January 31, 2023

How Account Abstraction Can Change Everything In Web3

The Balance Ecosystem encompasses a wide range of innovative products and developments in various DeFi and Web3 technology areas.
Balance is poised to build bridges between the theoretical and practical sides of finance so that there is a means in which we can provide real-world solutions and create value driven products within the web3 space.

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The rise of decentralized finance (DeFi) and blockchain technology has opened up new avenues for financial transactions, but the current infrastructure still has limitations. Account abstraction is a promising solution that has the potential to revolutionize the Web3 landscape. This article will delve into the concept of account abstraction and its potential impact on the future of Web3.

What is Account Abstraction?

Account Abstraction is a concept and a feature under development, that provides a solution to the issues with poor User Experience (UX) in the current web3 landscape. This exciting paradigm will allow anyone to interact with decentralized applications (dApps) on Fantom as well as other L1 blockchains.

To understand Account Abstraction, it's crucial to understand L1 Blockchain accounts and transactions. Generally speaking, there are two types of accounts - Contract Accounts and Externally Owned Accounts (EOAs).  Contract Accounts are smart contracts living on the blockchain, defined by code, and not controlled by a user. EOAs, on the other hand, are controlled by a person with a cryptographic pair of public and private keys. Transactions are required to write information to the blockchain and are initiated by an EOA, which also pays the gas fees.

The current experience of performing transactions and other actions on the blockchain is slow and tedious, especially for new users. EOAs are also risky as they can be lost by accidentally sharing or losing access to the private keys. Additionally, EOAs have limited capabilities and require high levels of responsibility from the user. This reality makes it challenging for mainstream adoption.

How Account Abstraction Can Change Everything

Account Abstraction solves the issues with UX and makes dApps accessible to anyone, not just Web3 enthusiasts. It offers a simplified experience for new users and reduces the risk associated with EOAs by enabling the use of alternative identities, such as social media accounts. This eliminates the need for private keys and the associated risk of losing access to funds. Additionally, Account Abstraction provides greater flexibility, enabling users to perform various actions without having complete control over their account.

Account abstraction can strike a balance between self-custody and protection from human error.

This is done by improving the user experience of your self-custodial wallet, so you do not need as much technical knowledge to interact with crypto and the blockchain. This means that account abstraction increases the overall safety of using the wallet, because it’s easier to use the wallet correctly and avoid making mistakes.

By using smart wallets, i.e., programmable smart contracts on the blockchain, rather than simple EOAs, we can program more functionality directly into the wallet itself, which wouldn’t be possible with an EOA. These functions can improve wallet UX, prioritize security, and bend to fit the needs of specific verticals, like investment, gaming, social, and art collection.