Account abstraction is one of Ethereum's most promising solutions for improving user experience. What began with smart contracts like Safe has evolved into sophisticated protocol upgrades, including ERC-4337 and the recently introduced in the Pectra upgrade, EIP-7702.
This post explores the history of account abstraction on Ethereum, explains how ERC-4337 and EIP-7702 work, and examines their current adoption and usage.
What is account abstraction?
Account abstraction on Ethereum enables smart contracts to perform user actions on the blockchain. These smart contracts can hold assets, execute swaps and trades, and perform numerous other operations while remaining under user or organizational control. These accounts are often called smart wallets.
The primary goal of account abstraction is to enhance the user experience.
Instead of requiring users to understand gas fees, nonces, or transaction signing, account abstraction allows wallets and applications to handle these technical complexities automatically.
This creates experiences similar to traditional web applications or mobile banking apps, rather than requiring users to become blockchain experts. This approach facilitates user onboarding and creates an environment where users can gradually build their knowledge while performing on-chain actions.
Why do we need account abstraction?
Account abstraction is necessary because it addresses fundamental limitations of traditional user accounts by leveraging smart contract functionality.
Ethereum has two primary account types: Externally Owned Accounts (EOAs) and Smart Contracts.
EOAs are standard user accounts controlled by private keys or seed phrases that can initiate transactions. However, they have significant limitations: they cannot respond to inputs like receiving tokens, they're restricted to private key/seed phrase operation, and they lack flexibility.
Smart Contracts are programs deployed on Ethereum without associated private keys. While they cost gas to deploy and must be created by an EOA, they can be programmed to respond to various inputs and perform complex operations.
Account abstraction builds on smart contract functionality to address the user experience, security, and flexibility issues inherent in EOAs.
A brief history of account abstraction
The earliest examples of account abstraction were multi-signature smart contracts pioneered by platforms like Safe. These contracts hold assets and require multiple signatures from different user accounts for transaction approval, eliminating single points of failure and enabling shared fund access.
A crucial insight from this approach is the separation of roles: the smart contract holds assets while user accounts act as authorizers. This separation of asset custody from transaction authorization became a foundational principle of account abstraction.
ERC-4337: The current standard
Building on early smart contract wallet experiments, the Ethereum community developed ERC-4337, released in 2023. When people discuss account abstraction on Ethereum today, they typically refer to ERC-4337 (though this has changed with EIP-7702).
ERC-4337 provides a unified framework of smart contracts designed to create a developer-friendly account abstraction infrastructure.
How ERC-4337 works
ERC-4337 introduces several components that function differently from standard Ethereum usage:
UserOperations: Instead of sending transactions directly to the network, users create UserOperations—special transaction-like objects containing the user's intent, smart contract wallet address, and operations to be performed.
Alternative Mempool: UserOperations are held in a separate mempool from regular transactions.
Bundlers: These entities collect multiple UserOperations, group them into single transactions, and submit them to the EntryPoint smart contract on Ethereum.
EntryPoint Contract: This contract validates and executes each UserOperation according to the logic defined in the user's smart contract wallet.
Key features of ERC-4337
ERC-4337 enables several important capabilities:
Gas Sponsorship: Optional Paymaster contracts can sponsor transaction gas costs, enabling users to trade on DEXs without holding ETH.
Transaction Batching: Smart contracts batch multiple actions into a single call, which is then submitted as one UserOperation. This reduces transaction overhead and gas for users.
Social Recovery: The framework facilitates setting up accounts with "guardians" who can recover accounts if private keys are lost.
While these features existed previously, ERC-4337 provided standardization and developer frameworks. Many organizations building account abstraction solutions now utilize ERC-4337, and numerous infrastructure providers offer ERC-4337 SDKs.
ERC-4337 limitations
The primary drawback is backward compatibility. Users with existing EOA accounts cannot simply "convert" to ERC-4337 smart wallets without creating new addresses and transferring all assets. EOAs also retain their original limitations: secure private key management remains challenging, and they lack flexibility.
EIP-7702: The next evolution in account abstraction
Ethereum's Pectra upgrade launched on May 7, 2025, introducing new account abstraction features through EIP-7702. The most significant change allows EOAs to execute code by delegating to smart contracts. Private key owners retain account control while delegated smart contracts can perform actions as if they were the EOA.
How EIP-7702 works
EIP-7702 introduces Type 4 transactions with an authorization_list field containing chain IDs and smart contract addresses for code delegation. Users don't deploy separate smart wallets but instead delegate transaction execution to predefined smart contract code. Delegations can be revoked when desired.
Benefits of EIP-7702
Single Address: Unlike ERC-4337, which requires deploying separate Smart Contract wallets with new addresses, EIP-7702 allows users to delegate tasks while maintaining their original address and asset control.
Flexibility: Users can delegate specific tasks (like weekly DeFi deposits) while retaining normal EOA functionality for other transactions. This reduces gas costs while providing smart wallet benefits, allowing users to function as both EOAs and Smart Contracts without being locked into either role.
Normal Ethereum Transactions: EIP-7702 transactions use the standard mempool and function as regular Ethereum transactions, maintaining backward compatibility with existing infrastructure.
Multi-chain Compatibility: Users can authorize delegations to single chains or multiple chains, facilitating cross-chain functionality.
How ERC-4337 and EIP-7702 work together
Rather than competing standards, ERC-4337 and EIP-7702 are complementary. EIP-7702 transactions are fully compatible with ERC-4337 infrastructure and can delegate access to ERC-4337 Smart Accounts.
Ethereum's roadmap emphasizes keeping delegation contracts compatible with existing account abstraction solutions while encouraging continued ERC-4337 use.
In practice, EOAs can use EIP-7702 to delegate to smart contracts built using ERC-4337 standards. For example, users could delegate their EOA to a contract handling UserOperations, benefiting from ERC-4337's proven paymaster infrastructure while retaining their original address.
This relationship provides flexibility for users and developers while advancing account abstraction's core goal: improving user experience.
Users no longer must choose between simple EOAs or starting over with smart accounts. They can maintain their assets and on-chain identity while gaining ERC-4337's UX benefits.
Users could begin with standard EOAs, utilize EIP-7702 benefits like gas sponsorship, then migrate to full smart wallets if desired. As the Pectra upgrade is relatively new, its evolution will reveal additional possibilities.
Building the future account abstraction
The future of accounts looks promising, but new features and standards present both challenges and opportunities.
Adoption challenges
Solutions must integrate with existing wallet providers to achieve adoption. ERC-4337 initially faced this challenge, and EIP-7702's adoption depends on integration with existing wallets and embedded wallets from Wallet-as-a-Service (WaaS) providers.
Infrastructure requirements
Implementing account abstraction requires robust infrastructure handling both traditional EOAs and modern smart account capabilities. Developers need solutions that work with evolving standards while remaining flexible, scalable, and secure.
Organizations integrating account abstraction need infrastructure partners capable of scaling to enterprise transaction volumes while providing reliability for building on new and evolving standards.
Security considerations
At the core of all account abstraction standards lies an EOA with a private key. Developers require secure key management solutions that handle complex authorization patterns, multi-signature setups, and delegation permissions without compromising user funds.
Turnkey's account abstraction solution
At Turnkey, we're building wallet infrastructure ready for the account abstraction era. Whether users prefer EOAs enhanced with EIP-7702 or full ERC-4337 smart account programmability, our platform provides comprehensive support.
Turnkey supports both ERC-4337 Type 3 transactions and EIP-7702 Type 4 transactions out of the box, with secure key management scaling from individual users to enterprise deployments.
Some capabilities include:
- Generating millions of embedded wallets using developer-friendly SDKs
- Creating custom transaction policies for organizations and end users
- Setting up users as signers for multi-party smart wallets
Sign up for a Turnkey account and connect with our team to learn more about building smart and secure wallet solutions into your DeFi application.
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