Account Abstraction Use Cases: Simplifying the Decentralized Web

Account abstraction (AA) is hailed as the innovative solution to streamline crypto adoption and speed up the advancement of Web3. It has hijacked the crypto scene and stirred-up significant conversations within the blockchain and developer communities.

So, let's look at what it is and what it can do for users.

AA in a Nutshell

A lot can be said about account abstraction, but a short definition would be that it's a methodology that can be applied to blockchain accounts to gain more flexibility, diversity, and security in user operations. This is possible by leveraging smart contract accounts in favor of EOAs. What this means:

— at the network/protocol level, the basic (EOA) account details are hidden/abstracted away and invisible to the blockchain, which only interacts with a smart contract; the logic of the contract when interacting with the Virtual Machine is programmable, thus flexible

— at the user level, the multi-layered complexities of handling operational load are invisible/abstracted away through a UI that displays human-friendly interactions; under the hood, it's served by a smart contract account instead of an EOA, taking the product shape of a smart contract wallet

Initially introduced by Ethereum co-founder Vitalik Buterin, account abstraction has reached its best-known configuration proposal and robust community support through ERC-4337.

But enough 🤓 geek-talk, let's see what the main uses cases of AA are:

13 Use-Cases of Account Abstraction

Seedless Account

Three words: no seed phrase 🥳

One of the most promising use cases of account abstraction is the creation of seedless accounts. Traditionally, managing private keys has been a significant hurdle for many users because of how difficult storing a mnemonic phrase is. Not to mention that if lost, the account is forever compromised.

AA eliminates this risk and offers a secure set-up for private keys through the account's programmable logic.

Benefit: increased security & ease of use for Web3 account access ✅

New Web Authentication Standard

➡️ Single access point

Account abstraction also opens up new possibilities for streamlining the web authentication process, leading to easy and fast onboarding.

When the WebAuthn standard is integrated, private key authentication is built into browser logic. Smart contract wallets interact with these browsers and recognize the private key, leveraging AA to match/confirm it. This lets the wallet interact directly with the application without inputting login data.

With traditional authentication methods, you must manage multiple sets of credentials and go through a complex authentication process. With account abstraction, users can authenticate themselves instantly. This will revolutionize how users interact with Web3 applications, providing a seamless and secure user experience.

Benefit: simplifies login process on multiple platforms (highly improves UX) ✅

Multi-Signature Authorization

Sophisticated signature schemes ✍️

Multi-signature authorization allows multiple parties to control a single account, providing additional security and control. This is particularly useful for organizations or groups where decisions must be made collectively. Signers can be added or removed without a limit (as opposed to MPC wallets, which can only define a signer set once).

Consider a decentralized autonomous organization (DAO) that wants to make a significant decision, such as making a large investment or changing the organization's rules. With multi-signature authorization, this decision would need to be approved by multiple members of the DAO, ensuring that no single member can make unilateral decisions.

Benefits: increased flexibility in account management + enhanced security ✅✅

2FA as a Security Mechanism

🔐Layered security

Two-factor authentication (2FA) has become a standard security measure in the digital world. With account abstraction, implementing 2FA on blockchain accounts finally becomes a possibility. This adds an extra layer of security, ensuring that users' assets are protected even if their private keys are somehow compromised.

The second form of authentication can be a one-time password or code sent to your device, a fingerprint scanner, a retina scanner, etc. (see account abstraction impact on mobile crypto wallets).

Benefits: reduces the risk of unauthorized transactions + offers you peace of mind ✅✅

Transaction Batching

👉 One approval for multiple operations

Account abstraction can also enable transaction batching, allowing users to bundle multiple transactions into a single operation.

Imagine you want to interact with multiple dApps: normally, you would need to make a separate transaction for each dApp interaction, each incurring high gas fees. With transaction batching, you can group all these transactions into a single multi-operation that needs approval.

Benefits: ease of use & operational efficiency + gas fee savings ✅✅

Session Keys

⏰ Temporary key pre-approval

Session keys are temporary and can be used for a specific period or dApp interaction, giving you more control over your account. They're a solution at the intersection of a user-friendly approach and managed/minimal risk exposure.

For example, you could delegate control of an account to a trusted third party for a limited period. Once the session ends, the key becomes invalid, ensuring your account remains secure. A trader or a gamer can create a session key that expires after 30 minutes and allows them to trade/spend up to a certain limit without confirming each transaction with their wallet.

