For most of us, NFTs have been our gateway to Web3. However, the process of purchasing, storing, and protecting those NFTs is still relatively complicated for the average person. Additionally, the wallet building experience, the necessary precursor to any Web3, NFT, or other activity, is a major inhibitor to mass adoption.
That’s where ERC-4337 comes into play.
This new upgrade to Ethereum has the potential to make blockchain technology more accessible to non-crypto-natives and brings benefits like lost key recovery, no seed phrases, zero-gas transactions, and more.
Let’s explore what ERC-4337 is, why it’s important, and what it could mean for the future of NFTs.
What is ERC-4337?
ERC-4337, short for “Ethereum Request for Comment 4337”, is an update to Ethereum that enables account abstraction. In simple terms, the account abstraction allows Ethereum wallets to act as smart contracts.
That means each crypto wallet can have custom authorization logic to suit the needs of individual users or applications. This update was proposed by Ethereum co-founder Vitalik Buterin and others in September 2021 and announced at ETHDenver on March 1, 2023.
Until now, creating and using wallets has been cumbersome, confusing, and intimidating for many people coming into Web3. The process of securing seed phrases, sending those first finger-shaking transactions, and the lack of easy-to-use security features are all significant barriers to entry for new users. ERC-4337 makes creating and using wallets much easier and therefore more accessible.
For NFTs, this is particularly important. NFTs have helped bring everyday people, traditional brands, and older IPs into the space. However, if the creation of wallets continues to be unfriendly for the user, it will continue to discourage people from buying their first NFTs.
What does ERC-4337 do?
ERC-4337 solves four key problems in current wallet structures:
1. Recover lost private keys
Losing your wallet’s private keys is one of the biggest risks and fears in the crypto space.
The only thing worse than buying an NFT that goes to zero is having a valuable NFT that loses. it’s a scary reality in Web3. ERC-4337 enables a “social recovery system” where designated users can restore access to their wallet if they lose their private keys.
2. Secure wallets without seed phrases
ERC-4337 also allows for secure wallets without seed phrases, which can be difficult for some users to remember and keep secure.
With this update, users can use 2FA (two-factor authentication) and biometrics to protect their wallets, making them much more secure and easier to use. However, some people are on Web3 specifically to protect themselves from the kind of institutional intrusion that security measures like biometrics represent. Plus, seed phrases provide an extra layer of security that those users and others won’t want to give up.
Nonetheless, this feature can still make it easier and more accessible for the many curious NFT users who would gladly set up 2FA or biometric account access.
3. Automated trading
One of the most challenging parts of collecting and trading NFTs is how practical it has to be. Tracking metrics, timing mints, analyzing price floors – they all require near constant effort.
However, ERC-4337 allows for automated trading, including a monthly spend limit, AI trading, and adjustment of yield farming positions. These features can make NFT trading much easier and more accessible for users of all levels.
4. Transactions without gas
Finally, ERC-4337 allows transactions without gas. With this feature, NFT cashouts and their DAOs can sponsor gas fees for users to make their transactions cheaper. Similarly, this feature allows you to group transactions, making them faster and more efficient.
This feature also makes it possible to pay transaction fees with an app’s tokens, which can also significantly reduce transaction costs. Complete blockchains, such as Avalanche and its subnetshave been configured to enable this as a core feature.
What could this change in the future?
Overall, ERC-4337 offers many features that traditional banks often offer to their customers, all without the need to trust a financial institution.
As a result, ERC-4337 could lead to a significant boost in NFT adoption. By making it easier to buy, store, secure and retrieve NFTs, this update could be a game changer for the market.
However, the features are not enough to drive mass adoption by themselves.
The key to realizing the potential of ERC-4337 lies in how we communicate it. Even the term “account abstraction” and other technical jargon will not be useful to those who are not yet familiar with the space. In fact, we may even need to drop the word “wallet” and instead go for language that’s more akin to web2: account creation, login, password recovery, and the like.
No one outside of our Web3 world knows what those seven alphanumeric characters in ERC-4337 mean. And they won’t have to, as long as everything else is easy for them.
