A quick and simple guide to account abstraction and EIP-4337

Account abstraction (AA) has emerged as a transformative concept in the Ethereum ecosystem, fundamentally changing how users manage their accounts and interact with the blockchain. This innovation addresses numerous pain points in the current system and represents a significant step toward making blockchain technology more accessible to mainstream users. By decoupling transaction sources from signatures and providing enhanced flexibility in account security, AA has the potential to dramatically lower the barrier to entry for those new to cryptocurrency. The implementation of EIP-4337 stands as a cornerstone of this evolution, offering practical solutions to long-standing challenges.

What's account abstraction?

To understand account abstraction, it is essential to first grasp the fundamental account structure within Ethereum. The Ethereum network supports two distinct types of accounts: externally owned accounts (EOAs) and contract accounts (CAs). EOAs are traditional user accounts controlled through private keys and seed phrases, representing the most common form of account ownership. In contrast, contract accounts are governed by smart contract code deployed on the blockchain.

Account abstraction represents a paradigm shift in how these accounts function. It refers to the process of decoupling transaction sources from their signatures and effectively upgrading EOAs to function more like CAs. This transformation enables smart contracts to control EOAs, facilitating the creation of smart contract wallets. The result is a significantly improved user experience with greater flexibility in account management, allowing for more sophisticated security models and user-friendly features that were previously impossible with traditional EOAs. EIP-4337 provides the technical framework that makes this transformation possible without requiring changes to Ethereum's core protocol.

Why AA is helpful

The Ethereum community has embraced account abstraction enthusiastically due to its potential to simplify and enhance the entire account management process. AA introduces substantial flexibility to what were previously rigid on-chain actions, enabling users to perform complex operations more efficiently. For example, users can batch multiple transactions together, reducing the number of individual approvals required and streamlining their interactions with decentralized applications.

Security improvements represent another crucial benefit of AA. With smart contract wallets enabled by EIP-4337, users gain access to advanced security features such as multi-signature authentication, social recovery mechanisms, and spending limits. These features provide layers of protection that go far beyond what traditional EOAs can offer. Additionally, AA addresses several pain points that have historically hindered mainstream adoption, including the inflexible gas payment requirements and the risk of losing access to funds if private keys are lost. By resolving these fundamental issues, AA creates a more intuitive and forgiving environment for users interacting with the Ethereum ecosystem.

Ethereum's history with AA

The journey toward implementing account abstraction on Ethereum has been marked by several key proposals, each contributing to the current state of development. Understanding the various Ethereum Improvement Proposals (EIPs) is crucial to appreciating the evolution of AA.

EIP-2938 was one of the earliest attempts to address account abstraction. This proposal aimed to make contract accounts 'top-level' accounts with the ability to pay transaction fees and initiate transactions directly. EIP-3074 took a different approach by introducing two new operation codes (OpCodes) called AUTH and AUTHCALL. These OpCodes would allow EOAs to delegate their control to smart contracts, giving developers the ability to design custom transaction objects and verification mechanisms within a more flexible framework.

EIP-4337 represents the most recent and promising approach to implementing AA. This proposal introduces the concept of user operations (user ops) and a dedicated memory pool for these operations. Importantly, EIP-4337 achieves account abstraction without requiring changes to the Ethereum protocol's consensus layer, which was a major obstacle for previous proposals. The EIP-4337 standard has gained widespread support across the Ethereum development community.

While AA concepts first appeared in EIP-2938 and EIP-3074, these initial proposals encountered implementation challenges. The primary reason for pausing these earlier approaches was the extensive changes they required to the Ethereum protocol itself. The introduction of EIP-4337 solved this problem by providing a pathway to AA that works within the existing protocol framework, making implementation significantly more feasible.

Comparison with other account abstraction solutions

When comparing different account abstraction solutions, EIP-4337 stands out for its practical approach to implementation. While EIP-4337 may initially appear complex to those new to Ethereum, it offers distinct advantages over its predecessors and has become the preferred standard for implementing account abstraction.

The earlier EIP-3074 solution required the introduction of two new operation codes to the Ethereum Virtual Machine (EVM). While this approach would have been effective, it necessitated extensive changes to Ethereum's consensus layer. Such fundamental modifications carry significant risks, as they require careful coordination across the entire network and could potentially introduce security vulnerabilities or compatibility issues. These concerns ultimately led to EIP-3074 being paused.

In contrast, EIP-4337's architecture operates at a higher level, building upon existing Ethereum functionality rather than modifying core protocol elements. This design philosophy makes it safer to implement and easier to iterate upon if improvements are needed. The EIP-4337 solution introduces new components such as bundlers and paymasters that work within the current framework, rather than requiring every node in the network to upgrade their consensus rules.

A deep dive into EIP-4337

EIP-4337 achieves account abstraction through an innovative architecture that introduces several new components and concepts. Understanding these elements is crucial to appreciating how the EIP-4337 system functions and why it has become the standard approach to account abstraction.

