In a recent blog post, Vitalik described the adoption of smart contract wallets as one of the most important transitions facing Ethereum today.
ERC-4337 is a standard for smart contract wallets, also known as smart accounts. The key features of the system are:
- Users make pseudo-transactions called UserOperations (UserOps).
- Bundlers bundle batches of UserOps into single on-chain transactions.
- Apps can use Paymaster contracts to pay for gas on behalf of users.
Over 350,000 ERC-4337 accounts have been deployed on Ethereum, Arbitrum, Optimism, and Polygon, with 83% of those accounts created just last month. The growth has been exponential.
I analyzed the on-chain activity of ERC-4337 users. Here's what I found:
In July, Polygon experienced a massive spike in ERC-4337 usage due to the launch of CyberConnect, a social network where all accounts are ERC-4337 wallets. CyberConnect drove around 360,000 UserOps in July alone.
Similarly, Optimism saw a jump in ERC-4337 usage this week following CyberConnect's launch on the L2. Observe how 4X+ more UserOps have been executed in the first four days of August than the whole month of July.
The second most popular app using ERC-4337 on Optimism is Beam, a smart account wallet tailored for stablecoin payments.
A big chunk of the smart account activity on Ethereum has been centred around liquid staking. In July, 41% of UserOps were generated by users minting and transferring stETH, cbETH, and rETH.
To keep track of the latest developments in ERC-4337, check out my smart account dashboard on Dune and give it a star ⭐
During ETHCC, the Metamask team announced the Snap Keyring API, allowing developers to add new types of accounts to Metamask outside of EVM EOAs. Smart accounts will be supported by Keyring later this year, and they're betting that they'll play a big part in Metamask’s future.
If you're running an ERC-4337 startup or you're looking for a new opportunity, you should learn to build Metamask Snaps.
Currently, ERC-4337 Bundlers have exclusive access to MEV extraction for any UserOps that get sent to them. Bundlers that get a lot of activity could decide to either sell access to that orderflow to MEV searchers or run their own MEV strategies.
Long-term, the plan is for there to be a public ERC-4337 mempool that all UserOps will feed into before being bundled. I think that'll spawn a lot of opportunities for products like real-time mempool data services.
3. Consumer apps
The most successful consumer crypto apps will have abstracted wallet experiences, where account recovery, zero gas fees, and automated actions are standard features.
Today, if you want to build a consumer crypto app, you have to develop and audit a custom implementation of this experience. The crypto apps with the most usage (Binance, Stake.com, Pornhub Premium .etc) usually take full custody of funds.
As the ecosystem develops, teams will be able to use ERC-4337 to get most of these key features out of the box while offering self-custody or partial custody. Features that aren't inherent to 4337 will likely be built as plugins that any modular account implementation can benefit from. I’m excited to see crypto consumer apps recognise this unlock and take advantage of it to save themselves a lot of dev hours.
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