Vitalik EthCC Speech Summary Account Abstraction Will Completely Change Wallet Interaction Methods

Vitalik's EthCC speech highlights how account abstraction will revolutionize wallet interaction methods.

Author: Intern, TechFlow

On July 17th, the Ethereum Community Conference (EthCC) was officially opened in Paris. Ethereum co-founder Vitalik Buterin delivered a keynote speech endorsing smart contract wallets, with the theme of the history and future of account abstraction.

This year, Vitalik has frequently expressed support for smart contract wallets with account abstraction. For example, in a Twitter AMA in June, when asked about his views on wallets based on MPC (EOA) and smart contract wallets, he believed that MPC-based EOA wallets have fundamental flaws because they cannot revoke keys, and smart contract wallets are the only choice.

In Vitalik’s view, account abstraction is “very elegant” because it does not require changes to the underlying protocol like previous upgrades.

Account abstraction itself is a relatively abstract concept.

Currently, Ethereum accounts are tightly coupled with key pairs to the extent that they are essentially the same thing. If you control the private key, you control an account.

Account abstraction decouples the entity (account) in the EVM from the entity (key pair or signer) that owns the movable assets. As long as the CA supports specific functions (such as signature verification), it can be an account.

Account abstraction essentially allows users to define the security model of their accounts, making Ethereum more suitable for different use cases.

For example, this feature allows users to set their own transaction validation rules, such as multi-signature requirements or spending limits. They can also make their accounts compatible with future cryptographic algorithms.

Vitalik describes account abstraction as allowing Ethereum accounts to be controlled by smart contract code rather than private keys.

His vision is that in the future, everyone will switch from the current EOA wallets to smart contract-based wallets. If successful, managing crypto wallets will become as simple as managing email accounts.

Early stages of account abstraction

Vitalik stated that the idea of allowing code to control accounts instead of just keys has been present in Ethereum’s design from the beginning.

The Ethereum yellow paper outlined two types of accounts: externally owned accounts (controlled by private keys) and contract accounts (managed by smart contract code). However, there were some challenges in implementing account abstraction in its early stages.

In the first proof-of-concept version of Ethereum, it was optimistic that users would adopt multi-signature wallets more. However, this did not happen immediately, and multi-signature wallets made deposit detection by exchanges more difficult. There was also complexity in paying miner fees from smart contract wallets. The initial vision was that all transactions would be simple “calls,” but issues like non-unique transaction hashes made the problem difficult.

The evolution of account abstraction

Over the years, the Ethereum community has iterated on many ideas for account abstraction. Suggestions have been made around standardized signatures, the use of “breakpoint” opcodes, and restricting access during transaction validation periods, among others. However, progress has been slow due to the complexity of changing the underlying protocol and concerns about providing proof-of-stake. It wasn’t until 2020 that a concrete account abstraction proposal (EIP) was put forward.

Independent projects like Gas Station Network and Argent Wallet have pushed for further innovation. They have found creative ways to enable meta-transactions and abstract accounts using only smart contracts. However, solutions that rely on “wrappers” also have drawbacks, such as higher transaction costs for each transaction.

It wasn’t until later that EIP-4337 was proposed, which provides a general account abstraction standard using only smart contracts, avoiding changes to the underlying protocol.

The Ethereum (ETH) upgrade will allow users to create non-custodial wallets as programmable smart contracts.

This will unlock many features, such as easy wallet recovery, transactions without signatures (meaning lower transaction fees), and team wallets (also known as multi-signature wallets).

According to Vitalik, this upgrade could be one of the main catalysts for global Web3 adoption. “One of the key properties we want blockchains to have is giving you money before you sign up,” he said.

He said the idea is to allow users to receive any tokens, such as stablecoins, in their smart contract wallets and be able to pay gas fees without having to convert and hold ETH.

To enable these types of wallets and transactions to be broadcasted, the latest account abstraction upgrade will enable “payment masters,” allowing users to pay gas fees with any tokens they are transacting with.

EIP-4337 also includes a signature aggregator, allowing multiple signers to join together with only one being used for the transaction.

Vitalik said, “This is a pretty big deal,” especially in Rollups, where signatures take up a lot of space on these types of L2 solutions.

Ethereum L2 solutions, such as Arbitrum or Optimism, batch transactions together and verify them off the Ethereum mainnet.

Account abstraction will allow for signature aggregation. In simple terms, this will allow for more data compression, resulting in cheaper computation, and, according to Vitalik, “an 86x reduction in cost.”

Furthermore, this is not the only Ethereum upgrade currently underway. Proto-danksharding or EIP-4884 is also in progress. It has quickly become a major focus of network development as it lays the groundwork for a new data type that will significantly reduce costs and make data usage more efficient.

Finally, Vitalik stated that, in order to improve efficiency and censorship resistance, there is increasing desire to directly incorporate partial account abstractions (such as ERC-4337) into the protocol. He also highlighted the importance of ensuring a smooth transition for old EOA users and integrating biometric signers and other innovations.