Interpretation of Binance Research Institute's Account Abstraction Report

Original Title: A Primer On Account Abstraction

Original Author: Colin Chan, Binance Research

Compiled by: Deep Tide TechFlow

Account abstraction has recently become a hot topic.

In the past 7 months, nearly 300,000 smart contract accounts have been created. Meanwhile, players in the market are eager to try:

Platforms like OKX have launched smart contract wallets, and StarkNet and zkSync have also introduced native AA support solutions, while Cyber Connect and Lens are making strides…

Stepping away from the discussion of what AA is, how is AA currently developing? What is the ecological landscape, feasible use cases, and the development trajectory? From various articles and analyses, we often only get fragmented impressions and cannot systematically grasp the full picture of this track and technology.

Recently, Binance Research released a report on account abstraction, systematically describing and analyzing the above issues. Due to the length of the report, Deep Tide has interpreted and distilled it to help everyone better understand the core viewpoints and conclusions.

Key Points

• With the introduction of ERC-4337, account abstraction (hereinafter referred to as AA) can now be supported on the Ethereum mainnet without changes to the core consensus layer.
• StarkNet and zkSync have launched native account abstraction solutions, and wallet providers like Argent and Bravoos are also seeking to offer these solutions.
• Use cases such as traditional institutions like Visa are also exploring this field, while Lens Protocol and CyberConnect have adopted account abstraction, demonstrating both realized and potential benefits to encourage users to join the Web3 environment.

Technical Implementation of AA

• The classification of Ethereum accounts, such as the difference between EOA and AA, will not be elaborated here; those interested can refer to the original report.

• General technical implementation of AA: It can be understood through the key components in the diagram below, which interact to allow developers to build smart contract wallets compatible with on-chain dApps.

  The summarized process is as follows:

• Users interact with the abstraction layer on the frontend, which converts user actions into underlying transactions.

• The EntryPoint smart contract is responsible for verifying user signatures and processing transactions initiated by the abstraction layer.

• The Paymaster contract is responsible for paying transaction fees for user operations.

• On-chain applications interact with user operations as if they were interacting with regular externally owned accounts.

Ecological Landscape of AA

The AA ecosystem has continued to expand over the past year as developers recognize the need for a clearer user experience and more user-friendly interactions between users, wallets, applications, and end-users.

Implementing AA helps enhance existing infrastructure and expand the possibilities for user participation in on-chain activities. Progress in this field can be broadly categorized into "infrastructure" and "social" components, as shown in the diagram.

Roles in the infrastructure domain:

• Blockchains: EVM-compatible blockchains and zk-rollup scaling solutions that support AA.
• Wallet providers: Wallets that leverage AA to offer specific functionalities to users.
• Payments: Providing fee abstraction capabilities through Paymaster contracts, allowing users to execute digital transactions without holding the native token of the blockchain.

Roles in the social domain:

• Games/NFTs: Utilizing AA with token standards like ERC-4337 and ERC-6551 to improve on-chain gaming experiences and expand the utility of NFTs.
• Social media: Combining forms of AA such as signature abstraction to allow users to continuously interact with social networks using Web3 wallets.

Market Acceptance of AA

• Key: The ERC-4337 EntryPoint contract was officially deployed on March 1 of this year. Since then, transaction activity and the total number of ERC-4337 smart accounts have surged, especially in July.
• The number of smart accounts has steadily increased, with nearly 300,000 accounts created in July, corresponding to a sharp rise in user operation activity.
• Most AA activity is driven by Polygon, due to the launch of the social network CyberConnect, where all accounts in this network are ERC-4337 wallets.

Overview of AA Use Cases

To understand the use cases of AA, the report highlights key infrastructure projects that implement new functionalities using token standards like ERC-4337 and ERC-6551. These projects aim to improve the UX for end users and drive the practical adoption of blockchain technology.

Paymaster-Based Payment Use Cases

• Paymaster is a component of ERC-4337, understood as an intermediary that can receive tokens used by users and exchange them for the blockchain's native token to pay transaction fees.
• Relevant cases include:
• VISA: Visa demonstrated a solution using Paymaster contracts to abstract basic blockchain interactions and improve the on-chain user payment experience through self-custodied smart contract wallets. Currently, this case is still in the proof-of-concept stage, but it aims to reduce friction for users making transactions through their wallets, allowing them to pay gas fees with any token, with the Paymaster covering the gas costs, exploring the "untapped potential" of digital transactions for consumers.

