Account Abstraction

ERC-4337 Compatible Bundler & Paymaster

Users interact with Ethereum using externally owned accounts (EOAs) which are public-private key pairs. Anyone with access to the private key can perform actions within the rules of the Ethereum Virtual Machine (EVM). By design, the Ethereum network can only go through state transition when an EOA triggers a transaction and consequently pays a gas fee in ETH. These factors limit how users can interact with the blockchain.

1. Poor security

   1. Lost private keys cannot be recovered

   2. Compromised private keys give attackers instant access to all funds in the account

   3. Rigid security rules (e.g., must use ECDSA)

2. Lack of customization

   1. Must initiate or sign every transaction

   2. Not programmable (i.e., can not define custom rules)

3. Gas payment

   1. Account must hold ETH at all times in order to cover transaction fees

   2. Can not use other tokens (e.g., ERC20)

Smart contract wallets are the solution to these problems by allowing users to flexibly program better security and user experiences into their accounts. Account abstraction enables smart contracts to initiate transactions themselves, without the user having to manage a separate EOA and ETH balance. This opens up the door to many exciting use cases.

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What is a Smart Wallet?

Smart wallets are wallets controlled by smart contracts following the ERC-4337 specification. Ethereum has two types of accounts:

1. Externally Owned Accounts (EOAs)

2. Contract Accounts (Smart Contracts)

A Contract Account is managed by a Smart Contract rather than an EOA and relies on code instead of private keys to secure and recover wallet information.

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Benefits of Smart Wallets

1. Fully programmable

   • Can do anything a smart contract can

   • Upgradeable to add new features

2. Arbitrary verification logic & recovery

   • ECDSA (EOA controller account)

   • Social Login

   • Session Keys

   • Biometric

3. Atomic multi-operations

   • Combine multiple transactions into a single atomic transaction

   • Better efficiency as call overhead is only incurred once

   • E.g., approve & spend tokens

4. Gasless transactions

   • Fully sponsored & ERC-20 payment

   • Compatible with all smart contracts out of the box

5. Semi-abstracted nonces

   • Concurrent execution channels

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Why ERC-4337?

Unlike other proposals, ERC-4337 avoids changes to the consensus layer itself increasing the chance of faster adoption.

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Terminology

Sender

The sender is an ERC-4337 compatible smart contract wallet storing the users assets.

It must implement the following interface:

interface IAccount {
    function validateUserOp(
        UserOperation calldata userOp,
        bytes32 userOpHash,
        uint256 missingAccountFunds
    ) external returns (uint256 validationData);
}

UserOperation

A UserOperation is a pseudo-transaction object sent by the user into an alternate mempool.

It contains the following fields:

Field	Type	Description
sender	address	Account requesting the operation
nonce	uint256	Anti-replay parameter
initCode	bytes	Account creation code (only required if not yet created i.e., first transaction)
callData	bytes	Data passed to sender during execution
callGasLimit	uint256	Gas allocated for main execution
verificationGasLimit	uint256	Gas allocated for verification
preVerificationGas	uint256	Amount allocated to compensate the bundler for any gas overhead not tracked on-chain by the EntryPoint
maxFeePerGas	uint256	Similar to EIP-1559
maxPriorityFeePerGas	uint256	Similar to EIP-1559
paymasterAndData	bytes	Paymaster address and callData (empty for self-sponsored transactions)
signature	bytes	Data passed to the account along with the nonce during the verification step

EntryPoint

The EntryPoint is a singleton smart contract that handles the verification and execution of bundles of UserOperations. This ensures much of the complicated logic is not required in the wallet itself and Instead, wallets trust the EntryPoint to perform proper validation (similar to a trusted forwarder).

Bundler

A bundler is a node that bundles together multiple UserOperations from an alternate mempool and forwards them to the EntryPoint contract as a single transaction. The bundler executes transactions via EOAs which cover the transaction fees upfront and are later compensated. The Gelato Bundler is built on top of the existing Gelato Relay service and sponsors transactions via 1Balance.

See Advantages & Highlights.

Paymaster

A paymaster is a service that covers transaction fees on behalf of the user. Unlike other solutions, Gelato does not rely on the on-chain EntryPoint to compensate transaction costs. Instead, fees are settled by the 1Balance paymaster post-execution which avoids overcharging users and reduces the overall on-chain footprint.

See Advantages & Highlights.