethereum. Pretty neat!
But what even is an ERC in the first place? ERC stands for Ethereum Request for Comment. An ERC is a type of EIP, or Ethereum Improvement Proposal. EIPs describe standards for core protocol, client APIs, and contracts on Ethereum. An ERC specifically refers to an application-level standard.
Over the years there have been many ERCs. Here are two notable ones:
ERC-20: Token Standard - This ERC creates a standard API for tokens within smart contracts. It provides basic functionality to transfer tokens, as well as allow tokens to be approved so they can be spent by another on-chain third party. In other words, it allows users to send and receive cryptocurrencies!
ERC-721: Non-fungible Token Standard - This ERC provides basic functionality to track and transfer NFTs. While ERC-20 was designed for fungible tokens (tokens that can be traded for equal value, or “like for like”), ERC-721 is for non-fungible tokens, or NFTs (tokens that are unique and do not inherently hold the same monetary value).
ERC-20 and ERC-721 introduced viable use cases for blockchain technology, and now with the introduction of ERC-4337, it is more user-friendly! Each ERC causes a ripple effect of change and innovation within the Ethereum blockchain. Hopefully we will start to see mass adoption with the most recent improvement.
This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.
