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Ethereum Co-Founder Vitalik Buterin Explains Why ERC-4337 Matters

Ethereum co-founder Vitalik Buterin recently tweeted to reiterate the importance of ERC-4337, a standard that achieves account abstraction on the protocol without any consensus-layer changes. He also shared a thread from 1.5 years ago that explains the rationale and design of the standard, which he co-authored with other Ethereum developers.

ERC-4337 was deployed on the Ethereum mainnet in March 2023, and since then it has seen remarkable growth and adoption. According to the latest data from ERC-4337.io, a website that tracks the progress of the standard, in February 2024, multi-chain ERC-4337 executed a total of 2.989 million transactions (UserOp), and the number of active AA accounts reached 945k, new AA accounts reached 845k, both reaching record highs. The number of Bundler, Paymaster and Wallet Factory activities all hit new highs as well.

ERC-4337 enables users to use smart contract wallets containing arbitrary verification logic instead of externally owned accounts (EOAs) as their primary account. This allows for more flexibility, security and usability for wallet designs, as well as reducing complexity for end users. For example, users can choose different signature schemes, pay gas fees with ERC-20 tokens instead of ETH, or request third parties to sponsor their gas fees.

However, ERC-4337 also faces some challenges and limitations. One of them is that the account abstraction activity is still mainly concentrated on Polygon, a layer-2 scaling solution for Ethereum. This is because Polygon offers lower gas fees and faster confirmation times than the Ethereum base layer, which are crucial for the user experience of ERC-4337. However, this also means that ERC-4337 users have to rely on the security and availability of Polygon, which may not be as robust as Ethereum.

Another challenge is that ERC-4337 requires a new type of actor called bundlers, who package UserOperations into transactions and submit them to the Ethereum chain. Bundlers need to have sufficient ETH to pay for the gas fees, and they also need to have a good reputation system to avoid spamming or censoring UserOperations. Moreover, bundlers need to coordinate with each other to avoid conflicts or duplication of UserOperations.

Despite these challenges, ERC-4337 is a breakthrough for account abstraction on Ethereum, and it has the potential to improve the user experience and adoption of the protocol. As Buterin tweeted, “ERC-4337 is still very relevant today, important to understand why it works and how the different parts of the ERC flow directly from the problems that it solves.”

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