Brief content

ERC-4337 is an Ethereum standard that provides account abstraction in the protocol without any changes at the consensus level. ERC-4337, deployed on the Ethereum network in March 2023, allows contracts to be concluded and created in a single contract account. This opens the door to user-friendly cryptowallet designs that could potentially drive wider adoption.

Introduction

The Ethereum Improvement Proposals (EIP) describe standards such as the core protocol specification and contract standards for the Ethereum platform. Ethereum Request for Comment (ERC) is one type of EIP that establishes application-level standards such as contract and token standards. An EIP can become an ERC only after network management allows the change.

ERC-4337 is the latest ERC standard deployed on the Ethereum mainnet to achieve the long-awaited goal of account abstraction. Some still refer to ERC-4337 using the original term EIP-4337. However, EIP-4337 was proposed as early as 2021, and in 2023 it was approved to become ERC-4337.

What is ERC-4337?

ERC-4337 was proposed by Ethereum co-founder Vitalik Buterin and other developers in 2021 to create account abstraction. It was deployed on the Ethereum mainnet in March 2023 and is expected to become the foundation of a user-friendly cryptowallet design.

In Ethereum, account abstraction aims to unify the functions of the protocol's two existing account types: external owner accounts (EOA) and smart contract accounts. The result is a single contract account capable of both token transactions and contract creation. This change enables creative wallet design, such as social recovery, personalization, and upgradeability.

Another view of ERC-4337 is that it provides smart contract functionality for single account wallets. This simplifies the setup of services such as multi-factor authentication and automatic payments.

Why is ERC-4337 needed?

To understand why ERC-4337 is needed, it is important to understand why it was proposed and implemented in the first place. Unlike the Unspent Transaction Outcome (UTXO) module of the Bitcoin network, the Ethereum protocol uses an account-based model. This means that the Ethereum protocol tracks and updates available account balances as transactions are confirmed.

The two types of Ethereum accounts have their own functions. EOAs are owned and controlled by users, while smart contract accounts are smart contracts deployed on the network. Both accounts can receive, store and send ether or tokens.

Most of the existing crypto wallets on Ethereum, such as MetaMask are EOA, which means that they are limited by the rules set for EOA. These restrictions include the use of private keys to access accounts and the requirement that all transactions be signed. Because of this, wallet setup procedures and private key security measures are usually complex and inconvenient for the user. If users lose their seed phrase, this usually means losing access to the wallet.

ERC-4337 removes such restrictions. Smart contract wallets such as UniPass and Safe are managed by smart contract accounts, not EOAs, and can achieve the same goal. However, users must manage their ether in two accounts to pay gas fees, or rely on a centralized relay system. ERC-4337 removes such restrictions, as it combines the functions of two accounts into one, which simplifies the deployment of the necessary wallet functions.

How does ERC-4337 work?

The Ethereum community has long been working on ways to achieve account abstraction. Before EIP-4337, the community put forward another proposal to achieve account abstraction called EIP-2938. EIP-2938 was similar to ERC-4337, but required changes at the consensus level. ERC-4337 circumvents this problem.

This is achieved by introducing a top-level pseudo-transaction object, UserOperation, which is similar to storage packages in that both involve different versions of the pooling concept. In ERC-4337, different users send UserOperation objects to a separate mempool.

Bundlers package these objects into a transaction that is included in the block. Bundlers pay a gas fee for bundled transactions and receive a fee for executing individual UserOperations. Bundlers work in the same way as validators, choosing which objects to add based on commission prioritization logic.

New features are also added, including validateUserOp, so that the wallet can be a smart contract at the same time. A new contract called EntryPoint is also being introduced to provide security for these new functions.

What goals does ERC-4337 achieve?

Objectives of ERC-4337:

Account abstraction: Allow users to use a single account with smart contract and EOA functions.

Decentralization: Allow any bundlers to participate in the process.

Preventing Consensus Changes: Enable faster adoption as Ethereum's consensus layer focuses on scalability-oriented updates.

Enabling innovative use cases: These may include aggregated signature, setting daily transaction limits, emergency account freezes, whitelisting, and privacy programs.

Saving time and gas fees: Since bundlers can package UserOperation objects into a single transaction, this can save time and gas fees.

What ERC-4337 means for users

ERC-4337 can put an end to the difficult experience of using cryptowallets and thus promote their adoption. Here are some highlights of what the ERC-4337 can do:

Wallet Setup: No need to record seed phrase. Setup can be quick and easy with just a few clicks.

Hassle-free account recovery: Users no longer need to worry about losing seed phrases, as multi-factor authentication and account recovery are now possible.

User-friendly wallet features: Users can enjoy a wide range of personalized services, including automatic payments, pre-approval of transactions and batch transactions. And these are far from all functions.

Higher Security: Wallets can potentially be more secure as the chance of human error is reduced – no more hiding seed phrases "under the mattress"! In theory, ERC-4337 should provide a smoother and more user-friendly interface, thus removing one major barrier to mass adoption.

Gas fee flexibility: ERC-4337-based wallets can now pay gas fees with any ERC-20 token and more. Developers can create wallets that allow gas fees to be paid in any token and even in fiat.

Results

Crypto wallet terminology, such as seed phrases, private keys, and public keys, can be intimidating to new users. The process of using crypto wallets is still difficult for some people. Many agree that the crypto interface for the average user should be as simple as possible to accelerate its adoption.

ERC-4337 lays the technical foundation to support creative cryptowallets. What developers can create based on this standard could change the main meeting point between cryptocurrency and users. Regardless, the impact that ERC-4337 will have on the user experience and cryptocurrency as a whole will be something to watch in the coming years.

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