Everything About Account Abstraction: RIP-7560, ERC-4337 struggles, ParaX’s Oracle Innovation, Onyx x Biconomy, goodcryptoX’s AA implementation & Core Devs Call #22

Everything About Account Abstraction: RIP-7560, ERC-4337 struggles, ParaX’s Oracle Innovation, Onyx x Biconomy, goodcryptoX’s AA implementation & Core Devs Call #22

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November 22, 2023

We are welcoming you to our weekly digest! Here we discuss the latest trends and advancements in account abstraction.

Please fasten your belts!

RIP-7560 — a new direction for Ethereum Account Abstraction

The Ethereum community is examining RIP-7560, a proposal that seeks to revolutionize account abstraction by introducing significant consensus-layer protocol changes.

The proposal’s author wants to combine the features of EIP-2938 and ERC-4337, offering a comprehensive approach to native account abstraction on Ethereum. He suggests dividing Ethereum transactions into multiple steps:

  1. validation,
  2. execution,
  3. post-transaction logic (with transaction validity determined at the validation stage​​).

While some community members applaud the proposal for its compatibility with ERC-4337, its gas optimization, and its resolution of the private bundler issue, which is crucial for account abstraction adoption​​, others raise concerns.

Many didn’t like the complexity it adds to the core protocol and the challenges of enshrining a specific AA standard amidst multiple competing standards. Some worry that this could hinder progress and lock the protocol into a single solution, especially given account abstraction technologies like intent-based AA and ERC-7521 are at their immature stages​​.

The community also debates the potential impact on upgrading processes, with suggestions for more straightforward methods for updating wallet implementations and handling version parameters in validation functions​​.

Low adoption of Ethereum’s ERC-4337 smart accounts

Despite high expectations, the adoption of Ethereum’s ERC-4337 smart accounts has been underwhelming. Ethereum advocate John Rising shared alarming statistics indicating a decline in user numbers, low transaction activity, and poor operational costs for key infrastructure components​​.

Data from BundleBear revealed a dismal monthly retention rate of just 6.89% for these accounts, far below anticipated levels​​.

Contributing to these challenges, bundlers, essential for smart account functionality, have struggled with profitability issues. Furthermore, the average smart account has conducted a meager five user operations​​.

Despite these setbacks, Jesse Pollak of Coinbase maintains a positive outlook, suggesting that the technology’s adoption may accelerate unexpectedly, indicating that it’s still early days for ERC-4337​​.

Dune Analytics reported a peak in August with over 420,000 active smart accounts across seven blockchains, but this has since declined to 143,000 active accounts in October​​.

How Account Abstraction simplifies crypto use

A publish0x.com blogger, Ticktalker, expressed his thoughts on how AA can onboard our grannies to crypto. According to him, “Account abstraction” is becoming a key term in the crypto industry, signaling a major shift in how users interact with Ethereum-based smart contracts and DApps. It represents a significant step toward more user-friendly wallets and applications in blockchain technology.

Account abstraction separates control of funds from smart contract execution. It allows smart contracts to manage funds and execute transactions without direct user permission, enabling “gasless” transactions. These wallets, built on smart contracts, don’t require private keys or key phrases.

Account abstraction’s simplicity and security make it accessible even for those less tech-savvy, like the elderly. Currently a novel concept, it’s mainly deployable on the Ethereum network.

Onyx by J.P. Morgan leverages Biconomy for Project Guardian

In the latest Project Guardian proof-of-concept, Onyx by J.P. Morgan utilized Biconomy’s Sponsorship Paymaster mode. The involvement of Fund Managers made deploying smart contracts reflecting Fund Investments straightforward, enabling them to mint and burn transactions without gas token balances.

This partnership will establish institutional use cases in Project Guardian, focusing on asset tokenization and cross-chain interoperability in conventional banking and decentralized blockchain ecosystems.

For Project Guardian’s first industrial pilot in November 2022, J.P. Morgan, SBI Holdings, and DBS successfully traded foreign exchange and government bonds against tokenized assets. Onyx by J.P. Morgan advanced this using Biconomy’s ERC-4337 infrastructure, allowing transactions on a permissioned Avalanche subnet without gas expenses through Account Abstraction.

Biconomy’s Paymaster system facilitated smart contract wallet creation for Fund Managers, simplifying fund transactions and eliminating gas token requirements.

Aniket Jindal, Biconomy COO, expresses excitement for blockchain’s integration in traditional financial institutions, enabling Web3’s capabilities for future users.

ParaX integrates Chainlink’s CCIP

NFT lending relies on oracles like Chainlink for accurate pricing and risk mitigation. ParaX, leveraging Chainlink’s oracles, has the lowest liquidation among competitors but faces privacy and accuracy issues. To address this, ParaX developed its own NFT oracles, which are costly due to high gas consumption.

ParaX turned to Chainlink’s Cross-Chain Interoperability Protocol (CCIP) for a more efficient solution. Yubo Ruan, ParaX founder, notes the new oracles are more accurate and gas-efficient. Using CCIP, ParaX facilitates interoperable oracles between Layer 2 platforms like Arbitrum and Ethereum, reducing gas costs by over 50%.

The process uses three clients on Arbitrum to feed data to ParaX’s NFTFloorOracleProvider, transferring finalized prices to Ethereum. This method ensures quicker, cheaper updates and precise pricing.

Ultimately, Chainlink’s CCIP enhances ParaX’s oracles, offering accurate, efficient, and optimized NFT pricing, improving service for users and NFTfi protocols.

goodcryptoX revolutionizes DeFi trading with advanced Ethereum integration

GoodcryptoX, a new DeFi trading platform, leverages Ethereum’s account abstraction to enhance trading functionality and user experience. DeFi, offering control over finances without intermediaries, faces challenges like limited functionality, centralization, user experience, and security risks. DeFi and DEXs, lacking in features and intuitive interfaces, are vulnerable to security issues.

Telegram trading bots, addressing these challenges, offer advanced features but have poor UX and security risks. In response, GoodCrypto is launching goodcryptoX, a noncustodial DeFi platform with advanced DEX features. Using Ethereum’s ERC-4337 standard, it allows trading without sharing private keys and offers advanced functionality like conditional orders and automated rebalancing.

GoodcryptoX, more than a token conversion kiosk, prioritizes user experience without compromising security. It uses smart contract wallets and multi-party computation technology for security. Leveraging Ethereum’s ERC-4337, goodcryptoX lets users operate wallet functions via third parties, enabling advanced features like trading bots.

ERC 4337 core devs latest online meeting

In the 22nd ERC 4337 Core Developers meeting, key topics were addressed. We’re shifting Shared Mempool testing to the Sepolia testnet, necessitating changes in the peer-to-peer protocol, which will affect Gossipsub, ReqResp domains, and node discovery.

A major issue discussed was the inconsistent gas estimates across different bundler implementations for the same user operations. Harmonizing these estimations is crucial. The team is considering separate fields for the paymaster gas limit and post-operation validation to improve clarity and efficiency.

Community feedback is sought for standardizing gas limits, which is essential for a smoother transition to a native account system.

Watch the full recording here.

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Start exploring Account Abstraction with Etherspot!

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