Why Blockchain Accounts Are Important: From EOA to UP

Source link: 《Why Blockchain Accounts Matter 2/3: From EOA to UP》

Author: Felix Hildebrandt

Compiler: ChainCatcher

Ordinary User Accounts on EVM

As mentioned earlier, in the Web3 data scheme, cryptography is used to seal and verify information with private keys. A basic framework is needed for these to potentially evolve into accounts that represent digital identities. On Ethereum's EVM, the most widely used programmable blockchain protocol, a minimal user account is known as an Externally Owned Account (EOA). Compared to the public and private keys described earlier, an EOA also derives an address from the public part of the key, which can be used to contact the user. This address then serves as an identifier. Creating an EOA is done offline, is free, and new accounts can be created frequently as needed. They do not consume any storage space in the network and are only referenced by data during the initial operation.

Every action in the network must be signed by such an EOA to be executed. However, it is crucial that each private key has only one EOA, which is necessary for participating in the network. With the proliferation of blockchain technology in financial markets, the term "wallet" quickly became a common term for applications managing these EOAs. The initial setup involves creating a list of words known as a seed phrase, which is then used as a backup for the private key. If lost, the held assets cannot be recovered, and further participation in that user account is impossible. This predicament makes current user connections very complex and less suitable for the future. Protecting a person's entire identity with just one static password (mnemonic) would be a serious oversight. Another disappointment: they do not obtain gland permissions. All private keys have direct management authority. Users often split datasets across multiple EOAs to reduce risk.

Alternative methods have alleviated the burden when storing high-value assets and reduced the importance of keys. Multiple EOAs are needed to operate multi-signature applications like Safe. However, these are all aimed at a group of people. In this case, accepting the everyday notion of a single, independent identity with different personalities sounds strange. But there is a second, more serious issue: it is impossible to locally connect user-based information to the public address of an EOA, as we are accustomed to doing on social media today. Therefore, without further concepts, user-friendly interactions based on the protocol layer are only occasionally possible.

Current Blockchain Adaptation Issues

Mass identity management requires multiple options for recovery, permission allocation, and linking to public user information. However, besides scalability and user account issues, other problems hinder widespread connectivity.

Once a wallet is set up, users must immediately connect to a cryptocurrency exchange, as no actions can be taken on the network without depositing value. However, verification of these exchange sites can take days, etc. Once interaction is allowed, there are no protections against erroneous data input. If a value is transmitted or an incorrect receiving address is provided during data transfer, the error is irreversible. The lack of consensus is crucial for preventing spam, especially when digital goods or certificates are account-bound, meaning they cannot be transferred again.

However, if the protocol is a good foundation, more layers of abstraction can be added. Modern blockchains have a programmable application layer—EVM is no exception. These programs are commonly referred to as smart contracts, which are deployed and executed on blockchain computers when an EOA initiates a specific transaction process. Smart contracts have addresses, just like the EOAs themselves, but incur network costs as they require storage and computational power. Compared to the centralized Web2 structure that hides data, this programmable smart contract's public backend is separated from the frontend. It is an important driver for development, as anyone can build their implementations. However, like the chains in the network, once implemented, smart contracts have final functionality. Only individual parameter values can be changed afterward. Ideally, accounts should be scalable and dynamic, requiring new clever storage methods.

To better understand why this is particularly challenging for developing blockchain accounts for the masses, we can look at the Ethereum Name Service (ENS) based on smart contracts. The idea of ENS stems from the web we use today. We do not enter the address of a website server but use a domain that resolves it into human-readable text. As long as users purchase a domain name, they can reference any address. ENS provides the same functionality for blockchain addresses. The domain can include information such as social media links, email addresses, or profile pictures. They are convenient for quickly remembering addresses, but there are some drawbacks in account management. This implementation cannot recover domains and can only attach static limitations and predefined amounts of information. Additionally, the cost of retaining names is a significant barrier to identity. When a subscription expires, all historical actions on the network no longer carry the original name, and users lose any reputation associated with it. Worst of all, others can repurchase that name and adopt historically relevant identities.

In-Depth Look at Universal Profiles

Since the concepts and issues were identified early on, the Ethereum community introduced the use of smart contracts as account centers in 2017, known as ERC-725. Here, LUKSO founder Fabian Vogelsteller proposed the intention to use EOAs solely as a higher-level abstract account for any form of entity. This way, people can use and exchange various EOAs across different devices, but on the surface, it is referred to as an identity. Some examples might include storing controllers in a Ledger device as a backup or having only one controller valid at a specific time. This could be a good idea for onboarding, where users subsequently take over control. The standard is divided into two parts: one part for executing program code or creating new smart contracts, and the other defines a storage list containing keys and values. This list exists solely as parameters and can be filled with any data elements (including VCs), making processing extremely flexible. Considering the enormous potential of a new economy, the LUKSO project develops at the application level and addresses adoption issues. It is an ecosystem based on public, universal, and modular smart contracts that can be used across all Ethereum networks and various use cases.

Building on Standardization

Standardization plays an important role in blockchain networks for several reasons: higher transparency, code collaboration, development efficiency, and better implementation of new features and improvements, as many people ensure code quality. As I explained earlier, open-source promotes collaboration among developers and organizations working on blockchain networks, leading to rapid development of new ideas and innovative solutions to meet changing demands. They can ensure that different components of blockchain ecosystems can interact seamlessly and modularly while building network effects and trust.

