How can companies provide exciting brand experiences with Account Abstraction (ERC-4337)?
Nov 2, 2023
Account Abstraction is not just another chat topic. It will allow blockchain and crypto to go from geek love to mass use by traditional businesses. How will it be, and how will companies provide exciting brand experiences with Account Abstraction? Let’s figure it out together in this article!
Vitalik Buterin and his crypto user experience. How is it related to the Account Abstraction concept?
There is a blog post on Vitalik Buterin’s website where he shares his experience using crypto as a payment method at coffee shops and restaurants. He mentioned that he faced different kinds of challenges, including poor Internet connection, Ethereum gas limits, minimum exchange deposit, and others.
Vitalik had to seek the Internet or overpay several times the order cost to pay with cryptocurrency. Most people who are not so interested in paying with cryptocurrency and are not ready to spend extra time on experiments will conclude that paying with cryptocurrency for ordinary things is very inconvenient.
That’s why he concluded his text with a phrase I like so much:
Good user experience is not about the average case; it is about the worst case.
Such unfortunate situations could be overcome if merchants have payment providers with Account Abstraction.
Description of Account Abstraction (ERC-4337)
Account Abstraction is a blockchain and cryptocurrency technology concept that makes blockchain accounts more flexible and programmable.
In the context of the Ethereum wallet, "abstraction" means separating the verification and execution of transactions, which now occur as one continuous process. Accordingly, smart wallets allow you to configure each process flexibly, which opens up more opportunities for optimizing the user experience.
Account Abstraction refers to separating an account and its owner. Currently, the wallet and the user are essentially one whole because only the owner of the seed phrase or private key can send assets, and only the owner of the public address can receive assets.
Account Abstraction will allow you to run a smart contract as a wallet, controlled by code in the EVM and not by a bunch of public and private keys. This expands the supported authentication methods and security features of the wallet.
Since October 2023, Etherscan, Ethereum's most popular block explorer, has supported a simple display of ERC-4337 Account Abstraction transactions.
A short breakdown of an ERC-4337 transaction:
The sender (the user) initiates a User Operation
Bundler packages User Ops and sends it to the EntryPoint contract for execution
Number of unique User Ops initiated by user
You may view the executed function via a calldata decoder
The main goal of the account abstraction and the EIP-4337 update is to replace EOA wallets with smart wallets (CA). This will provide developers with more opportunities to create high-quality user experiences.
Business Necessity of Account Abstraction
To explain the business necessity of AA, I should describe what kind of features smart wallets have:
Various authentication options. Verification logic allows flexible configuration of user authentication options. This can be done using a trusted email, a biometric authenticator or a whitelisted device.
Flexible fee payment mechanisms. With Account Abstraction you can pay fee in any token you want, you can even mint NFT from the brand you love without paying any fee, because the brand will pay for you. It's possible because of Paymaster - one of the key components in Account Abstraction.
Visa deployed two sets of Paymaster contracts to demonstrate how gas fees on the blockchain can be redesigned for enhanced user convenience. Read more here.
A user no longer needs to use ETH to interact with dApps, which reduces the entry barrier for beginners.
Advanced account security settings. Additional security settings may include, in addition to the authentication method, multi-signatures, a daily spending limit, or time lags for transactions. This will help protect the user's funds even if an attacker has accessed the account.
Atomic multi-operations. You can forget the numerous signatures needed to conduct the first swap on a DEX, purchase an NFT, or otherwise interact with dApps.
The new type of wallets will be more similar in functionality to Google or Apple ID accounts than MetaMask and Ledger.
As a founder of a Web3 startup or a traditional business, you can allow your customers to mint NFTs, make transactions, save data, track progress, and use other benefits from the blockchain and pay fees instead of them.
Also, instead of forcing customers to remember the seed phrase, you can allow them to enter a blockchain account using email only.
In September 2023, The Ethereum Foundation announced the successful conclusion of the ERC-4337 Account Abstraction grant round. This grant initiative will support 18 teams in their efforts to build diverse projects centered around the ERC-4337 standard.