Benefit: smoothness & flexibility in operations ✅

Recurring & Scheduled Payments

Automatic payments? Yes, please 🤩

Scheduling payments allows you to preset payments in advance, just like you would do now with your traditional Internet banking/payment app. This AA application brings Web3 UX to a Web2 level and helps you save time and effort.

With traditional blockchain transactions, you must manually make a payment each time a subscription is due. With account abstraction, you can set up recurring payments for all your services, automating the process and ensuring your subscription never lapses. This could revolutionize subscription-based services in the Web3 space, providing a seamless payment experience for users.

Benefits: streamlining ops/convenience + peace of mind  ✅✅

Transactions Simulation

👀 See before you sign

Account abstraction wallets also benefit from transaction simulation, allowing users to test their operations in a safe environment before executing them.

Simulations are helpful if you want to interact with a complex smart contract but need clarification on the transaction's outcome, the fees, or how it will impact your account balance. An AA wallet UI can also display the gas costs and indicate/let you choose precisely what tokens to use for paying fees.

User-focused wallets like Ambire also simulate batched transactions at the dashboard level.

This is an actionable, unique AA feature: When simulating a batch, you can spend a token not yet officially in your account. Yes, you read that right, it's AA magic 🪄… actually, no, it's just code: the contract knows the operations bundled together will be consecutive, so it lets you see the hypothetical balance in advance while allowing you to make transactions with tokens from operations in the same bundle.

Benefits: operational transparency + ease of use + avoiding costly mistakes ✅✅✅

Instant Onboarding with FIAT On-Ramps

🔁 Stablecoins for fuel, from the get-go

FIAT on-/off-ramp integrations are not unique to account abstraction wallets, but smart contracts do have a particular advantage: they allow on-ramping directly with stablecoins, bypassing  ETH as a mandatory token for gas. This eases your crypto onboarding process and offers flexibility in token choice.

As we’re pushing towards Web3, AA wallets are using on-/off-ramping integrations not only to fund or cash out but also with gift platforms, voucher programs, etc., opening up a whole range of Web2 applications for Web3.

Benefits: accessibility & UX improvement ✅✅

Withdrawal/Spending Limits

👮‍♀ ️Expense limit management

Account abstraction can also enable you to set withdrawal or spending limits on your accounts.

For example, suppose you're worried about the risk of an account being compromised. In this case, you can set a withdrawal limit to ensure that any possible attacker cannot drain your funds at once or transact more than a specific limit you set.

Benefit: increased security & asset protection  ✅

Account Inheritance/Social recovery

🫴 Leave your crypto to your loved ones

Planning for the unforeseen is part of any security model: with account abstraction, you can also enable an "inheritance" function, meaning you can decide which users (heirs, frens, charities, etc.) can access/receive your crypto assets in the unfortunate event of your demise.

Benefits: asset transferability + security + peace of mind ✅✅✅

Gas Abstraction Mechanisms

Gas is no longer a pain in the 😇

Yes, the painful subject of gas and network fees has finally found solutions through account abstraction. Smart contract wallets offer some innovative gas perks: paying for fees in stablecoins or other ERC-20 coins, gas abstraction mechanisms that help you pay fees in any token from your portfolio (see Ambire's Gas Tank) while also receiving cashback and savings, or even gas sponsorships (the platform itself subsidizes the costs).

Benefits: savings & cashback for fees + flexibility in payment across chains ✅✅

Support For Quantum-Secure Algos

🫡 Future-ready.

Quantum computing is still not a [big] thing, but its advent is inevitable. Account abstraction enables smart contract wallets to align with quantum requirements because they are upgradeable. By design, smart accounts are not only bound to ECDSA signatures (the only ones used by EOAs), and their custom logic is programmable, so they will be able to implement quantum-secure signature algorithms.

Benefits: security + future-proof ✅✅

Conclusions

AA enhances the overall user experience in the crypto realm by bringing significant improvements in operational speed, cost, security, flexibility, and convenience. With such a strong impact, account abstraction is in poll-position to drive the expansion of Web3 and blockchain applications for multiple industries, not just fintech.

Indeed, AA's potential applications are vast and varied but yet to be fully explored, so there is still room for growth: we are still in the pioneering phase, and there's much work to be done regarding standardization, infrastructure development, or cross-industry research and implementation.

As a user, the advantages of account abstraction are overwhelming and undeniable, so there's really only one question left in the end: do you already have an AA account set up?

Let's go 🚀

​​Interested in Ambire? Follow us:
Discord | X (Twitter) | Reddit | GitHub | Telegram | Facebook