A Glimpse into Account Abstraction
Beyond the Buzz
It’s undeniable that Account Abstraction (AA) has been generating a lot of excitement on Crypto Twitter. While live integrations within digital products are still hard to find as the tech is so new, AA's potential to transform user experiences for non custodial wallets is undeniable. This article explores concrete AA applications that are already in development, showcasing the real-world benefits they offer to users today and in the future.
What is Account Abstraction?
To keep it short, Account Abstraction (AA) is an Ethereum Request for Comment (ERC) that lets developers create non-custodial wallets as programmable smart contracts. These smart contract wallets offer users all of the same features that traditional wallets have — but with enhanced security & advanced customizations on top. This paves the way for better web3 user experiences and use cases.
As this article does not intend to focus on how Account Abstraction works, we won't go deeper in the details on this front. However, you can check the 3 links below that will explain AA by growing levels of technical complexity.
- Level 1: Overall explanation
- Level 2: Technical overview from Vitalik Buterin
- Level 3: The initial thread between the Ethereum devs
EOAs vs. AA: A Tale of Two Wallets
Currently, most users rely on a specific wallet type known as Externally Owned Account (EOAs) - Metamask falls in this category. Being the first generation of wallets, they have paved the way for DeFi and on-chain onboarding but come with significant limitations.
On the other hand, Account abstraction simplifies smart contract development, empowers users to manage funds across different contracts without juggling private keys for each one, and enhances security for users.
Let’s see how they compare to programmable wallets:
Limited Functionality
- EOAs can only perform tasks whenever the user is here to validate them, implying little automation capabilities.
- AA wallets, on the other hand, leverage smart contracts to unlock a wider range of functionalities. Imagine setting spending limits for your children's accounts or automatically rebalancing your DeFi portfolio – these become possible with AA.
Security Woes
- Losing your private key with an EOA means losing access to your entire crypto portfolio.
- AA wallets store private keys within smart contracts, making them more resistant to theft. Additionally, AA allows for features like multi-signature wallets, requiring multiple approvals for transactions, similar to requiring two keys to open a safe deposit box.
Gas Fee Headaches
- Every interaction with the blockchain using an EOA incurs a gas fee, often requiring users to manage gas prices and hold the network's native token.
- With AA, the gas fee can be paid by a third party, meaning the gas could be paid for using alternative tokens, a credit card, or even allowing sponsoring gas costs.
These limitations paint a clear picture: EOAs, while familiar, struggle to develop features wallets would need to open up to a more mainstream audience - and this is where Account Abstraction steps in. Let's now explore the exciting possibilities AA unlocks, diving into concrete user experiences that are being built or envisioned with programmable wallets.
The Future of User Experience with AA
AA enables wallets to open up to a more intuitive and secure Web3 experience. Here's how:
Real World Use Cases
- Friend.Tech - Seamless Onboarding: Last year, Friend.tech onboarded thousands in Web3 through their smooth onboarding process. Users can sign in with familiar methods like SMS, Google, or Apple. Behind the scenes, Privy, Friend.Tech's onboarding partner leverages an AA layer to seamlessly create a self-custodial wallet for new users and enable this seamless process. Importantly, neither Friend.tech nor Privy have access to users’ private keys, ensuring their assets stay secure while retaining complete control. Read more here.
- Visa - Frictionless Gas Fees: Paying gas fees with familiar methods like Visa cards becomes a reality with AA. Visa allows users to cover fees using their cards, eliminating the need for native tokens or bridge processes, just like paying for online purchases with your credit card today. Read more here.
- Kulipa - Debit Cards for Self-Custodial Wallets: Unlike other crypto payment cards that only enable a prepaid card, Kulipa creates smooth debit experience with AA wallets. Their smart architecture enables them to authorize the transaction based on the wallet’s balance and settle directly on chain. This ensures a smooth payment experience for users, allowing them to spend crypto instantly without upfront top-ups. Read more here.
2 Other Potential Use Cases
- Freeze Assets: Imagine a "virtual cold storage" feature within wallets, to prevent accidental transfers of specific assets, similar to how banks allow users to temporarily freeze their cards. Users could choose which assets to "freeze," ensuring valuable NFTs or crypto holdings remain secure.
- Automated Trading Strategies: AA enables in-wallet trading strategies tools connected to price action on the blockchain, similar to tools offered by platforms like Unibot. Think triggered buy and sell actions, or DCA strategy directly within the wallet, eliminating the need to interact with external DApps and constantly monitor markets.
Conclusion
Account Abstraction is a revolutionary update that unlocks a future of user-friendly, secure, and versatile interactions with the blockchain. From seamless onboarding to innovative features like virtual cold storage and in-wallet trading, AA paves the way for a more accessible and intuitive Web3 experience for everyone.
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