Cointime

Cointime

Download App
iOS & Android

Why the Future of Ethereum is Smart (Accounts)

From Safe by deb©hia.eth, Lukas Schor

cover-ethereumsmartaccounts

In the dynamic landscape of Ethereum, the traditional concept of digital ownership through externally owned accounts (EOAs) is revealing its limitations. As Ethereum's ecosystem grows, incorporating more complex applications and expanding through layer-2 scaling solutions, it becomes evident that our foundational tools for ownership and interaction need an overhaul.

The transition to smart accounts is not just a technical upgrade; it's a necessary evolution to make Ethereum truly accessible and secure, as also stated by Vitalik Buterin.

While the path to transition will come with its own set of challenges, the outcome will make Ethereum finally suitable for the masses.

Challenges of EOAs

EOAs are the current standard for user interactions on Ethereum. Most wallets and application are leveraging EOAs today. It’s a simple account type that is native to the Ethereum blockchain and essentially allows a private key (often represented with a secret phrase / seed phrase) to perform operations on the account.

But this simple logic also makes EOAs fundamentally limited. They lack the capability to perform complex operations or automations. Users are required to learn about private keys, gas fees, ERC-20 approvals and more technical concepts early on. This creates challenges for onboarding and overall accessibility for many user groups.

The limitation of EOAs not only undermines the user experience but also poses serious security risks. Compromised or misplaced private keys associated with EOAs can lead to irreversible losses. And there is a general lack of security features such as allow- or deny-list functionalities or transaction thresholds. Research showed that over $3.8B was lost due to crypto hacks in 2022 alone.

The full potential of digital ownership on Ethereum requires a more flexible and powerful type of account.

What are Smart Accounts?

While EOAs leverage native authentication logic from Ethereum, smart accounts are based on smart contracts which define the authentication rules. This enables smart accounts to be freely programable. This flexibility provides completely new design spaces to solve long-lasting UX and security challenges of Ethereum such as cross-chain interoperability and key management. An Ethereum standard implemented in 2023, ERC-4337, further empowered smart accounts by making them a primary account type on the Ethereum blockchain.

Benefits of Smart Accounts

The evolution from EOAs to smart accounts is similar to the leap from cell phones to smartphones, unleashing a wave on innovation, use-cases and customizations for different user needs. Smart accounts will fundamentally level up the security and UX of Ethereum with features like:

  • MultisigsWallets that are controlled not just by a single private key but leverage multiple private keys, potentially controlled by different individuals or companies
  • Seedless onboardingAllow users to onboard with a social account (Google, etc.) or email, while still being able to migrate to a more trustless setup at a later point
  • Batched transactionsCreate more seamless dapp interaction that bundles multiple onchain actions into one single transaction
  • Sponsored transactionsAllow applications or even entire chains to sponsor gas fees, massively increasing the UX of web3 interactions
  • Key rotationDetach signing key with the account, allowing to exchange the signer setup without having to migrate assets to a new account
  • AutomationReplicate known patterns of automations that are common in web2 / traditional finance such as subscriptions
  • Security mechanismsEnable onchain security features like allow- and deny-lists, blocking of interactions with malicious contracts, etc.
  • Hybrid custodyAllow accounts to be co-managed by trusted third-parties, enabling recovery or fraud prevention that give users peace-of-mind.

The tip of the iceberg: Smart Accounts unlock a range of UX and security benefits

First Slowly, Then All at Once

The shift towards smart accounts is met with several challenges, primarily due to the widespread use of EOAs and the optimization of many applications and wallets today. However, layer-2 solutions present a new opportunity to redefine the standard by prioritizing smart accounts from the outset.

In 2024 we might see the tipping point for smart account adoption, with general momentum on the builder side (mostly accelerated by ERC-4337) and entire L2’s switching to making smart accounts the default. Also, there is a lot of new catalysts on the horizon like Coinbase leveraging smart accounts, and cross-chain interoperability enabled through smart accounts.

A recent proposal to the core Ethereum protocol, EIP-3074, is creating another stepping stone. EIP-3074 can provide some smart account functionality to legacy wallets and when combined with another Ethereum protocol upgrade, EIP-5003, would allow not just migrating, but fully converting legacy wallets into smart accounts.

The combination of two upgrades to the Ethereum protocol, EIP-3074 and EIP-5003, can enable a seamless transition from existing EOAs to smart accounts.

Through the transition to smart accounts, Ethereum will become a more viable option for less technical audiences, use-cases and major enterprises building solutions on Ethereum, creating a positive flywheel for smart account adoption.

Safe’s Mission: Make every Ethereum Account a Smart Account

The core mission of Safe is to accelerate the transition to smart accounts. Through open-source technologies and ecosystem support initiatives, we promote the benefits of smart accounts and enable users and developer to take advantage of them. To date, Safe has already onboarded over $100B in digital assets to smart accounts, by over 8 million users.

A full list of the 200+ ecosystem applications can be found at ecosystem.safe.global

Comments

All Comments

Recommended for you

  • Binance Reports Initial Findings on Security Incident: Approximately $2.85 Billion in Assets Frozen or Intercepted

    According to Binance's official disclosure, the security incident on October 29 involved approximately $6.34 billion in digital assets, with about $2.85 billion in assets frozen or intercepted as of the report's release. The amounts are subject to verification and affected by market price fluctuations. Binance's preliminary investigation indicates that attackers infiltrated employee devices through fake job interviews and malicious software downloads, subsequently using internal AI tools and stolen credentials to access wallet signature services, bypassing normal withdrawal processes to initiate transactions. The attackers also exploited the Ethereum EIP-7702 authorization mechanism, allowing malicious contracts partial execution rights over hot wallets. Binance stated that the company will bear the financial impact of the stolen funds; as of October 31, 98% of the affected token assets have been replenished, while the remaining assets with lower liquidity are still being purchased. The company has closed the identified attack vectors and is hiring independent security experts for further review.

  • U.S. Stock Indices Open Mixed, Most Tech Stocks Rebound

    The three major U.S. stock indices opened mixed, with the Dow Jones Industrial Average down 0.36%, the S&P 500 up 0.09%, and the Nasdaq Composite up 0.36%. Among popular stocks, Nvidia rose 2.17%, Apple fell 3.8%, Microsoft increased by 0.66%, Google-A gained 0.76%, Amazon was up 1.39%, TSMC rose 1.4%, SpaceX increased by 1.33%, Tesla was up 0.46%, Meta gained 1.03%, Broadcom rose 1.44%, SK Hynix increased by 2.61%, Micron Technology was up 2.62%, AMD rose 2.27%, ASML gained 1.92%, Cisco increased by 0.49%, Oracle rose 1.91%, Intel was up 1.83%, Dell Technologies-C gained 2.45%, and ARM rose 2.04%. Apple opened nearly 4% lower, with CEO Tim Cook stating during the earnings call that rising memory prices are dragging down the company's gross margin for the upcoming quarter, and he expects memory costs to be higher in the future.

  • Meta Plans to Issue $15 Billion in Dollar Bonds

    On November 3, Meta plans to raise approximately $15 billion through a dollar bond issuance, which is part of its cross-border bond financing. Previous reports indicated that Meta aims to raise at least $20 billion through the issuance of dollar and euro bonds, with the financing scale potentially expanding further based on investor demand.

  • Central Bank's Pan Gongsheng: Ensure Stable Operation of Financial Markets

    On November 3, the 25th session of the Standing Committee of the 14th National People's Congress held its second plenary meeting at the Great Hall of the People in Beijing. The meeting listened to a report on financial work delivered by Pan Gongsheng, Governor of the People's Bank of China, on behalf of the State Council. The report outlined the main progress and achievements in financial work since October 2025, the current economic and financial situation, and the challenges faced. It proposed considerations for future work: to continue implementing a moderately accommodative monetary policy to create a suitable monetary and financial environment for the sustained and improved development of the economy; to further strengthen and improve financial regulation, continuously enhancing the quality and effectiveness of supervision; to effectively implement monetary policy tools that support the capital market, consolidating and improving mechanisms for stabilizing the capital market. The goal is to maintain the stable operation of financial markets, including stocks, bonds, and foreign exchange, and to uphold the baseline against systemic financial risks. (Xinhua News Agency)