At the heart of EIP-4337 is the concept of UserOperation, which is an object that describes what action an individual wants to perform on the blockchain. Unlike traditional transactions, UserOperations can contain more complex instructions and don't require direct signing by an EOA. The Entry point is a specialized smart contract that serves as the central hub for processing bundled UserOperations. It validates and executes these operations according to predefined rules established by the EIP-4337 specification.

Bundlers play a critical role in the EIP-4337 system, acting as specialized nodes that collect multiple UserOperations and package them into single transactions. These bundled transactions are then submitted to the Entry point contract for processing. Bundlers ensure that UserOperations are included in blocks while they remain valid, similar to how miners or validators process traditional transactions.

Wallet contracts represent the individual user's smart contract account, containing the logic for transaction validation and execution. The Wallet factory is a smart contract designed to deploy new wallet contracts on demand, streamlining the process of creating smart contract wallets for new users within the EIP-4337 framework.

Aggregators serve as helper contracts that can validate multiple signatures simultaneously, improving efficiency when multiple accounts need to authorize related operations. Bundlers maintain whitelists of trusted aggregators to ensure security. Finally, Paymasters are contracts that implement custom gas payment logic, enabling features such as paying transaction fees in tokens other than ETH or having third parties sponsor transaction costs—one of the most powerful features introduced by EIP-4337.

Understanding the flow of transactions

The transaction flow in an EIP-4337 enabled system differs significantly from traditional Ethereum transactions, involving multiple steps and specialized components working together to provide enhanced functionality.

Starting the transaction process

When a user wants to initiate a transaction, they begin by creating a UserOperation object according to the EIP-4337 specification. This object encapsulates all the information necessary to execute the desired action, including the sender's address, gas parameters such as maxFeePerGas and maxPriorityFee, and other relevant data. The signature field's usage is determined by the specific account implementation rather than being rigidly defined by the protocol, allowing for greater flexibility in authentication methods.

Once created, the UserOperation is submitted to a dedicated user operations memory pool, which is separate from the traditional transaction memory pool. This separation allows UserOperations to be processed through the specialized EIP-4337 AA infrastructure without interfering with standard Ethereum transactions.

Sending transactions

Validators, specifically bundlers in the EIP-4337 architecture, monitor the user operations memory pool and collect UserOperations for processing. These bundlers package multiple UserOperations together into a single bundle, which is then formatted as a standard Ethereum transaction. The bundler acts as a block builder, working to include the bundled transaction in an upcoming block while the Entry point transactions remain valid.

Even if the bundler is not directly producing blocks, it can achieve inclusion by collaborating with block building infrastructure such as mev-boost, proposer-builder separation systems, or experimental RPC APIs like eth_sendRawTransactionConditional. This flexibility ensures that UserOperations can be processed efficiently across different network configurations within the EIP-4337 framework.

Identifying transactions

Once the bundled transaction reaches the Entry point contract, a validation process begins according to EIP-4337 rules. The Entry point contract examines each UserOperation in the bundle, using the validateUserOp function to verify signatures and ensure that each operation meets the necessary requirements. This validation process ensures that only legitimate operations are executed and that the smart contract wallets have properly authorized the actions.

Bundlers must whitelist the Entry point contracts they support, creating a trust framework that protects against malicious operations. This whitelisting process ensures that bundlers only process UserOperations through verified and secure Entry point implementations that comply with EIP-4337 standards.

Executing transactions

After successful validation, the execution phase begins. The smart contract wallets associated with each UserOperation implement the ExecuteUserOp function, which carries out the actual transaction logic as defined by EIP-4337. The bundler packages these validated UserOperations and calls the handleOps function on the Entry point smart contract, which coordinates the execution of all operations in the bundle. Once this transaction is included in a block, all the individual UserOperations are finalized on the blockchain.

Comparison of EOA, MPC, and AA crypto wallets

Understanding the differences between various wallet types helps clarify the advantages that account abstraction brings to the Ethereum ecosystem, particularly through the implementation of EIP-4337. EOA wallets represent the traditional account type, using externally owned accounts with low creation costs and gas fees. However, they offer limited functionality, requiring users to manage private keys directly and providing no built-in recovery mechanisms. Gas payments must be made in ETH, and transactions must be processed individually. The signature method is restricted to ECDSA, and security depends entirely on private key management practices.

MPC (Multi-Party Computation) wallets also use EOA accounts but distribute key management across multiple parties. This approach maintains low creation costs and gas fees while improving security through distributed key storage. Like traditional EOAs, MPC wallets still require single-currency gas payments and process transactions individually. The signature method remains ECDSA, but security is enhanced through the elimination of single points of failure. However, ecosystem compatibility can be weak, and careful consideration of off-chain signing authorization policies and transparency is necessary.