Such massive investment in AA-supporting projects shows that the concept is promising and will be explored and implemented as much as possible.
Among those who received funding, the following cases are worth noting:
ZeroDev Kernel is a smart contract account compatible with the above standard. The core is modular, which allows you to connect additional plugins.
Ambire - the service allows you to register and authenticate using your email and DKIM password. The solution is designed to lower the entry barrier and attract more users to the ecosystem.
Clave is an easy-to-use, non-custodial smart wallet powered by Account Abstraction and the Hardware Elements (e.g., Secure Enclave, Android Trustzone, etc.), offering a unique onboarding process. The Clave team is the winner of the ETHGlobal Hackathon 2023. Clave is the partner of zkSync.
IoTeX - Zero Knowledge Proof (ZKP) based wallet. The wallet uses zkSNARK to confirm account access.
UniPass - authentication module for protocols with OpenID. When combined with ERC-4337, this solution facilitates one-click OAuth login and account creation for new users using social logins such as Google and Apple.
SixdegreeLab. By addressing the impact of ERC-4337 on on-chain data analysis and exploring the native account abstraction mechanism in other Layer2 and EVM chains, this project can provide valuable insights and resources for data analysts working in the Ethereum ecosystem.
The Ethereum Foundation team believes that ERC-4337 can attract the next 1 billion users. This ambitious goal is achievable if many traditional businesses implement this standard.
In the following part of this article, I will uncover how companies can use Account Abstraction to seamlessly onboard users to Web3 if blockchain is relevant to their business models.
Account Abstraction Use Cases for Businesses
In this section, I describe four user cases where AA creates additional value for the company's brand.
Case №1. The Future of Loyalty Programs
Brand loyalty is essential for any successful brand today to survive and continue to thrive. Loyalty programs are used by all types of businesses - from coffee shops to hospitals.
This picture shows how loyalty programs become more personalized and scalable, bringing more value to the business customer.
One of the trends of the last two years has been the use of NFTs as collectibles that provide access to unique experiences.
NFTs gave brands the ability to supercharge membership and loyalty programs. With NFTs, customers can own their membership and loyalty status, meaning the more they interact with a brand, the more perks and benefits they accumulate over time, making their NFT more valuable.
There are three main ways how NFTs can be used in loyalty programs:
Utility Tokens. These tokens enable users who are eligible to receive cashback from the brands for various offers or offers to reward loyalty in the form of NFTs or tradeable cryptocurrencies.
Soul Bound Membership Tokens. Customers can be rewarded with membership tokens that are Soul-bound in nature. A user's loyalty and interactions with the brand can be cited using an NFT-based loyalty system where a user's actions are recorded and reflected via these dynamic Soul-bound NFTs.
Reputation Tokens. These are a collection of NFTs representing a history of the user's interactions with the brand. These include POAPs, loyalty points, badges, and collectibles collected from the brand. By the way, do you collect POAPs? I have several in my collection:
No matter what type of tokens you use for your loyalty program, AA will help you simplify the flow for the user. Customers can join your loyalty program without a wallet and technical knowledge. Pay fees and reward your customers using the blockchain that works best for you.
Case №2. Connection between Digital and Physical Worlds with native Account Abstraction
Bridging the digital and physical gap is key to Web3’s mass adoption. By utilizing blockchain technology to build immersive, interactive experiences, brands can bring the power of Web3 to a billion users in a way that is easy to onboard, fun, and accessible.
In September 2023, Web3 brand Pudgy Penguins released its Pudgy Toys at 2,000+ Walmart stores across the U.S., connecting zkSync technology and the broader Web3 community with America’s largest retailer.
Pudgy Penguins offer two ways to play — physical and digital.
Both the Pudgy Penguins plush and figures come with a digital adoption certificate that kids can redeem on pudgeworld.com, the open-world digital social experience. Through the digital adoption certificate, kids can unlock their digital Penguin, which they can use to play games and interact with other kids in Pudgy World.
