- To improve wallet functionality, EIP-3074 enables EOA to deploy smart contracts for tasks like fee payments in tokens.
- Critics worry about security lapses and the possibility of major wallets enforcing gatekeeping, which might impede innovation and result in internal regulation.
With the upcoming Pectra upgrade, which is expected to launch in late 2024 or early 2025, the Ethereum blockchain is ready for a major change.
The aforementioned upgrade represents a significant advancement in Ethereum’s extended plan to provide “account abstraction,” a structure that streamlines user engagement with blockchain technology by augmenting wallet features.
EIP-3074: Bridging EOA and Smart Contract Wallet
Ethereum users have historically used what are referred to as Externally Owned Accounts (EOA), which have fewer features than the more flexible smart contract wallets (SCW).
With SCW, which Ethereum’s EIP-4337 first introduced in March 2023, a plethora of additional capabilities are available, such as transaction fee payment in alternative tokens like stablecoins, direct debit settings, and programmable spending limitations.
The introduction of two critical operations—AUTH and AUTHCALL—by the integration of EIP-3074 into the Pectra upgrade is poised to completely transform the way EOA functions.
Through these activities, EOA will be able to assign particular functionality to smart contracts, enabling users to bundle transactions to reduce fees, pay transaction fees using tokens other than ETH, and even enable credit card companies to make retroactive withdrawals from wallets on their behalf.
Security Issues and Regulatory Obstacles
Notwithstanding the positive outlook surrounding these advancements, there are many who have criticized EIP-3074. There have been concerns expressed about possible security flaws that could arise if the “invoker,” or smart contract, is compromised. This could put user money in several accounts at risk.
Furthermore, concerns exist regarding the possibility that wallets such as Metamask could take on the role of gatekeepers, regulating which apps and invokers are allowed to use EIP-3074. This could possibly hinder innovation and result in internal regulation.
Furthermore, detractors contend that although EIP-3074 improves accessibility and user interface, it falls short of fully utilizing the security benefits of account abstraction, in line with what ETHNews previously disclosed.
This might make it more difficult for smart account wallets to reach their full potential in the future.
According to Martin Köppelmann of Gnosis, introducing EIP-5003, which was based on EIP-3074, would have been a more ambitious approach and would have completely achieved these possibilities.
The market’s reaction to these technological developments, meanwhile, seems to be strong. The price of ETH is currently trading at $3,185.25, according to CoinGecko, despite a minor decrease of 1.27% over the previous day. Ethereum has performed very well over the last week, rising by 3.60%.