• Additionally, VISA has other initiatives aimed at allowing users to pay gas fees using Visa cards.

• Other use cases of Paymaster contracts:

  Overall steady growth, led by Optimism. This is related to the launch of the Beam wallet on OP at the end of July, allowing users to pay transaction fees using the tokens used in transfers instead of the blockchain's native token.

  In the following diagram, the total gas of Paymaster contracts has significantly increased, indicating a growing demand for these intermediary services to simplify user experience.

Wallet Management Use Cases

• By integrating AA into existing wallet solutions, these accounts are enhanced into smart contract wallets with programmable logic, offering new functionalities such as batch transactions and social recovery.

• Wallet management solutions supporting AA include:

1. Safe:

   

2. Launched a multi-signature solution requiring multiple authorized entities to sign for the same account instead of a single private key.

3. Recently integrated the ERC-4337 standard through a pluggable interface, providing developers with modules to build and create wallets.

4. Introduced signature abstraction, allowing users to customize rules for authorizing wallet-initiated transactions based on their preferences. For example, to prevent suspicious activities, users can specify spending limits to reject transactions above a certain scale.

5. Argent:

6. Introduced the concept of "social recovery," allowing users to recover lost or forgotten private keys.

7. Users can nominate "guardians," which are other wallets or accounts they trust, as backups for recovering their wallets.

8. Alternatively, users can use email addresses and phone numbers for off-chain recovery, introducing a familiar two-factor authentication mechanism.

9. Braavos:

   Launched a smart wallet on Starknet, adopting the form of signature abstraction.

   Users can access the wallet using biometric features of their phones (such as facial or fingerprint recognition).

Delegated Transaction Use Cases

• "Delegable accounts" utilize AA to allow users to delegate signing authority to an approved external contract. This account contains rules customized by the user according to their preferences, then interacts with applications mentioned in the rules without manually approving each transaction.

1. VISA's Automated Payment Solution:

2. While fully controlling the wallet, users can approve automated payments for utilities and subscription bills.

3. This delegation effectively abstracts signature verification and alters user interactions within the application for a more user-friendly experience.

2. Lens's Social Use Case:

   

3. Allows users to delegate signing authority to a dispatcher wallet to execute posts, comments, and profile changes;

4. Users can continuously interact with dApps without needing to approve each time;

5. The dispatcher also pays the fuel costs for these transactions, eliminating the need for users to hold the native token for in-app interactions.

6. This has led to a temporary increase in usage.

Token-Bound Account Use Cases

• ERC-6551 introduces the Ethereum standard for token-bound accounts (TBA), empowering NFTs to function as "smart contract accounts" and become their own wallets through permissionless registration. This creates an integrated mechanism that allows owners to host NFTs within the TBA.
• In the past month, TBA accounts have surged:

• Through abstraction, existing NFTs are greatly empowered to achieve the following capabilities:

  Enable multi-layer ownership of assets

  Allow NFTs to interoperate across ecosystems

  Reduce fuel costs, making transactions more economical

  NFTs gain their own digital identity

• Use Case: Sapienz Street Culture

  The Sapienz project brings the ERC-6551 standard to digital street culture.

  Users receive a customizable character, with unlocking based on the NFTs they own.

  The "character" is a customizable avatar that represents the user, and users can unlock different appearances of this avatar based on their owned NFTs. They can equip the character with different accessories and personalize it according to their preferences.

Key Development Points Worth Noting in AA

• Smart contract wallets currently rely on intermediaries called "relayers" to convert user-signed messages into typical Ethereum transactions.

• Therefore, new L2 chains provide viable alternatives for developers to experiment with AA, such as:

  zkSync is the first EVM-compatible chain to implement native AA at the protocol level.

  Similarly, the zk-rollup solution StarkNet has also implemented AA.

  Optimistic rollups like Optimism and Coinbase's Base have also adopted forms of AA.

• Proposals and protocols related to AA:

• A timeline of key events from the proposal of AA to its current adoption over the past six months: