What is Account Abstraction ?
The wallets in which we store our crypto are generally Externally owned accounts EOA
An EOA is made up of a cryptographic pair of keys: public and private. It is represented by an address that is created after a user has set up his/her key pair. A private key is used to sign transactions; it grants users custody over the funds associated with their accounts
This results in specific restrictions. For example, only having one key to authorize transactions and control the account. If lost or stolen, the account is likely lost forever.
Account abstraction is a way to address these roadblocks by converting an EOA into a smart contract with its own logic for deciding what constitutes a verified transaction. This means the signer and the account can be decoupled, opening up a wider range of possibilities for account use
Lets dive deeper on the benefits Account Abstraction AA provides :
Problem : Loss of private key
The amount of crypto lost is quite a significant number, taking Bitcoin as example, around 20% of the circulating supply is lost forever. Before we worry about scams and hackers, there is actually a greater possibility of losing it by human mistakes
AA Solution :
AA can help us retrieve lost funds by implementing “Social recovery” to wallets. Users can select a few other trusted addresses to authorize recovery of the private key.
These addresses are called the “Guardians”, they can be called for help when needed like when loss of private key to recover your assets
Problem : Crypto Scams
The crypto space has been associated with hackers, scammers, frauds and speculators. Crypto scammers took a record of 14 billion in 2021 according to CNBC
Bad actors in the space may exploit new users as well as it gets difficult to identify frauds and scam
AA Solution :
With AA ,Users can preset transaction limits to minimize loss and only allow transactions made to known addresses to avoid sending funds to scam addresses
Further major Changes AA brings to the crypto space are :
i) Removal of seed phrases : Seed phrases will no longer be needed, using a crypto wallet will be as simple as logging into email and social media accounts.
ii) Gas Payment : Users will be able to pay gas in other desired tokens instead of only in Ether, so as long as there are tokens in their wallet they will be able to settle transactions.
iii) Bundle Transactions : AA enables multicall which allows us to bundle multiple transactions so they can be executed at one go.
iv)Session Keys : currently users would have to sign every time they interact with the protocol . With AA Users will be able to predetermine rules with a protocol for a specific timeframe so the signing can be done automatically within a timeframe of for example 10 minutes.
v)Multisig Wallets : This is like the concept of a joint account where two or more private keys are required to sign in order to approve a transaction. Use cases of this would be family shared account, trust account, escrow account etc
The use cases above are just the beginning, Account Abstraction will be the key to tremendously upgrade security and UX of Crypto and Defi, as well as expanding the possibilities of design and development for builders, hence unleash the massive potential of crypto and Web3 mass adoption and onboarding the next billion users to Decentralized Finance.