Ethereum Account Abstraction
Tags: webdev, ethereum
Published: 2023-06-19 13:13:35

### Simply Explained

Account Abstraction is a big improvement for cryptocurrencies, making them easier to use for everyone, not just for tech experts.

Let's think about how things used to be when the internet started. When you wanted to create an account on a website, you had to ask someone to make a special record for you with a username and password. It was a bit complicated. But then, people found a way to make it easier. They created systems where you could automatically create your own accounts and even reset your password if you forgot it.

Now, something similar is happening with cryptocurrencies. Account Abstraction is a new idea that will make using cryptocurrencies more user-friendly. It's like the next step in the evolution of the internet. It will allow you to do things with cryptocurrencies without needing to understand all the technical details.

### Technically Speaking

Ethereum Account Abstraction refers to a proposed upgrade to the Ethereum blockchain protocol that aims to enhance the flexibility and capabilities of smart contracts and account management.

In the current Ethereum architecture, there are two types of accounts: externally owned accounts (EOAs) and contract accounts. EOAs are controlled by private keys and can initiate transactions, while contract accounts are controlled by smart contracts and execute predefined codes.

With Account Abstraction, the goal is to enable more advanced functionalities by allowing smart contracts to directly control and manage their own accounts. This means that smart contracts would be able to hold and manage Ether (the native cryptocurrency of Ethereum) and interact with other contracts, similar to how EOAs currently operate.

By introducing Account Abstraction, developers would have greater flexibility in designing complex decentralized applications (DApps) and implementing more sophisticated logic within smart contracts. It would enable the creation of new types of accounts, such as privacy-focused accounts or accounts with multi-signature capabilities, expanding the range of possibilities for decentralized applications on the Ethereum platform.

Account Abstraction is still a proposed upgrade and is being actively researched and developed within the Ethereum community. It is part of the ongoing efforts to improve the scalability, privacy, and functionality of the Ethereum network.

### Key Components of Account Abstraction:

**Smart Contracts:** Smart contracts are self-executing agreements with predefined rules and conditions. In the context of account abstraction, smart contracts gain the ability to hold, send, and receive funds autonomously.

**Virtual Machines:** A virtual machine (VM) executes smart contracts and facilitates the processing of transactions on the blockchain. Account abstraction requires a VM that supports the necessary functionalities for interacting with funds.

**Gas Model:** Most blockchain systems employ a gas model to allocate computational resources and prevent abuse. Gas is a unit of measurement representing the computational effort required to execute operations on the blockchain. Account abstraction involves considering gas costs associated with contract execution and fund management.

### Some Problems Account Abstraction seeks to solve

1. **Simplifying Fee Payments:**
Traditional wallets require users to have a certain amount of Ether (ETH) in their wallets to cover transaction fees. This creates friction when users want to send other tokens, such as USDC, as they need to ensure they have enough ETH to pay for the fees. This inconvenience is in contrast to traditional payment systems, where users don't have to worry about the underlying currency required for transactions. Account abstraction addresses this issue by abstracting away the need for users to manage separate currencies for transaction fees, creating a smoother experience similar to traditional payment rails.
2. **Enhanced Security and Asset Recovery:**
One of the concerns for cryptocurrency users is the permanent loss of assets if they lose their private keys. Unlike traditional banking, where password recovery options exist, losing access to a private key can result in irreversible loss. Account abstraction acknowledges the importance of risk mitigation and aims to provide enhanced security features. By implementing mechanisms for key recovery or alternative access methods, account abstraction offers users a sense of security, potentially outweighing the inconveniences associated with slower transfer times and lower interest rates.
3. **User-Friendly Approach:**
Cryptography concepts, such as seed phrases, private keys, public keys, and addresses, can be complex and intimidating for non-technical users. Account abstraction aims to bridge this knowledge gap by simplifying the user experience. With account abstraction, users can interact with their wallets without the need for in-depth understanding of cryptography. This eliminates the unrealistic expectation of non-technical consumers having to learn and secure their keys, making cryptocurrency adoption more accessible to a wider audience.
4. **Advancing User Experience:**
Account abstraction goes beyond the limitations of standard private keys or seed phrases. It allows for the implementation of arbitrary and complex logic within wallets, enabling a more intuitive and user-friendly experience. By combining the comfort of traditional financial systems with the speed and efficiency of blockchain technology, account abstraction paves the way for a significant improvement in user experience. This transformation in user experience is a crucial step towards onboarding the world to Web 3.0 and driving widespread cryptocurrency adoption.

### Benefits of Account Abstraction:

1. **Enhancing User Experience and Security:**
Account abstraction offers significant enhancements to the user experience by simplifying the onboarding process and bolstering security measures. Users can easily create accounts through smartphone apps, utilizing convenient biometric authentication methods such as fingerprint or face scanners. This eliminates the complexity of seed phrases, making cryptocurrencies more accessible to a broader audience. Moreover, smart accounts leverage the secure element in smartphones' hardware security modules to store cryptographic keys, thereby enhancing the security of funds. With additional security measures like two-factor authentication and spending limits, smart accounts provide robust protection for users' assets.
2. **Improving Transaction Efficiency:**
Smart accounts bring forth a range of features that enhance transaction efficiency. Two-factor authentication, implemented through smartphone apps or hardware wallets, adds an extra layer of verification for high-value transactions, ensuring enhanced security. Monthly spending limits empower users to exert better control over their financial activities. Session keys enable automatic approval of low-value transactions, facilitating seamless interactions with blockchain-based games and applications. Additionally, smart accounts support decentralized recovery options, enabling users to regain control of their accounts in case of loss or theft, without compromising the security of their funds.

