What is Account Abstraction? Smart Accounts on Ethereum

Account Abstraction

Let’s be honest with ourselves: crypto needs to do better in terms of user experience. The hassles of private keys, gas fees, and switching between networks…. The promise of Ethereum’s account abstraction is that all these issues will be ‘abstracted away’ by so-called smart accounts.

Today, users of crypto face a stark dilemma. They must either give up full control of their assets to a custodian (boo!) or take on the full responsibility of safeguarding their assets and checking and double-checking each transaction closely. That’s not the definition of user-friendliness. 

Enter account abstraction. Already in 2015, Vitalik Buterin envisioned it as being a core Ethereum roadmap initiative.

What is account abstraction (AA)? It is a new feature of Ethereum that turns a wallet into a smart contract account. Comparing the current Ethereum accounts, called externally owned accounts (EOAs) to a smart contract account is like comparing a flip phone to a smartphone. They operate on an entirely different level of versatility.

Traditional Ethereum Accounts Versus Smart Accounts

Account abstraction makes smart accounts possible. What is the difference between these accounts and good old Ethereum accounts?

Data abstraction in computer science means ‘hiding’ data. Hiding as in, no longer wanting to bother users with it. And that’s critical if blockchain tech wants to become mass technology: the plebs don’t want to be bothered with gas fees and private keys.

See, the current Ethereum accounts are External Owned Accounts (EOA), generated and controlled by your private keys. These accounts need to sign any transaction you do. That’s a heavy burden on users, who must safely store their private keys.

Whereas smart contract accounts or Contract Accounts (CA) exist within the Ethereum Virtual Machine. They can be managed by different traditional EOA accounts. Each wallet is a smart contract and can be programmed in a personalized way. Users don’t have to download a wallet or store their private keys!

Use Cases of Smart Accounts

This is all pretty… abstract. What it boils down to is that with smart accounts users aren’t solely responsible for their account security and can recover their assets without completely relying on a third party. Furthermore, users will be able to carry out transactions without worrying about the chain they are on.

But there’s more. Account abstraction lets smart contracts handle all the hard parts for users. 

Let’s look at some use cases. 

  • Gasless transactions: Developers can sponsor transaction fees for users. This is possible because smart contracts can now pay for their own gas fees. After all, they sign by the smart contract itself. The funds can then be provided by a third party or the contract’s balance. This is obviously nice for users: they would not need to hold Ether to interact with smart contracts, lowering the barrier to entry for new users.
  • Privacy features: by abstracting the account layer, developers can integrate privacy-preserving technologies that hide transaction details or allow users to prove possession of certain information without revealing it (zero-knowledge proofs).
  • Wallet security: Account abstraction allows users to implement custom security measures for their Ethereum wallets, such as multi-signature authentication/social log-in, time-locks, or spending limits. So users can have greater control over their assets and better protect themselves from potential security breaches.
  • Cross-chain interoperability: account abstraction can improve cross-chain interoperability by allowing Ethereum accounts to interact with other chains. This is achieved by enabling users to sign transactions using different signature schemes, which can then be validated by other networks
  • Recover accounts: Whereas a private key cannot be recovered if it is lost, your smart contract can implement specific logic in case you lose it. For example, it could be set up to allow another key to take over if the original key does not interact with the contract for a certain period of time.

Development Milestone: Core Contract Within ERC-4337

Account abstraction is enabled by a new standard, called ERC-4337. It’s a milestone on Ethereum’s AA roadmap. It is a shared, audited, and core contract within ERC-4337. Wallet and infrastructure providers can now, more securely, continue building innovative apps around account abstraction. For example, wallet developers can offer automation features, and application developers can choose to integrate those features to improve their own user experience.

Visa Joining Forces

Visa is a Tradfi company that is threatened by central bank digital currency on the one hand, and crypto on the other. It has decided to join forces with crypto. It too recognizes the need for auto payments on crypto rails and has worked out its own implementation of account abstraction. In 2022, Visa organized an internal hackathon challenge, which resulted in a solution that uses smart contracts to enable automated payments on Ethereum. It will be implemented on Ethereum layer 2 network StarkNet.

New Standard

In the roadmap toward these smart accounts, big steps are being set toward standardization. As more developers adopt this new standard, users will have access to better features, similar to how smartphone apps have revolutionized how we use our devices. 

To ensure these new features are reliable and easy to use, companies like Safe{Core} (see below), MetaMask, and Uniswap are working to create “app store” models where users can find and access these features safely.

Safe: First Mover in the AA Space

Company Safe{Core} is positioning itself as a distributor and curator of AA functionality. The Safe smart contract wallet is continuing to build adoption across layer 2s. SafeCore is Safe’s account abstraction software developer kit. Safe has partnered with traditional payment provider Stripe, amongst others. Safe invites developers ‘to help create the next generation of web3 apps with robust security standards but smoother UX.’

Hurdles Toward Full Adoption of Account Abstraction

As mentioned, the new standard called ERC-4337 makes it easier for developers to adopt this new type of account by providing a set of rules, like an instruction manual. However, developers must choose to follow these new rules, and there is still work to be done:

  1. Apps will need to change: Apps should accept signatures from smart contract wallets. This is important because these wallets sign differently than normal wallets: they do not sign messages with a private key as EOA wallets do. There is a standard way (EIP-1271) to do this, but apps must follow it.
  2. High costs will have to come down: Smart contract wallets cost more than regular wallets. There are ways to reduce costs for users, but someone still needs to pay. Using Ethereum is very expensive. Layer 2’s will help out here.
  3. Centralization risks need to be resolved: Special providers called Bundlers are needed to help with transactions. They offer relaying services. The risk this poses is comparable to the Flashbots issue of the end of 2022 (which seems to have resolved itself). Namely that of a monopoly/centralization risk that comes with one or a few players offering a service with the Ethereum ecosystem.


It’s an exciting promise: account abstraction lets developers build blockchain-enabled apps without requiring users to learn anything about crypto or download a wallet. This is a crypto-related app that can expand from a few million users at best to the entire world.

Overall, account abstraction on Ethereum paves the way for a more flexible, secure, and user-friendly ecosystem that can accommodate a wide range of use cases and applications.

What is Account Abstraction? Smart Accounts on Ethereum - - 2024

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