A new decentralized layer was added on top of Ethereum to make smart accounts possible with the introduction of ERC-4337 and account abstraction, but infrastructure providers suggest it may be tricky to profitably participate at the moment.
ERC-4337, commonly called “smart accounts” or “account abstraction,” was implemented on the Ethereum mainnet on March 1. “Smart accounts” are essentially an upgraded version of an Ethereum wallet. Although smart contract wallets already exist, they are based on centralized components. ERC-4337 changes that with a distributed network of “Bundlers” and “Paymasters”.
Under the hood, there are some subtle but significant changes, namely the addition of the “user intent layer,” explained Matt Cutler, co-founder and CEO of Blocknative, an Ethereum core infrastructure provider.
According to Cutler, an Ethereum transaction today involves several discrete steps.
A user accesses their standard externally owned account (EOA) or private key to compose a signed transaction, for example, transferring a non-fungible token (NFT) to another user.
This transaction is then sent to the public mempool, which could be described as a shared queue for transactions, for a “Builder” to mine and organize into a “profitable block”. From there, the block is proposed to a Validator who ultimately proposes it and posts it to the chain, completing the transaction.
Under ERC-4337, the new “User Intent Layer” is introduced before the current EOA step.
This additional layer allows a user to initiate more complex transactions in one step. To make this possible, ERC-4337 introduces an “alternative Mempool” and transaction packet network, and along with this, a new way to earn fees.
Become a minor
A Bundler is a node that does a job very similar to the “Builder” block. Rather than orchestrate signed transactions from the public mempool to assemble a profitable block, a Bundler takes User Operations, or userOps, from Alt-Mempool to create the most profitable bundle that is signed and sent to the network as a single transaction. This is all part of the newly added layer that makes smart accounts possible.
Packagers receive compensation through userOp’s gas fees for providing their much-needed service.
Will Account Abstraction Bring a Billion People to Crypto?
NO. Solving a problem that billions of people have will bring billions of people into crypto.
The account abstraction enables the distribution of the solution.
—John Rising (@johnrising_) March 24, 2023
While anyone can be a Bundler in theory, being successful in reality could be another story, Cutler said.
Like builders, packagers are “specialized players” made up of “relatively sophisticated development teams that operate substantial computing, storage and network infrastructure,” he said.
“ERC-4337 has no trust or permission. So if you are technically savvy you can of course stand up and operate your own Bundler. The challenge is that bundling is a competitive market. So you will be competing against relatively sophisticated teams that are investing heavily to be a competitive Bundler,” he said.
“Packers are not the kind of tools that you just get up, forget about, and start printing money on you. We expect Bundling to be substantially more technically sophisticated than being a validator, for example.”
Cutler noted that there are already a number of open source package code repositories.
Related: Ethereum ERC-4337 ‘Smart Accounts’ Launch at WalletCon: Account Abstraction is Here
There is ongoing debate as to whether ERC-4337 will have an impact on Ethereum gas fees, particularly given the increase in transaction complexity associated with the introduction of the new User Intent layer.
ERC-4337 and AA are all over the news, but with that comes a lot of misinformation. Here are some common misconceptions (and valid concerns): https://t.co/MkVoOvR44y
— ZeroDev (@zerodev_app) March 9, 2023
“While it is still too early to tell, my current expectation is that on average gas rates will not change that much. If ERC-4337 does have an impact, it will be fairly slight, either up or down. We don’t expect transaction fees to suddenly drop to zero, or suddenly become 100 times more expensive,” Cutler said.
Magazine: ‘Account Abstraction’ Powers Ethereum Wallets: A Beginner’s Guide
