Gareth Jenkinson12 hours agoHow smart accounts and account abstraction can unlock Ethereum’s full utilitySmart contract wallets promise many benefits to Ethereum users, including enhanced security capabilities and transaction programmability.2288 Total views3 Total sharesListen to article 0:00InterviewOwn this piece of crypto historyCollect this article as NFTJoin us on social networksThe Ethereum ecosystem is on the cusp of realizing advanced security features and transaction functionality through the advent of smart contract wallets and account abstraction, but adoption of the technology remains gradual.
Cointelegraph spoke to Safe co-founder Lukas Schor during ETHGlobal in London to unpack why smart contract accounts and account abstraction promise to unlock Ethereum’s full utility.
“Vitalik Buterin recently put out this blog post with the three transitions we need to go through, and one of them is moving to smart accounts. That’s where we see our role,” Schor said.
Safe, a smart wallet infrastructure provider in the Ethereum ecosystem, was initially developed as an in-house multisignature wallet by Ethereum sidechain Gnosis to manage a significant amount of Ether (ETH) raised during its initial coin offering.
“They wanted to have multisig wallet, but there weren’t any battled-tested ones out there at the time,” Schor said.
Gnosis founder Stefan George opted to build his own multisignature wallet and open-sourced it. Ethereum community members began to adopt it, and the wallet became “the de facto standard for multisignature wallets.”A breakdown of Safe’s smart account numbers and transactions across the Ethereum ecosystem. Source: Dune
Gnosis Safe was born, but the project eventually became a standalone offering, Safe, that now serves as the smart account infrastructure for Ethereum users, layer-2s like Optimism and Polygon, and exchanges like Bitfinex. Safe secures over $100 billion in value across more than 7.5 million smart account addresses. Smart accounts address security, UX challenges
Smart accounts fundamentally improve the security and user experience (UX) within the Ethereum ecosystem, enabling a broad set of functionalities that a conventional ETH wallet cannot perform.
“As smart accounts are programmable accounts, they provide entirely new design spaces to solve long-lasting UX and security challenges of Ethereum, such as cross-chain interoperability and key management, fundamentally reducing the barriers of adoption,” Schor elaborates.
Smart account features include the ability to batch transactions, which Schor says can create more seamless decentralized application (DApp) interactions that bundle multiple on-chain actions into one single transaction.
Security guarantees are another fundamental feature that makes smart accounts increasingly important. Aside from multisig functionality, the key rotation allows users to detach the signing key from an ETH wallet, enabling the exchange of the signer setup without migrating assets to a new account.
Smart accounts also allow for the automation of common Web2 or traditional finance concepts like subscriptions. They can enable on-chain security features, like allow and deny lists and the ability to block interactions with malicious contracts.
The functionality can also remove friction for non-Web3 natives without an ETH wallet. This means users can be onboarded using Web2 social accounts or email addresses with the option to migrate to a “more trustless setup” at a later point.
DApps, exchanges, layer-2 protocols and other chains are also able to sponsor gas fees, which Schor says could massively increase the user experience of Web3 interactions:“Through these advancements, I expect Web3 to become a more viable option for large brands and companies building solutions on Ethereum and regulators to be more favorable toward the industry.”First slowly, then all at once
The adoption of smart accounts is something that Schor sees as being a “first slowly then all at once kind of thing.” The Safe co-founder highlights that their work on developing smart accounts has been ongoing for six years, which is indicative of a very gradual adoption curve.
“One of the blockers of adoption is that most users still use EOA accounts [externally owned accounts], via wallets like MetaMask, so many applications and wallets optimize for this,” Schor explains.
He adds that layer-2 protocols have an opportunity to “start from scratch,” and the recently proposed migration EIP-7377 could expedite adoption, as wallets and DApps don’t have to optimize for “legacy users” anymore.
Schor says Safe intentionally focused on specific user groups would benefit the most from additional security and flexibility of smart accounts, including Ethereum ecosystem teams and DAOs.
Over time, he’s witnessed adoption gradually shift more and more to less technical and lower-value use cases. Schor highlights Worldcoin’s deployment of six million smart accounts as evidence of this adoption and says that 2024 could be a breakout year:“I expect this year to be a tipping point, with general momentum on the builder side, mostly accelerated by ERC-4337, and even entire L2’s switching to making smart accounts the default.”
New catalysts, like Coinbase leveraging smart accounts, the development of cross-chain smart accounts and EIP-7377, could drive the migration to smart accounts.
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