In its standard ecosystem, ERC725 transforms into LPS0, incorporating various modular standards to improve user interaction. Using a universal receiver standard, accounts can receive notifications about incoming and outgoing operations. For these, developers can attach custom processes and behaviors. One example is rejecting or approving certain digital goods or currency transactions. Redirecting or blocking lists to reduce spam is also conceivable. If a recipient does not accept certain payments, they may be returned to the original address. However, if a transaction occurs, digital goods will also be directly written into the profile as a reference until the user spends that currency or no longer owns that object. This feature is a milestone in the data economy infrastructure of blockchain networks. The collective viewing of currency was previously only possible through centralized services that scanned the blockchain and displayed transactions in a readable format. Now, blockchain programs can achieve complete decentralization by directly querying account addresses through simple calls.

Necessary Steps for Verifying Token Ownership

Another key point is the key manager, through which different roles and permissions can be assigned to EOAs. So far, these simple accounts can only cover full access rights and provide almost no security for managing content. By default, the key manager has nine permissions, but any behavior can be adjusted through its interface and even attached to other smart contracts, such as tokens with governance functions.

ERC725 Account Structure

The standard also includes specifying memory registers. If one knows how to access and interpret this data, the storage space is only helpful to certain people. A universal read-write scheme ensures that data can be read automatically. Since storage space on the blockchain is very scarce, the information here is decoded according to predefined patterns. The ERC-725 library, appropriately developed for developers, makes it easy for people to handle these standards. Another criticism of current goods on the blockchain is that their connections can be verified, but the additional data itself is often unverifiable. For this, this type of smart contract has a standardized hash key to indicate whether the original information has remained unchanged.

The proposed storage concept is also used for entity metadata. ERC725 accounts can enrich user information. This enhancement is called a universal profile, combining publicly visible information with accounts that people are accustomed to using on current social media. However, the same functionality is designed for interchangeable and unique goods on the blockchain to allow rich, product-related metadata. Here, multiple pieces of information and media sources, names, or descriptions can be attached, and even profiles of numerous artists can be processed. In the long run, these profiles can enter the value chain of digital goods through the use of royalties. If there is a link with the Key Manager, permissions for subsequent content modifications can also be implemented here. The standardization of digital assets is adjusted according to user-friendliness to treat newly created account functionalities fairly. Among other things, these include notifications, transfers of collected goods, and new security aspects.

The approach of universal profiles can be referred to as "public first, private second," as the account can already possess general information like a regular social media application. After that, services will utilize the convenient structure below to dock private statements to them, even maintaining complete anonymity. As David Silverman said in his speech: "If you build a project for private purposes first, it will be locked in and not publicly listed. Therefore, being public and flexible is more beneficial for handing direction and power to developers rather than making decisions for them."

Basic Example of Universal Profiles

Whether it is decentralized organizations, applications, or the metaverse: there is a lot of hype around social applications. It can be assumed that many future data transfers will occur through decentralized user accounts, making navigation difficult. Universal profiles can create multiple linked instances, known as vaults, to organize data and assets. These actions are similar to subfolders of profiles. They can be used not only to categorize personal property or provide additional security but also allow trusted applications to write into specific profile subfolders. Users can enjoy digital software without worrying about additional account handling. This concept can be bundled with separate standardization of relay services. In these, transactions are not sent directly from accounts to the blockchain but are passed to external services that execute transactions on behalf of users. These operations are still protected by cryptographic signatures, but users no longer need to pay directly for transactions. A new market may develop, allowing users to participate fully in the network without crypto assets. These concepts may resemble the monthly available data amount from mobile phone providers. In return, users can use advertisements, free game concepts, or subscription models. Of course, frequently used users can still manage their currency. All these functionalities of the LUKSO ecosystem can be operated through extensions in the browser or mobile applications currently in development. But users no longer need to pay transaction fees directly. A new market may develop, allowing users to participate fully in the network without crypto assets. These concepts may resemble the monthly available data amount from mobile phone providers. In return, users can use advertisements, free game concepts, or subscription models. Of course, frequently used users can still manage their currency. All these functionalities of the LUKSO ecosystem can be operated through extensions in the browser or mobile applications currently in development. Of course, frequently used users can still manage their currency. All these functionalities of the LUKSO ecosystem can be operated through extensions in the browser or mobile applications currently in development. Of course, frequently used users can still manage their currency. All these functionalities of the LUKSO ecosystem can be operated through extensions in the browser or mobile applications currently in development.

The New Major Network of the Economy

The project starts from its blockchain, similar to the current Ethereum network or Gnosis blockchain. In LUKSO, users enter the network through abstract LSP0 accounts instead of EOAs to use a complete set of functionalities among each other. If users also interact with EOAs, the counterpart will require more functionalities in their relationship, hindering the convenient network effects around them. By establishing separate independent networks for different economies in the blockchain space, the general scalability of mainstream adoption can be safely increased. Moreover, early users can easily obtain subsidies with lower network participation. Subsidies and the convenience of entry points cannot function on a stable network.

Although the subnet costs and speeds of Ethereum itself are low, the project decided against them from the beginning due to certain sacrifices. The docked L2 is managed by multi-signatures and uses centralized building blocks. Therefore, they are variable and in a state of risk for digital assets. Another drawback of subnets is that they are user data islands, which may get stuck if the transfer costs exceed the assets they want to bridge back or if too many users wish to exit the subnet simultaneously, leading to bottlenecks. At this point, only a few applications or datasets can bridge because the datasets are too large or too cumbersome to package.

Subnets are crucial for bringing scalability to applications and protocols for temporary interaction durations. However, they are not suitable for imagining a universal core account as the center of your decentralized identity in Web3. Independent networks can achieve maximum security and interoperability while providing a landscape for valuable data fields. These can quickly connect across major networks using interoperable Ethereum protocols (like Hashi's concept) or read verifiable data from external instances using CCIP. For LSP, a separate domain and a fresh start are very suitable for attracting new users through the blockchain account ecosystem and economy, which was previously impossible.