Key Takeaways:
- Learn about Ethereum’s newest token standard, ERC-4337, in detail and how it aims to change the functionality of tokens.
- Leverage the standard to create smart-contract-powered tokens that instantly double up as wallets inside dApps.
- Explore the advantages the standard brings to the Web3 space when compared with the existing conventions for better understanding.
The Web3 space has evolved to new heights, given the underlying technology has been understood by more people. Still, a large-scale influx of users into the Web3 space is yet to be witnessed. While volatile markets have been a prominent reason, the fact that accessing Web3 comes with extra hassles for most users is a point worth noting. In this case, ERC-4337 token development comes as a relief as it aims to provide seamless accessibility to the Web3 space. This blog will especially focus on how this new token standard pans out and how one can tap into this during Ethereum token development campaigns for better results.
ERC-4337: The Newest Revolutionary Token Standard
There is a high chance you have heard of ERC-4337 if you are an avid follower of updates in the Ethereum space. The newest token standard recently came into existence as a result of an Ethereum Improvement Proposal (EIP) of the same number. This standard essentially expands the utility for wallets by converting them into functional smart contracts.
- The ERC-4337 standard realizes a concept called Account Abstraction, which aids in improving user experience and security by implementing smart contract functionality. Although multiple standards were approved before, they faced several challenges that led to their fading with time. However, ERC-4337’s nature of keeping the present consensus layer as it is made it popular.
- Using account abstraction, the ERC-4337 standard aims to abolish the present way of accessing the Web3 space through EOAs (Externally Owned Accounts). While these accounts bolstered security using secret private keys, the need to use them for every transaction alongside the non-retrievable nature when missed make them complex to use.
- ERC-4337 taps into smart contract solutions built on wallets that can interact with other contracts on the go, completing transactions automatically. These programs can even determine the appropriate gas fees to be paid for a transaction, saving immense time and costs for processing transactions.
Pivotal Elements of ERC-4337 Token Development
ERC-4337 token development comes with several elements that drive how wallets are bolstered with smart contract functionality. Each of these components aids in easing issues surrounding accessibility and security in the crypto space by handling specific facets associated with the process. Overall, ERC-4337 wallets simplify user experience and transactions, enabling the easy onboarding of the next billion Web3 users.
- UserOperations: UserOperations are pseudo-transaction objects used by wallet contract accounts to execute transactions. According to the standard, these are created by dApps themselves, eliminating the need for their front-ends to adapt to support the ERC-4337 standard. Wallets can create their own pseudo-transaction objects from normal transactions, easing hassles for dApp owners.
- Bundlers: Bundlers are entities that pack UserOperations objects from a mempool and send them to the EntryPoint contract on the Ethereum network. Using these entities enables account abstraction on EVM-powered networks without having to change anything about the blockchain. These elements comply with several high-grade security requirements to eliminate DDoS threats.
- EntryPoint: The EntryPoint smart contract handles the logic for the verification and execution of a transaction. According to the standard, each EntryPoint contract can be executed only once on each blockchain, as only one instance of a transaction should exist. Doing so simplifies the logic utilized by smart contract wallets while trusting other functions are tested extensively beforehand.
- Account Contract: An Account Contract is the smart contract owned by the user (in this case, a wallet). These contracts need to have at least two custom-built functions – one for verifying signatures and the other for processing transactions on-chain. These, alongside Factory Contracts, ensure the wallet contract addresses stay the same, similar to conventional EOA wallets.
- Factory Contract: The Factory Contract is helpful in specifying the creation of a wallet contract and its first operation on the blockchain simultaneously. These contracts become beneficial as Account Contracts tend to be Singletons, meaning they have only one address irrespective of the blockchain. This enhances security and reliability, as users will be able to generate their wallet address automatically without external involvement.
- Paymaster Contract: Paymaster Contracts are optional programs that can sponsor gas costs for Account Contracts or allow people to pay for transactions using various ERC-20 tokens instead of Ether ($ETH). Using these can enhance how quickly people can pay for transactions, as owning ETH becomes optional. Also, by allowing other entities (such as dApp businesses) to pay for gas, attaining Web2-like user experiences becomes easier.
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Benefits of Using the ERC-4337 Standard for Wallets
The ERC-4337 standard has already diversified the utility for Ethereum token development as wallet functionality has been added to the list. With account abstraction, Web3 users can experience a whole load of benefits that could be the driving force in the next bullish phase in the Web3 market.
- Seed Phrase Elimination: Using ERC-4337 token development for wallets eliminates the need for seed phrases to access and transact cryptocurrencies. Doing so can get rid of risks associated with private keys, such as the loss and hack of keys. It ensures security using other measures like multi-factor authentication (MFA) and biometric authentication.
- Human Error Removal: Smart contract wallets based on the ERC-4337 standard remove the possibility of human-induced errors, ensuring the efficiency of operations. The use of account abstraction also boosts the blockchain’s security, making it tough for attackers to steal tokens from the account. This is because private keys here will lead to only a smart contract and not directly to the crypto assets held in the wallet.
- Cross-chain Compatibility: With its capability to work on blockchains compatible with the Ethereum Virtual Machine (EVM), ERC-4337 token wallets can work across networks without hindrances. Note that the ecosystem surrounding EVM technology has grown by leaps and bounds, easing accessibility for users.
- Multi-user Operations: Account abstraction wallets enable multi-user and shared operations that were not possible under EOA-based wallet apps. One could design an ERC-4337 wallet that needs two or more signatures to execute transactions, empowering the security of platforms. Wallets can even come with options for people to make smaller and spread-out payments within a given time.
Conclusion
Therefore, we have explored how ERC-4337 token development bolsters the prospects for crypto wallets and the overall Web3 space. With account abstraction attaining prominence through this standard, the time for wallets to become self-executing programs rather than mediums of storage can just be the beginning of exciting things. As the Web3 space heads for yet another bullish season, conducting Ethereum token development with added value can prove vital for commercial success for aspiring entrepreneurs. If you are one among them, consider working with our seasoned professionals at Blockchain App Factory for massive results. Get in touch with one of us to begin developing your new ERC-4337 token wallet!
