What is EIP-7702? A Beginner's Guide
Ethereum's evolution never stops: with each Ethereum Improvement Proposal (EIP), the network takes a step towards greater scalability, security, and usability.
One such proposal, EIP-7702, is set to revolutionize the Ethereum blockchain by introducing native account abstraction. Essentially this provides a more flexible and user-friendly experience. Allowing smart contracts to act as Ethereum accounts could potentially unlock a myriad of new use cases beyond improving UX.
But before we dive into the details, let's first touch on what account abstraction is, how it works, and how EIP-7702 might affect developers and users.
What is Account Abstraction and how does it work?
Account abstraction allows users to interact with the blockchain without friction: unlocking features like gasless and signless transactions, and allowing you customize wallet experiences with programmable logic.
Programmable transactions
Account abstraction allows for much more flexibility in how transactions are validated. For example, a wallet could require multiple signatures before a transaction is executed, or it could use off-chain data (like a proof of biometric authentication) to validate a transaction.
Paymaster Contracts
Account abstraction also introduces the concept of "paymaster contracts." These are contracts that can sponsor the gas fees for user operations. This means that users can interact with Ethereum without needing to hold any ETH, as long as there is a paymaster willing to cover their gas fees.
For now, account abstraction has only been made possible with smart contract wallets, web3 wallets controlled by code and capable of executing complex operations. But these wallets are not natively supported Ethereum wallets. Externally Owned Accounts (EOAs) are not capable of these functionalities, so smart wallets rely on smart contracts instead.
The Challenges of Account Abstraction Today
While smart contract wallets are great, they can lead to fragmentation: if you use an EOA and want to set a smart wallet up, these will operate as two separate accounts. Plus in some instances, smart contract wallets can be more costly to use, since they execute such complex operations.
That’s why there has been such a push to integrate native account abstraction on the Ethereum network. While that’s an important goal, it also has also faced challenges, such as:
Backward Compatibility Issues
Many proposed solutions require significant changes to Ethereum’s architecture, making it difficult to integrate them seamlessly with existing systems.
Complexity
Some implementations add layers of complexity to transactions, making them harder to process efficiently.
Adoption Barriers
Developers and wallet providers must integrate new standards, which can slow down widespread implementation.
That’s the whole story behind EIP-7702: it offers another path to achieving account abstraction—and without requiring a complete overhaul.
What is EIP-7702?
EIP-7702 is an Ethereum Improvement proposal co-authored by Vitalik Buterin (co-founder of Ethereum) that introduces a streamlined approach to account abstraction, allowing EOAs to temporarily function like smart contracts. This unlocks new features, including gas fee optimization, enhanced security, and a more seamless user experience.
Read the official EIP-7702 Proposal here
What is EIP-7702 for?
The main reasons for EIP-7702 existing are similar to any other account abstraction capabilities. Account abstraction is powerful vehicle for building seamless apps and experiences, with benefits such as:
Improved Usability
EIP-7702 allows users to access smart contract functionalities without needing a dedicated smart contract wallet. This makes interacting with decentralized applications more seamless and user-friendly.
Enhanced Security
By enabling advanced authentication methods, such as multi-factor authentication and key recovery options, EIP-7702 strengthens wallet security and reduces the risk of lost assets.
Gas Efficiency
Compared to full smart contract accounts, EIP-7702 minimizes transaction overhead, leading to lower gas costs and more efficient execution.
Faster Adoption
Since EIP-7702 maintains backward compatibility with existing Ethereum infrastructure, its implementation can be achieved with minimal disruptions, making it easier for developers and users to adopt.
What does EIP-7702 do differently?
Essentially EIP-7702 allows generic web3 wallets to unlock some of the functionalities you’d expect from smart wallets, but with some core differences, including:
Temporary Transformation
EOAs can act as smart contracts for the duration of a transaction, allowing them to execute more complex operations.
No Permanent Code Storage
Unlike full account abstraction models, EIP-7702 does not permanently alter the account structure, maintaining compatibility with existing Ethereum infrastructure.
Backward Compatibility
The proposal minimizes disruption, allowing EOAs to integrate with smart contract functionality without compromising the network’s architecture.
Comparing EIP-7702 to Previous Proposals
EIP-7702 builds on previous account abstraction efforts while addressing their shortcomings. Of course, it wasn't the first proposal aiming to solve the challenges that come with wallet limitations. However, it seems that EIP-7702 will be the winning proposal, following predecessors such as:
EIP-4337
This proposal introduced user operations and paymasters but required significant infrastructure changes.
EIP-3074
Allowed EOAs to execute smart contract-like transactions but lacked the flexibility developers needed to customize transactions.
Where EIP-7702 stands out
Since EIP-7702 enables EOAs to temporarily become smart contracts without requiring additional infrastructure, it offers a more seamless and efficient solution.
The Proposed Solution: How EIP-7702 Works
EIP-7702 introduces a new contract_code field within transactions, allowing EOAs to execute programmable logic during a transaction without permanently converting into a smart contract. This mechanism preserves the flexibility of EOAs while enabling advanced transaction capabilities.
Transaction Execution
When an EOA includes a contract_code field in a transaction, it temporarily operates as a smart contract for that transaction’s duration. This allows EOAs to interact with decentralized applications and execute complex operations without fundamentally altering their structure.
State Management
Once the transaction is complete, the EOA returns to its standard state. Unlike traditional smart contracts, which retain code permanently, EIP-7702 ensures that the EOA’s underlying architecture remains unchanged. This means that users can take advantage of smart contract functionality without committing to a permanent contract structure.