To get and activate it, the user must scan a QR code and, with the help of Account Abstraction, unlock their Forever Pudgy Penguin without needing a digital wallet or ETH.
zkSync and Ethereum were chosen as Pudgy World’s foundational technology to enable an immersive user experience, lightning-fast speeds, and affordability.
Web3’s mass adoption becomes closer through fun and easy access.
Case №3. Users Enjoy Metaverse Experience with Account Abstraction
The concept of “metaverse” became common in the last 2-3 years, but many people are still far from using metaspaces. The mass Internet user does not fully understand what metaverses are for and what they are helpful for. Also, mistrust is promoted by the idea that virtual reality will replace reality; that is, we will transfer our whole life to digital.
Digital technology shouldn’t compete with physical reality; most people don’t enjoy prolonged experiences inside virtual worlds. The metaverse should improve, rather than replace, human experiences.
So far, meta spaces are trying the best interaction formats with users, allowing them to play, learn, attend concerts, make exhibitions and concerts, buy land and houses, and much more.
Metaspaces can be built with or without blockchain. The most famous blockchain users are Decentraland (MANA token), The Sandbox (SAND token) and AXIE INFINITY (AXS token).
For example, brands like Dolce & Gabbana, Tommy Hilfiger, Domino's, Samsung, Coca-Cola, and others have opened branded spaces in Decentraland to create new experiences and attract a young audience.
Some fashion brands, like Nike, create NFT collections with unique designs. Users can purchase sneakers or t-shirts and wear them in the metaverse.
Decentraland offers a wide range of functions only for users with digital wallets:
Here, in the screenshot, you see that new users can sign in to the full version using their e-mails with the help of Fortmatic:
According to the documentation, Fortmatic SDK allows you to easily integrate your app with the Ethereum blockchain, whether you already have a dApp integrated with web3 or are starting from scratch. Fortmatic provides a smooth and delightful experience for both you and your app's users.
This product was created to simplify the user experience, but it doesn’t use Account Abstraction or have all its features.
So, we see that Decentraland doesn’t want to lose users because of challenging onboarding. Metaverse platforms and similar products would benefit from integrating AA into the new user registration process.
Additionally, AA in metaverses can simplify the purchase of items and their storage in the blockchain. I expect all meta spaces will use wallets with Account Abstraction in their onboarding flows. This feature is most often used in the cases described in the next point of my list.
Case №4. ERC-4337 helps to onboard gamers to the blockchain
According to True List, approximately 3.26 billion people worldwide play video games. 89.5% of video game sales happen in the digital world. By 2025, the mobile games industry will reach 138 billion US dollars.
This means that gamers are a huge number of users who can potentially become users of blockchain-based products if these products can improve their gaming experience.
Some gamers are already users of the GameFi products or Play2Earn platforms. Others, on the contrary, ignore blockchain and crypto products, not trusting them or are too young to assess risks and make decisions. They only want to play and get achievements.
What if the game allows users to keep their game achievements and items in the blockchain in the NFT format? Authorization to the game account can unblock their smart contract wallet. Also, the game platform can pay a fee instead of the user with the help of the paymaster.
So gamers will not need to create an account before starting the game. They can enjoy the process, and under the hood, there will be a blockchain that will ensure that all game achievements are saved and will be able to convert game skins to NFT.
Account Abstraction and its capabilities look promising for anyone interested in implementing mass blockchain usage.
Until now, most businesses (Nike, Gucci, Starbucks, and others) have joined Web3 by launching NFT collections or identity verification and supply chain management through platforms like Everledger. Now, companies that want to be technological pioneers have more tools to implement, thus opening up a field for experimentation.
I strongly advise traditional businesses to add not only AI but also blockchain to their business processes and user immersion in brand experiences. If relevant and possible, implement something that will increase interest in and loyalty to your brand.