Ethereum Developers Target Ease of Crypto Wallets With ‘EIP-3074’

As a seasoned analyst, I’ve been closely monitoring the ongoing discourse among Ethereum developers regarding the proposed upgrades for the Ethereum blockchain’s upcoming hard fork, named Pectra. These discussions involve the consideration and implementation of specific Ethereum Improvement Proposals (EIPs) that aim to enhance the functionality and efficiency of this next significant network update.

Among the Ethereum community’s debated suggestions, EIP-3074 stands out as a proposed modification to the Ethereum Improvement Proposal library. This update aims to enhance the interaction between users and digital wallets on the Ethereum blockchain by introducing an intended user-friendly improvement.

Ethereum programmers have addressed complications in the past that improved the user interface of digital wallets and introduced new functionalities. Presently, they are striving to simplify the experience further and embed these enhancements directly into the blockchain.

As an analyst, I would explain this new development from the perspective of an EOA user: With this update, my externally owned account gains more flexibility in terms of programmability. Smart contracts now have the ability to grant certain permissions to my EOA, expanding its capabilities and functionalities.

According to Georgios Konstantopoulos, CTO of Paradigm, EIP-3074 is a significant development. It’s going to revolutionize the user experience in wallets by tenfold.

In the Ethereum network, there exist two main types of wallet accounts: Externally Owned Accounts (EOAs) and Smart Contract wallets. EOAs, which are commonly used by individuals, include wallets such as MetaMask and Coinbase Wallet. On the other hand, Smart Contract wallets, like Argent and Safe, function differently and are designed to interact with Ethereum applications or “dapps” using predefined rules encoded in smart contracts.

Users of Ethereum Outbound Accounts (EOAs) are issued two distinct keys: a publicly accessible one and a privately held one. In contrast, smart contract accounts function autonomously through coded control. However, the primary challenge with EOA usage lies in the risk of human error. If you misplace or lose the private key to an EOA account, there exists no centralized assistance or recovery mechanism to restore access to your associated funds.

Proposals such as ERC-4337 have strived to simplify the usage of External Owned Accounts (EOAs) by introducing account abstraction (AA). AA empowers users to regain their cryptocurrencies along with the benefits of smart contract functionality.

EIP-3074 represents another advancement in the realm of innovation by enabling smart contracts to manage transaction capabilities on behalf of users. A significant aspect of this proposal is the ability for users to group transactions and approve them collectively through a single signature. Furthermore, third parties can cover the gas fees for users, making it feasible for decentralized applications (dapps) to subsidize their users’ transaction costs.

A proposal drafted as early as October 2020 includes the capability for users to approve transactions initiated by others. This feature enables signing transactions from alternative interfaces or even offline. The document lists Sam Wilson, Ansgar Dietrichs, Matt Garnett, and Micah Zoltu as its authors.

The primary distinction between EIP-3074 and ERC-4337 lies in their respective focuses. While EIP-3074 aims to deliver all the perks of execution abstractness, ERC-4337 is dedicated to securing the advantages of account abstraction across all Ethereum Virtual Machine (EVM) networks, albeit in a less efficient manner that doesn’t fully leverage native support. Essentially, both proposals contribute towards achieving some aspects of full native account abstraction.

Community pushback

Among the supporters in the community, the proposition gained a significant following. However, some voices of concern emerged, urging caution due to security apprehensions surrounding the batched transaction feature.

Lukas Schor, the co-founder of Safe, has expressed worries about the ERC-4337 proposal advocated for Ethereum wallets. He believes that while the proposal is moving in the right direction, it may not provide a clear roadmap to achieving full account abstraction (AA) and could even hinder AA adoption instead.

Itamar Lesuisse, one of Argent wallet’s co-founders, expressed concerns about EIP-3407 on X, warning that it could potentially enable a fraudster to empty an entire digital wallet with just one off-chain signature. He anticipates this situation may become quite common.

Mudit Gupta, the chief information security officer at Polygon Labs, expressed security concerns and recommended that individual wallets should disable EIP-3074 “MAGIC signatures” as a security measure.

“For security reasons, I do not want to expose my cold wallets to AA batching,” Gupta added.