Validation Rules
Ethereum nodes process EIP-7702 transactions similarly to standard transactions, maintaining network stability and ensuring seamless integration. This approach minimizes disruptions to existing protocols while expanding the capabilities of EOAs in a secure and efficient manner.
Challenges EIP-7702 Faces
While EIP-7702 presents a plethora of benefits, it's not without its challenges.
Complexity
One of the main hurdles is the added complexity it brings to Ethereum clients and wallets. Implementing account abstraction requires significant changes to the existing infrastructure, which could lead to potential compatibility issues and increased development overhead.
Gas Optimization
Another challenge is optimizing gas costs for user operations. Since smart contract wallets will be performing additional computations to validate transactions, this could lead to higher gas costs compared to traditional EOA transactions. Developers will need to find ways to minimize these costs, possibly through gas optimization techniques or by utilizing gas sponsorship mechanisms.
Paymaster Abuse
There's also the question of how to prevent abuse of paymaster contracts. While gas sponsorship is a powerful feature, it could potentially be exploited by malicious actors. Safeguards will need to be put in place to ensure that paymaster contracts are used responsibly and don't enable spam or denial-of-service attacks.
Community coordination
Adoption of EIP-7702 will also require buy-in from the broader Ethereum community. Wallets, dapps, and other ecosystem participants will need to update their software to support the new transaction types and interactions introduced by account abstraction. This process will take time and require coordination across the community.
EIP-7702's Impact on the Ethereum ecosystem
The changes proposed by EIP-7702 have significant implications for both developers and users of Ethereum.
EIP-7702 Impact on Developers
For developers, EIP-7702 brings a new level of flexibility in designing smart contract wallets. They can implement custom verification logic, enabling features like multi-factor authentication, spending limits, and emergency recovery mechanisms. This opens up a whole new design space for smart contract wallets.
Moreover, the ability to sponsor gas fees through paymaster contracts allows developers to create more user-friendly onboarding experiences. New users can interact with Ethereum applications without needing to acquire ETH first, reducing a significant barrier to entry.
However, these benefits come with some challenges. Implementing account abstraction adds complexity to Ethereum clients and wallets and adds to the learning curve. There are also questions around how to optimize gas costs for user operations and how to ensure that paymaster contracts are not abused.
EIP-7702 Impact on Users
For users, EIP-7702 promises a more seamless and secure Ethereum experience. Smart contract wallets can offer better safety features, like protection against phishing attacks and the ability to recover funds if private keys are lost. Gas sponsorship also makes it easier for users to get started with Ethereum, as they don't need to worry about purchasing ETH for gas fees.
How EIP-7702 Could Shape Ethereum's Future
As EIP-7702 and the concept of account abstraction gain traction, it's exciting to consider how they might shape Ethereum's future.
User Experience
One of the most promising implications is a vastly improved user experience. With smart contract wallets, users will have access to advanced security features, customizable transaction validation, and the ability to interact with Ethereum without needing to manage ETH for gas directly. This could make Ethereum much more approachable and user-friendly, lowering the barriers to entry for mainstream adoption.
Smart contract interactions
Account abstraction also unlocks new possibilities for developers. The ability to define custom transaction validation logic opens up a whole new design space for smart contract interactions. We could see the emergence of new types of dapps and use cases that were previously not possible or practical with traditional EOA accounts.
Identity verification & decentralized governance models
For example, account abstraction could enable more sophisticated identity and reputation systems. Smart contract wallets could incorporate identity verification, credit scoring, or other off-chain data into their transaction validation process. This could pave the way for decentralized credit markets, self-sovereign identity, and more robust decentralized governance models.
Economic models & Incentive Structures
Gas sponsorship also introduces new economic models and incentive structures. We could see the rise of "gas relayers" - entities that specialize in sponsoring transactions in exchange for other forms of value (e.g., token rewards, service fees, etc.). This could create new revenue streams and business models within the Ethereum ecosystem.
Of course, the full impact of account abstraction will depend on the rate and scale of adoption. But with proposals like EIP-7702 and the growing ecosystem of tools like thirdweb, the future looks bright. As more developers start experimenting with these new capabilities, we're likely to see a wave of innovation that could redefine what's possible on Ethereum.
Leveraging thirdweb Tools for EIP-7702
If you can’t wait until EIP-7702 goes live, you can already start implementing account abstraction with thirdweb’s comprehensive toolkit.
Smart Wallets
thirdweb’s Smart Wallets take full advantage of EIP-7702’s capabilities, allowing for gasless transactions and seamless user experiences.
Paymaster
thirdweb account abstraction is compatible to paymasters and bundlers, enabling developers to sponsor gas fees, removing a major barrier to entry for new users engaging with decentralized applications.
Pre-Built SDKs
thirdweb provides easy-to-use SDKs that simplify the integration of EIP-7702, allowing developers to focus on building high-quality applications rather than navigating complex infrastructure.
And when EIP-7702 does go live, we’ll make sure you can make the best of it—always offering the most comprehensive toolkit for every onchain app.
EIP-7702: Account Abstraction goes mainstream
EIP-7702 represents a significant step toward making account abstraction a practical reality on Ethereum. By allowing EOAs to temporarily function as smart contracts, it enhances security, usability, and flexibility without requiring major changes to Ethereum’s protocol.
Although challenges remain, EIP-7702’s simplicity and backward compatibility make it a strong candidate for driving Ethereum’s continued adoption.
With thirdweb’s tools, developers can seamlessly integrate EIP-7702, unlocking new possibilities for smart contract wallets, gasless transactions, and improved user onboarding.