Loopring Smart Wallet: The Next Evolution

The next evolution of the Loopring Smart Wallet has arrived as we take it Multi-Network. Now you will be able to deploy multiple Smart Accounts using the same address across various networks, all managed by a unique EOA wallet.

To better help you understand all of the new changes coming to the Loopring Smart Wallet, let’s take a deep dive into our thought processes behind the new wallet as well as look at a breakdown of the different types of wallet options.

EOA Account vs. Smart Account

First, let’s take a close look at how a Smart Wallet differs from a typical EOA (Externally Owned Account) wallet. Unlike EOA, Smart Accounts are smart contracts deployed on a target network. Essentially, a Smart Account comes into existence only after the user spends network fees to deploy it on-chain. This deployment fee can be significant, particularly on networks with high gas fees like Ethereum.

For an EOA wallet, once you know the private key, you have full access to accounts on EVM-compatible networks at that address. In contrast, for a Smart Account, you need to deploy a smart contract individually on each desired network, and each smart contract is an isolated entity.

Multi-Network Support

Certain conventional uses of EOA wallets become unconventional for Smart Wallets. A prime example is cross-network functionality. With EOA wallets, once a user has control on one network, they can access the same address on other EVM-compatible networks because each EOA account shares the same private key. However, with Smart Wallets, the situation becomes more complex. Each Smart Account is a smart contract deployed on each specific network even at the same address.

Most Smart Accounts have an owner role, who can initiate transactions on behalf of the Smart Account, akin to owning the Account. The owner can be replaced via the social recovery feature of the Smart Account implementation. With social recovery, the majority of guardians must approve to reset the owner of the Smart Account to a new one.

While social recovery is a promising security solution, which relieves users from memorizing seed phrases, it also comes with some costs. Users must pre-set guardians for each smart contract deployed on each network. In the case of recovery, users need to conduct operations for each smart contract on each deployed network (one-by-one), incurring a fee for each operation. This process can be tedious and potentially costly.

Moreover, with the rise of Ethereum Layer 2 solutions and various Ethereum-compatible Layer 1 networks, managing multiple Smart Accounts under the same address poses challenges. If a user loses access to their Smart Accounts deployed across multiple networks, they must individually recover each account, each operation incurring gas fees, which presents a cumbersome user experience.

As Loopring expanded its focus from an Ethereum-only Smart Wallet to a multi-network strategy, it encountered this dilemma. On one hand, users need an easy way to deploy multiple Smart Accounts under the same address; on the other hand, they need a seamless method to save and restore wallet states across networks. Social recovery isn’t efficient or user-friendly in a multi-network scenario. Thus, Loopring sought a different solution.

Loopring’s Approach for Multi-Network Support

After careful consideration, Loopring has decided on the following approaches:

1. Trustless Management: Users now have access to the Seed Phrase of the Smart Account owner. The app reminds users to back up this Seed Phrase upon wallet creation. This means social or cloud recovery is no longer the only way to recover your account(s). Recovery via this Seed Phrase is now possible instead.
2. Social Login Options: Users can quickly deploy a Smart Account by logging in with their Google/iCloud account. The Seed Phrase is encrypted with a password and uploaded to the user’s trusted cloud drive. Proper access controls prevent accidental deletion of the file and unauthorized access by other apps. Loopring does not have access to this encrypted file.

Users still have the option to create a Smart Account with guardian protection (social recovery). In this case, users must understand that they need to set up guardians separately for each account on each network they want to deploy. In the case of recovery, they will need to recover each deployed Smart Account one by one — by either Cloud recovery (if setup) or by Social (guardian) recovery. To learn more about the benefits and trade-offs for each option, you can check out our full guide here.

Key Terms in Loopring Smart Wallet

Below is a list of terms that will be commonly used when accessing the Loopring Smart Wallet app:

• Smart Account: The smart contract deployed on the dedicated network.
• Wallet (Smart Wallet): The entity uniquely identified by its Wallet address. In the context of a Smart Wallet, it includes multiple Smart Accounts deployed on various EVM-compatible networks. All Smart Accounts associated with the Wallet address share the same Owner (EOA wallet), unless the user changes the Owner of a Smart Account. As long as the user can import the Owner’s Seed Phrase, the Wallet and all associated Smart Accounts can be restored using this.
• Wallet Group: Each Seed Phrase can generate multiple Wallets (multiple addresses). To minimize the effort of Seed Phrase backup, Loopring allows multiple Wallets to be created from the same Seed Phrase within given rules. These Wallets are grouped into one Wallet Group governed by the same Seed Phrase.

Here is a brief figure regarding how various entities are organized.

Decentralization Effort

One important aspect of this new approach is Loopring’s effort to decentralize the solution, removing the previous dependency on Loopring centralized services. This new effort involves two major changes:

1. Cloud Backup Mechanism: Previously, cloud backup relied on Loopring’s centralized service to verify the user’s identity to retrieve the encryption key. This safe solution included a middleman service, which posed a risk if Loopring’s service was down. The new method allows users to pre-set an encryption password themselves. This password encrypts the Seed Phrase, which is then saved to a trusted cloud drive. Loopring does not have access to this.
2. Official Loopring Guardian: In our previous Smart Account creations, the Loopring Guardian was automatically added. Each time approval was needed, users interacted with this Loopring service to verify 2FA information. To fully decentralize the Loopring Smart Wallet, the Loopring Guardian will not be automatically included in any new Smart Account creations. Users can add other accounts as guardians if they wish, removing any dependency on Loopring services. If users still want to use this Loopring service, they can add the Loopring Guardian, with the understanding that the Smart Account can function properly even without Loopring Guardian.

The Real Value of a “Smart” Wallet

At Loopring, we believe that the true uniqueness and potential of the Loopring Smart Wallet app will lie in the “smart” features coming to facilitate trading and earning. Loopring is developing a new Smart Agent feature, which will enable Smart Wallets to perform many tasks on a decentralized, smart contract basis, direct from their self-custodial wallets. Something typically reserved only for major Centralized Exchanges’ trading bots and not something a user could access in a self-custodial way.

By leveraging the Loopring Relayer and these new smart agents, Loopring aims to unlock a very promising future for all Smart Wallet users. Join us as we introduce these exciting new features and more!

About Loopring

Loopring is an Ethereum Layer 2 zkRollup protocol for scalable, secure DeFi and NFT applications. Loopring builds non-custodial, high-performance products atop our L2, including the Loopring Wallet — a mobile Ethereum smart wallet, and the Loopring L2 web app — an L2 orderbook and AMM DEX. To learn more, follow us on Medium or see Loopring.org.

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