5 Ways Account Abstraction Will Make Decentralized Products Easy to Use

Though the term has been gaining momentum on crypto Twitter, account abstraction is more than a trend or narrative in the world of Web3. It’s a transformative way to store and manage cryptocurrency, NFTs and other digital assets. So what exactly is account abstraction (AA)?

According to Julien Nisel, abstraction means every account is a smart contract that can contain logic and implement flow, such as Social Recovery, Fraud Monitoring, Multi-calls, and so on.

One way to think about account abstraction is that it allows a user account to dictate certain “rules” of a transaction whereas legacy accounts operate exclusively at the behest of parameters set by the contracts they interact with.

Legacy cryptocurrency accounts broadcast their transaction and are only subject to the rules of the smart contract.

Account Abstraction (AA) allows users to set certain rules of their transactions for increased security and convenience.

The current norm of the industry is that “dumb” accounts are interacting with smart contracts. Why not have smart accounts to even the playing field? With this in mind, let’s look at examples of how account abstraction will make non-custodial DeFi, Web3 gaming, and crypto asset management easier for everyone.

1 — Session Keys (Perps Trading and Gaming)

With legacy accounts, every on-chain transaction requires a signature. It’s convenient enough if a user is only sending or swapping a few times a week, but what if that user makes multiple transactions during a specific period of time?

One of the reasons centralized exchanges continue to attract liquidity, even from Web3 natives, is because of the “login once and trade” convenience they offer. Decentralized alternatives like GMX require users to sign every time they move a stop loss, change their profit target or scale into a position. With AA, they won’t have to.

How does it work?

Secondary accounts, or child accounts, are created through permissions. While these accounts have access to the same funds as the user’s primary account, rules are implemented so that they can sign once and remain “unlocked” for a period of time, or until the user revokes those permissions.

With AA, users sign once and get a CEXy experience without surrendering custody of their collateral.

Using account abstraction, traders on Helix would only sign once upon connecting their wallet, and would not be prompted again until their trading session ends.

In the hypothetical example above, Injective’s Helix offers traders a “sign-in” style experience wherein they create a session key upon connecting their wallet, and are not prompted to sign again for the remainder of their session.

This same principle applies to blockchain gaming. How much fun would a game be if every action required players to sign a transaction? With Session Keys, players sign once until the gaming session ends.

2 — Asset Inheritance

No one can guarantee when the markets will go up or down. But I can guarantee a day will come when you won’t care because you’ll be dead. And if you self-custody your assets, they might die alongside you.

Seriously — what is your plan to pass on your assets? Most solutions require some trade-off between recoverability, and security. Account abstraction makes non-custodial inheritance possible.

Inheritance of assets will be released SOON in the standalone version of Obi Wallet, available in Obi Labs.

How does it work?

Users create a secondary account with delegated access to their assets, but only after some conditions have been met. If the parent account has gone dormant for a set period of time (ie. no transactions for 12 months), then the secondary account gains access to user funds.

In the Obi Labs example, funds are accessed on a scheduled drip for enhanced security. Setting up inheritance can also serve as a last resort to recover your assets if you manage to lock yourself out of your account.

3 — Subscriptions

Pull-transactions are practically impossible with traditional cryptocurrency accounts. That’s why entire web3 businesses have been built on some combination of escrow/subscription payment models.

AA makes non-custodial subscriptions possible, without sending funds to a third-party account, or overpaying the subscription amount.

How does it work?

In order to begin a subscription, a user allows the service’s account to spend a specific amount of their funds in a specific recurring time period — for example, monthly. This service’s account can then pull without needing to prompt the user to sign each and every month.

The user can cancel any subscription at any time, revoking this spend permission entirely.

This hypothetical example shows how Shopify can easily request users set up a limited spend account at $39/mo which would create subscription payments with limited user risk and exact payment amounts.

In the example above, Shopify would request a signature from customers who choose to pay in crypto. Upon signing, that customer would create a secondary account that would automatically have limited access to their funds at $39 USDC per month.

4 — Seedless Onboarding

Managing seed phrases is quite possibly the worst part of the crypto user experience. Asking someone to scribble 24 words on a piece of paper that could represent a large portion of their net worth is scary, and there’s no lack of horror stories to go around.

How does it work?

With AA, wallets can replace the inconvenience and risk of mnemonic (pronounced “moronic”) phrases. Instead of relying on a single point of failure, abstracted accounts can provide multi-factor authentication using universal characteristics of an individual:

• Something they are (biometrics)
• Something they know (password)
• Something they have (credit card)

The example above gives users the option to choose between a traditional seed phrase, or seedless multi-factor keys made possible by account abstraction.

Obi plans to integrate seedless onboarding with an already popular wallet soon, giving users the choice either to onboard with a legacy seed phrase, or to use multi-factor authentication. Obi and our partners DO NOT store user information during the creation of their keys.

5 — Fee Lending

One of the most frustrating occurrences in crypto is running out of assets for gas fees and scrambling around to find 0.01 ETH or some other native asset just to transact again.

“But I’ve got thousands worth of alts, why can’t I just use those?”

We’ve all been there — and depending on if you have a second wallet or exchange account — it might be easier to ask a friend for some spare change. Does AA solve this problem? Of course it does.

How does it work?

Fee lending is slightly different from other account abstraction models in that a small portion of assets can be allocated from an entity that’s willing to provide the fees. This service could, in theory, be performed by an open market. Once a user borrows fees, they incur a debt that’s repaid to the lender on their next outbound transaction.

OpenSea users can make offers on unlisted NFTs. These offers expire after a certain period of time, causing a race against the clock if the seller wants to accept the offer, but doesn’t have enough to cover fees.

In the example above, our user has just accepted an offer for their expensive ape NFT. Despite their new found riches they don’t have enough ETH to cover the transaction fee. OpenSea would lend the fees to said user to complete the transaction and immediately recoup the debt upon settlement.

Obi’s Account Abstraction Modules

Obi is modularizing the examples above, and offering them in a quick and easy SDK that any layer1, application or wallet can deploy.

If you’re interested in testing our suite of modules in a live environment, join the Obi Labs beta group and download the iOS Testflight or Google Play beta versions now.