  • CFTC Chair Announces Approval for U.S. Listing of Equity Perpetual Futures

    On November 3, Michael S. Selig, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), announced that equity perpetual futures (Equity Perps) can now be listed and traded on securities exchanges that have obtained CFTC-designated contract market status and completed notification registration with the SEC. Selig stated that this move is a significant advancement, allowing U.S. market participants to use perpetual futures for risk management and price discovery within a regulated framework, thereby preventing capital from flowing to unregulated platforms overseas. The implementation of this product is based on the Commodity Futures Modernization Act of 2000 and a regulatory memorandum of understanding between the CFTC and SEC. For a long time, innovative products like securities futures and equity perpetual futures have been stuck in a regulatory gray area due to unclear jurisdiction between the two agencies. Now, both parties have reached coordination, clearing the compliance path.

  • ETH Surpasses $2300

    Market data shows that ETH has surpassed $2300, currently priced at $2300.25, with a 24-hour increase of 0.92%. The market is highly volatile, so please ensure proper risk management.

  • Insiders: Anthropic's Usable Computing Power to Reach 3.5 Gigawatts by Year-End

    AI giant Anthropic submitted its S-1 filing last week and is expected to complete a record IPO this month, stirring Wall Street sentiment. On Monday, the company updated its prospectus, revealing impressive growth data, but also highlighting significant expenditure risks. Over the past year, Anthropic has signed numerous computing power procurement contracts to secure resources for training and operating large AI models, betting that soaring demand can cover substantial investments. The updated S-1 shows that Anthropic's revenue for the third quarter reached $17 billion, a twelvefold year-on-year increase and a 47% rise from the second quarter; however, it reported a net loss of $23 billion, with the growth rate slowing from 144% in the previous quarter. By 2045, Anthropic's total commitments for data centers, chips, and computing power procurement could reach $895.4 billion, with nearly $70 billion in contract payments due within the next 12 months. Two insiders revealed that by the end of this year, the company's usable computing power will reach 3.5 gigawatts, enough to supply all households in Chicago; the target is to double this capacity next year. Anthropic is even deeply involved in data center design, hiring infrastructure and supply chain experts, and procuring hardware such as cooling systems from contractors. Its primary competitor, OpenAI, is also making massive investments in computing power, with insiders indicating that OpenAI expects total computing power investments to reach about $750 billion by 2030.

  • Spot Gold Falls Below $3900 per Ounce

    Spot gold has fallen below $3900 per ounce, declining by 1.19% during the day.

  • U.S. Stocks to Trade 'Around the Clock': Nasdaq to Implement 23-Hour Trading Starting December 6

    On November 3, Nasdaq announced that since its establishment in 1971, the regular trading hours for U.S. stocks have long been maintained from 9:30 AM to 4:00 PM Eastern Time. Although pre-market and after-hours trading have been available for many years, the core trading framework has remained unchanged for over forty years. This December, this pattern will undergo a significant change—Nasdaq will officially launch a '23/5' trading system on December 6, with only a 1-hour market closure each day, allowing for continuous trading for the remaining 23 hours.

  • BTC Surpasses $77,000

    Market data shows that BTC has surpassed $77,000, currently priced at $77,001.78, with a 24-hour decline of 1.94%. The market is experiencing significant volatility, so please ensure proper risk management.

Daily Must-Read

Popular Activities

RaveDAO at Terra Solis by Tomorrowland: A Female-Led Techno Night Where Web3 Culture Converges

RaveDAO at Terra Solis by Tomorrowland: A Female-Led Techno Night Where Web3 Culture Converges

April 30 - April 30
Dubai

Popular Tags

Cointime
News
Contents
RSS
Company