Analyzing

Despite making progress, the blockchain currently struggles to provide the same level of flexibility and user experience as mainstream digital payment ecosystems. However, emerging technologies can enhance the payment experience when using digital money for transactions. In 'Automatic Payment with Self-custody Wallet,' we delve into the application of cutting-edge technology in automatic payments by leveraging the concept of account abstraction (AA) on the public blockchain.¹ Our exploration of AA and improved encryption payment experience continues to examine how the current AA paradigm on the ETH network offers creative solutions for handling money laundering: whether users can pay with stablecoins, other ERC-20 tokens, ETH, or not at all. Finding innovative solutions for frictionless encryption onboarding and transaction experience is crucial before digital money achieves mainstream adoption. The technical overview of ERC-4337 is the current standard for implementing AA on Ethereum, aimed at better understanding ERC-4337. We discuss Visa's experimental deployment of two groups of Paymaster contracts to demonstrate how to redesign gas fees on the blockchain to improve user convenience.
account abstraction and ERC-4337
To better understand the value proposition of account abstraction, let's briefly review the two types of accounts currently existing on the ETH network: Externally Owned Accounts (EOAs) and Contract Accounts (CAs), typically referred to as user accounts and smart contracts, respectively. EOAs controlled by a Private Key allow users to send transactions. However, they lack the programmability of smart contracts, making them more rigid. In contrast, CAs have executable code but cannot initiate transactions independently. Transactions must always come from a user account and include the user's signature, whether it's a simple token transfer or a complex operation executed through many smart contracts. 🔥
The concept of Account Abstraction (AA) aims to leverage the programmability of CA for the benefit of end users. When writing Smart Contracts, it is common to define an owner to control the behavior of the contract. A self-managed Wallet built as a Smart Contract can provide users with more functionality than an EOA-based Wallet. This is achieved through the introduction of a new Ethereum standard called ERC-4337, proposed by Ethereum community members (including Ethereum founder Vitalik Buterin). ERC-4337 allows the owner to directly own the Smart Contract account without requiring EOA signatures. While the owner may not use EOA signatures in the traditional sense, they still need a secure authentication process for owning and managing the Smart Contract account correctly. In turn, this Smart Contract account can handle tasks such as Multi-Factor Authentication, regular payments, and user-defined custom rules and policies.