AA wallets, built on contract accounts and enabled by EIP-4337, represent the most advanced option. While they have higher creation costs and gas fees compared to EOA wallets, they offer substantial advantages in functionality and security. Users can pay gas fees in multiple currencies or have third parties sponsor their transactions through the paymaster feature of EIP-4337. Batch transaction processing is available, allowing for more efficient operations. AA wallets support various signature methods beyond ECDSA, eliminating the need for traditional private key management. Built-in wallet recovery mechanisms protect against key loss, and chain-level security is achieved through the EIP-4337 standard. The ecosystem compatibility continues to improve as adoption of EIP-4337 grows across the Ethereum network.

How does EIP-3074 AA differ from EIP-4337 AA?

While EIP-4337 represents the current path forward for account abstraction, understanding EIP-3074 provides valuable context for appreciating the trade-offs involved in different AA approaches and why EIP-4337 has emerged as the preferred solution.

Advantages

EIP-3074's approach offered several compelling advantages. The most significant was its ability to allow users to delegate control of their EOA to a smart contract, giving developers unprecedented flexibility in creating novel transaction schemes. This capability would enable features like batch trading, packaged trading, and flexible gas payment options directly for existing EOA accounts.

Another advantage was the introduction of invoker contracts, which could accept payment in tokens other than ETH. These trustless intermediaries would act as middlemen executing transactions between sponsors and sponsees, facilitating more flexible payment arrangements. Additionally, EIP-3074 would allow any existing EOA to function like a smart contract wallet without requiring the deployment of a new contract, potentially making the transition to AA smoother for existing users.

Disadvantages

Despite its advantages, EIP-3074 faced significant challenges that ultimately led to it being put on hold and to the development of EIP-4337 as an alternative approach. The most critical issue was its requirement for changes to the consensus layer of Ethereum. Such fundamental modifications carry substantial risk, as they could necessitate a hard fork if problems arose. The potential for network disruption or security vulnerabilities made this approach less appealing to the Ethereum community.

Furthermore, while EIP-3074 granted EOAs many characteristics of contract accounts, it still required the use of fixed ECDSA signatures for the signature mechanism. This limitation prevented the adoption of alternative signature schemes that might offer better security or efficiency, reducing the flexibility that account abstraction aims to provide. EIP-4337 addresses these concerns by working within the existing protocol without requiring consensus layer changes.

The introduction of EIP-5003

EIP-5003 represents an interesting development that builds upon the foundation laid by EIP-3074, demonstrating that the earlier proposal's concepts have not been entirely abandoned. This proposal introduces the AUTHUSURP OpCode, which enables the deployment of code at addresses that have been authorized under EIP-3074.

Working in conjunction with EIP-3607, EIP-5003 provides a mechanism to revoke the original signing key's authority for EOAs. For example, if EOA one has authorized address two to act on its behalf under EIP-3074, address two can use the AUTHUSURP OpCode to set EOA one's code. This process effectively allows an existing EOA to upgrade to a contract account, granting it the ability to migrate from ECDSA signatures to more efficient and secure signature methods. This approach offers a potential pathway for transitioning existing accounts to take advantage of AA features while building on the work done for EIP-3074, though EIP-4337 remains the primary implementation path for account abstraction.

Conclusion

Account abstraction represents a fundamental advancement in Ethereum's evolution toward mainstream adoption. Through EIP-4337, the Ethereum ecosystem has gained a practical, implementable solution that addresses longstanding pain points in user experience and account security. The introduction of smart contract wallets, flexible gas payment options, batch transactions, and enhanced security features collectively work to lower the barrier to entry for new users while providing existing users with more powerful tools for managing their digital assets.

The journey to account abstraction has been marked by thoughtful iteration, with proposals like EIP-2938, EIP-3074, and EIP-5003 each contributing valuable insights even when not directly implemented. EIP-4337's success lies in its pragmatic approach, achieving the benefits of account abstraction without requiring disruptive changes to Ethereum's core protocol. As the ecosystem continues to integrate this technology, with major centralized exchanges and wallet providers implementing EIP-4337 support, we can expect to see increasingly sophisticated and user-friendly applications that make blockchain technology accessible to a much broader audience. The future of Ethereum accounts is flexible, secure, and ready to support the next generation of decentralized applications, with EIP-4337 serving as the foundation for this transformation.

FAQ

What is EIP 4337?

EIP 4337 is an Ethereum proposal for account abstraction, separating transaction verification from inclusion. It enables smart contract wallets, improving user experience and security in blockchain interactions.

What is the difference between EIP 4337 and 7702?

EIP 4337 is a toolkit for smart contract accounts, while EIP 7702 adapts these features for existing externally owned accounts. 4337 focuses on new capabilities, 7702 on compatibility.

What is the protocol ERC-4337?

ERC-4337 is a standard for account abstraction on Ethereum, enabling smart contract interactions without private keys. It uses bundlers and mempools for enhanced functionality.

Are EIP and ERC the same thing?

No, EIP and ERC are not the same. EIP (Ethereum Improvement Proposal) suggests improvements, while ERC (Ethereum Request for Comments) defines standards for Ethereum.