Slow Adoption and Retention for Ethereum's ERC-4337 Smart Wallets

28/11/2023 19:53

According to Blockworks, the introduction of Ethereum Foundation's ERC-4337 account abstraction standard earlier this year has seen slow adoption and retention rates. The standard was designed to transform Ethereum accounts into smart accounts, offering more flexibility for wallet holders. However, data from BundleBear reveals that weekly retention for ERC-4337 smart wallets drops as low as 1% for accounts older than five weeks, and an average smart account only sends five user operations. Revenue for transaction bundlers is also low, currently less than $8,000 per week. At the time of writing, daily active users are at around 3%, according to sixdegree data. Most smart account users are on the Polygon network, making up over 66% of all smart account holders and almost all monthly new users by chain. Despite the low adoption rates on Ethereum, industry participants remain optimistic about the future of smart accounts and are actively working on proposals to spur usage. John Rising, the co-founder of Stackup, an account abstraction infrastructure company, believes that many existing issues with ERC-4337 can be resolved with the first-ever Rollup Improvement Proposal, RIP-7560. The existing ERC-4337 standard is considered a semi-native+ smart account, where a user does not need a private key because the trustless relay network is designed to forward transactions to the blockchain. Rising aims to move towards a native smart account, where accounts would be able to specify their own validation logic, completely removing the need for a private key, something that RIP-7560 hopes to achieve. "ERC-4337 has always been intended as a stepping stone to native account abstraction. The account abstraction proposal, RIP-7560, is designed to be backwards compatible with ERC-4337," Rising told Blockworks. Further discussions around the proposal and its applicability must still be considered. Native account abstraction has drawn concerns over the complexity it adds, as it introduces consensus layer changes rather than just high-level infrastructure layer modifications.

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