An account abstraction is a concept where users use smart contracts as wallets instead of regular wallets. This proposition contributes to the user experience due to the infinite potential and flexibility of smart contracts.
“In Ethereum, state is made up of objects called “accounts”, with each account having a 20-byte address and state transitions being a direct transfer of value and information between accounts”
Ethereum Whitepaper (March 03, 2023)
With the recent release of the ERC-4337 standard, there are many doubts about what account abstraction is, the difference with a regular wallet, and the benefits.
It is known that you need a wallet or account to send transactions through the blockchain protocol, in general, there are two types of accounts: Externally Owned Accounts (EOA) and Contract Accounts. EOAs are traditional wallets that are owned by individuals where they usually hold their funds, send transactions and call smart contracts, they are controlled by private keys and have no code inside. Contract accounts, on the other hand, are smart contracts that are controlled by their own code, so every time the contract receives a message, its code gets executed.
When a smart contract is deployed to the Ethereum blockchain, it is assigned its own unique contract account address, which can be used to send and receive ether and interact with the smart contract. These contract accounts are typically created by developers and organizations that want to implement decentralized applications on the network.
Contract accounts are often programmed to automatically execute specific tasks when certain conditions are met. For example, a contract account can be programmed to automatically send a token when a certain amount of Ether is sent to the account. As you can see with contract accounts, the possibilities are the developer’s imagination
Introduction to Account Abstract (AA)
Account abstractions are smart contracts that operate on the blockchain and provide a secure platform for managing complex transactions. Unlike regular wallets, these are self-executing, which means they can automatically execute certain financial operations based on predefined conditions. For example, it can send money to a specified address only if certain criteria are met, such as a date or a specific block number.
Account abstractions are becoming increasingly popular, as they offer a wider range of functionality than traditional wallets. For example, AA can be configured to run specific tasks such as escrow, crowdfunding and auction processes without the need for human intervention. In addition, account abstraction provides enhanced security by providing you with multiple signatures before transactions are executed, making it very difficult for hackers to gain access to your funds.
A great example of account abstraction is Safe Wallet, built on top of the Safe Core AA SDK, providing a multi-signature wallet where two or more user signatures defined at wallet creation are required to send a single transaction. thereby increasing security, control and usability.
Use an account abstraction or a regular wallet?
Unlike contract accounts, EOAs or traditional wallets do not have any code associated with them, nor do they have the ability to execute programmable functions. They work like traditional digital wallets and allow the storage, sending and receiving of cryptocurrencies without the need for a third-party intermediary.
Continuing with the idea, the EOA uses the private key to sign transactions, so if the passphrase is lost, there will be no way to recover the funds, unlike the abstraction of an account, which includes a function May be that can help to recover immediately. Funds by sending them to a predefined backup address. Also, digging a bit deeper, transactions can be batched with an account abstraction, meaning a sequence of transactions such as token approval and token transfer can be performed in just one operation , thereby optimizing gas consumption.
EOA wallets are relatively simple and straightforward to use, making them a popular option for those looking to engage in simple cryptocurrency transactions. They provide an important layer of security because they are encrypted, and you are the only person with access to your funds. Unlike ledger abstractions, they have limited use cases and lack the ability to execute complex transactions.
Finally, both contract accounts and EOA wallets play a vital role in the blockchain space to meet specific user needs. Contract accounts are ideal for executing complex transactions with increased security and transparency, while EOA wallets are great for simple, straightforward transactions. As blockchain technology continues to evolve, it will be interesting to see how these wallets shape the future of financial transactions and Web3 UX with the release of the new standard ERC-3447, as well as other developments in the blockchain space.
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