### How will account abstraction be implemented?

Implementation strategies for account abstraction are still being explored and developed. While the concept of account abstraction holds promise, it's important to note that the specific implementation details may vary.

Currently, the Ethereum Virtual Machine (EVM) does not natively support smart contract wallets or account abstraction. To work around this limitation, developers have created smart contract wallets by adding complex code around standard Ethereum transactions. These wallets rely on off-chain processes and intermediaries, such as relayers, to translate user-signed messages into regular Ethereum transactions.

However, there are ongoing discussions within the Ethereum community to enable account abstraction at the protocol level. The idea is to allow smart contracts to directly initiate transactions, eliminating the need for external processes. By shifting the necessary logic into Ethereum smart contracts, the network's decentralization would increase as it removes reliance on relayers operated by wallet developers.

While the implementation details and timeline for account abstraction on Ethereum are not yet finalized, the Ethereum development community is actively exploring ways to enhance the capabilities of smart contracts and address the challenges associated with smart contract wallets.

It is crucial to refer to official Ethereum documentation, updates, and announcements from the [Ethereum Foundation](https://ethereum.org/en/roadmap/account-abstraction/#how-will-aa-be-implemented) and relevant Ethereum Improvement Proposals (EIPs) to stay informed about the progress and official plans regarding the implementation of account abstraction on the Ethereum network.

### Challenges and Considerations:

Security: Account abstraction requires robust security measures to protect against vulnerabilities such as reentrancy attacks, unauthorized fund access, and code bugs that could lead to unintended consequences.

Gas Optimization: Account abstraction introduces additional complexities in gas estimation and optimization. Developers need to carefully consider gas costs to ensure efficient contract execution and minimize transaction fees.

Scalability: Implementing account abstraction on a large scale can pose scalability challenges. Designing efficient and scalable VMs is crucial to handle the increased workload resulting from complex smart contract interactions.

### Smart Accounts Use Cases

Smart accounts, enabled by account abstraction technology, introduce a range of innovative use cases let's explore some.

1. **Simplified Subscription Management:**
With smart accounts, users can set up conditional pull payments for their subscriptions. For instance, an electricity company could create an auto payment smart contract on its website, specifying the frequency and maximum amount for monthly charges. Users can then approve these conditional pull payments through their smart accounts, allowing for automated bill payments as their funds are deposited into the wallet. This eliminates the hassle of manual initiation of "push" transactions for each bill, making subscription management effortless.
2. **Enhanced Security and Control:**
Unlike traditional payment methods that require users to trust centralized services, smart accounts empower individuals to retain control over their funds. Transactions initiated from user accounts require user approval and signature, ensuring that payments are made only when the user authorizes them. This level of security and control eliminates the need to rely on third-party intermediaries, reducing the risk of unauthorized transactions or data breaches.
3. **Seamless Integration with Existing Services:**
Smart accounts can seamlessly integrate with existing subscription-based services, providing users with a familiar and convenient payment experience. Users can set up their smart accounts to automatically send funds matching the subscription amount for a given period. This automation streamlines the payment process, eliminating the need for manual intervention, and ensuring uninterrupted access to services.
4. **Expansion of Payment Applications:**
The introduction of smart accounts opens up a host of new payment applications within the cryptocurrency ecosystem. Users can script their smart accounts to enable a variety of payment scenarios, similar to those seen in traditional Web2 services. For example, users can effortlessly purchase subscriptions, make regular donations, or fund recurring expenses directly from their smart accounts. This expands the utility of cryptocurrencies, providing users with more options to utilize their funds effectively.

### Conclusion

Account abstraction enables many more opportunities for building better crypto wallets****.**** By leveraging the power of account abstraction, wallets can deliver a more seamless and intuitive experience, bridging the gap between traditional finance and the efficiency of blockchain technology. This advancement is a vital catalyst for accelerating the adoption of cryptocurrencies and ushering in the era of Web 3.0.

References and Further Reading 

- Ethereum Improvement Proposal (EIP) 2938: **https://eips.ethereum.org/EIPS/eip-2938**
- [Vitalik's "Road to Account Abstraction" notes(opens in a new tab)](https://notes.ethereum.org/@vbuterin/account_abstraction_roadmap#Transaction-inclusion-lists)
- https://ethereum.org/en/roadmap/account-abstraction/

Worthy Watches

- [Account abstraction panel discussion from Devcon Bogota(opens in a new tab)](https://www.youtube.com/watch?app=desktop&v=WsZBymiyT-8)
- ["Why account abstraction is a game changer for dapps" from Devcon Bogota(opens in a new tab)](https://www.youtube.com/watch?v=OwppworJGzs)
- ["Account abstraction ELI5" from Devcon Bogota(opens in a new tab)](https://www.youtube.com/watch?v=QuYZWJj65AY)