AA is not coming. AA is here.

One of the most popular topics at EthCC this year was AA (Account Abstraction). From “Beyond 4337”, and “Account Abstraction Village”, to multiple other panels and presentations, there was plenty of discourse centered on how to approach AA. In this article, we are going to tackle LUKSO’s unique approach to account abstraction and how it aims to move the space beyond the EIP-4337 solution.

“If we can’t solve AA, Ethereum is gonna fail” — @VitalikButerin

“We need to have modular AA features” — @SchorLukas

Status Quo

Although having been a topic of interest since 2015, the topic of account abstraction has garnered significant momentum with the release of EIP standards such as 1271 and 4337.

What is AA (Account Abstraction)?

Let’s start with some definitions.

An account is an entity that can hold native tokens (in its balance). It can be used to perform transactions on a blockchain network. On Ethereum, there are two types of accounts: Externally Owned Accounts — EOAs (controlled by their private keys), and smart contracts (controlled by their code).

A Smart Contract Account operates under code governance, in contrast to the more prevalent EOA implementation, where a private key manages the account.

The main idea behind account abstraction is to transition from EOA accounts to smart contracts-based accounts with arbitrary verification logic that will improve usability and flexibility. When it comes to AA, it is also vital to consider how the account will interact with the blockchain. Allowing flexible authorization logic and decoupling the account from the signer gives freedom to developers to experiment with features such as:

• hardware signers
• social recovery
• multi-factor authentication
• quantum-resistant and gas-efficient signatures
• replacing signers
• multiple signers
• hybrid custody setups

It also gives way to new gas models:

• users don’t need to hold native tokens to send transactions (new currencies for gas)
• protocols can pay for users’ transactions

The most widespread standard currently tackling AA is ERC-4337: Account Abstraction Using Alt Mempool: “An account abstraction proposal which completely avoids consensus-layer protocol changes, instead relying on higher-layer infrastructure.”

This approach defines a system that works without disrupting the current implementation of accounts and transactions. Rebuilding these fundamental building blocks on a live network like Ethereum would be unwieldy because fundamental assumptions around the consensus mechanism, virtual machine, and other critical components would be challenged. As such ERC-4337 proposes a solution that would avoid a disruption to Ethereum’s ecosystem, live applications, assets, and client software.

Now, given that the solution must keep accounts and transactions in their existing form, the only viable option is to add a new system on top of the existing one. Sounds complex, right?

To grasp the complexity of this model, let’s take a practical example and see what it means to submit a transaction from your account with an ERC-4337 implementation.

1. The wallet receives a transaction. However, instead of signing it, it builds a pseudo-transaction called a “UserOperation” that gets submitted to a new special mempool designed for AA.
2. Bundler nodes watch the special mempool and batch multiple pseudo-transactions into a normal transaction that, in its turn, calls a special smart contract called an “Entry Point.” Now it’s time that the normal transaction goes to the regular mempool and gets included in a block.
3. The EntryPoint smart contract divides the bundle of pseudo-transactions and initiates separate calls to individual user smart contracts, which serve as the new “abstracted” accounts. Each call conveys the user’s specific intentions for their respective account. In cases where a particular account smart contract hasn’t yet been created, the EntryPoint is additionally responsible for invoking a designated factory smart contract.
4. The abstracted accounts then verify signatures on the pseudo-transactions and make the desired calls to other smart contracts on behalf of the user. In addition, the account smart contract is also responsible for implementing additional logic for safety checks, checking the EntryPoint, conducting the fee payment, and more.

If you did not fully grasp this, it is not your fault. This approach brings a great level of overhead: a new mempool, new pseudo-transactions, a new fee payment, etc. Although the solution is technically impressive and helps avoid foundational changes to Ethereum, it also introduces a significant amount of complexity.

These new additions mean that it is much more challenging to implement AA safely, avoiding unforeseen repercussions.

ERC-4337 is also still in draft which means it will be some time until the ecosystem adopts and integrates it. And what if another standard will emerge in the meantime? How can we ensure compatibility and standardization?

LUKSO’s approach

To tackle these challenges, LUKSO started with a clean slate. LUKSO was conceived with smart contract-based accounts in mind, thereby ensuring they are interoperable. Additionally, this allows subsidizing early users using a relay service, offering a gasless experience from the get-go.

Smart contract-based accounts (called Universal Profiles on the LUKSO network) bring the advantages of AA without the complexity overhead:

Multiple keys and devices can control your account and social recovery

Losing your seed phrase is a scary thought. Especially to those just starting out in crypto. This pushes users to custodial services or even to give up crypto completely. With LUKSO, you can control your wallet safely across multiple devices with different keys and different permissions. Losing access to a key is no longer a death sentence because it can always be replaced.

MFA (Multi-Factor Authentication) and improved security

On LUKSO you can choose what level of security is needed to execute different types of transactions. This approach allows you to customize your experience and balance between convenience and security for different transactions.

Here are some possibilities:

• Have multiple-factor authentication for transactions over a certain threshold
• Block certain addresses
• Set daily transfer limits
• Get notified when a transaction happens
• See all your assets in your account, without relying on centralized indexing services

The Gasless (Gold) Experience

Your account should be more than just a string of numbers. With Universal Profiles (UPs) you can attach images, descriptions, and names to your account. Your profile is your entry point to the blockchain and LUKSO offers a relay service that will cover your gas as you interact with the ecosystem. When sending a transaction users will not need to hold LYX (or any token for that matter). LUKSO will continue to push for a competitive relay ecosystem that will fuel new, emerging business models (e.g. projects can pay on behalf of their users; users can subscribe to different gas plans, etc).

Final thoughts

As the landscape of Account Abstraction evolves, LUKSO’s forward-thinking approach allows it to adapt and innovate in the rapidly advancing web3 ecosystem. AA is not just on the horizon; it’s here, and LUKSO is at the forefront of this transition. If you want to learn more about LUKSO and its approach to smart contract-based accounts and AA, join the community on Discord and have a look at the documentation.