Experts Assess Impact of EIP-3074 on Ethereum Wallets

In preparation for the Pectra hard fork, Ethereum developers and the community discussed EIP-3074, designed to add new features to crypto wallets. 

The proposal is expected to make a certain type of wallet — externally owned accounts (EOA) — more programmable and enable authorization through smart contracts. 

Georgios Konstantopoulos, CTO of Paradigm, stated that EIP-3074 is “of great significance.” He believes it will “increase wallet UX tenfold.”

EIP-3074 is coming in the next Ethereum hard fork.

This is a big deal. Wallet UX will 10x.

Congratulations to Ethereum and the EIP-3074 sponsors.

Reth has already implemented and tested it. We are fans.

Let’s go. https://t.co/lUiK2kb3UT

— Georgios Konstantopoulos (@gakonst) April 11, 2024

In the Ethereum blockchain, there are two types of wallets: the more popular EOAs (such as MetaMask and Coinbase) and contract accounts (Argent and Safe).

EOA owners are provided with a pair of keys — private and public. The second type involves wallet management through code, thus they cannot initiate transactions themselves. 

Previous proposals like ERC-4337 aimed to simplify EOA usage through account abstraction, allowing cryptocurrency recovery via smart contract functions. This feature also includes the ability to pay gas fees in ERC-20 tokens and automate payments.

EIP-3074 is another step in this direction, delegating transaction capabilities to smart contracts. The proposal will allow for transaction batching and paying fees on behalf of other users. 

Ethereum Foundation developer Yoav Weiss highlighted a key difference between EIP-3074 and ERC-4337. According to him, “the former focuses on leveraging execution abstraction, while the latter aims to benefit from account abstraction across all EVM networks, albeit in a non-standard, less efficient way.” 

However, not everyone supported EIP-3074. A co-founder of Safe expressed concern that the proposal lacks a “clear path to full account abstraction” and negatively impacts its adoption.

Argent co-founder Itamar Lesuisse believes the solution could pose a significant security threat, potentially allowing attackers to “drain the entire wallet with a single offchain signature.”

It should allow a scammer to drain your entire wallet with a single offchain signature. I expect this will be a major use case…

— itamar.eth (@itamarl) April 11, 2024

Buterin’s Alternative

To ensure greater security, Ethereum co-founder Vitalik Buterin proposed improvements for the feature. 

His approach involves creating a new type of transaction, similar to EIP-2930, which is compatible with EIP-3074 processes by converting them into optimized code.

According to Buterin’s idea, AUTH and AUTHCALL will be replaced with simpler verification and execution functions related to EOAs. This change maintains operational integrity and enhances the authorization process’s efficiency.

The developer noted that this approach would require minimal network changes, as EIP-3074 supports direct compatibility with account abstraction.

Additionally, Buterin’s proposal allows EOAs to temporarily perform contract functions, ensuring compatibility with the current architecture.

Despite numerous advantages, including support for a unified code ecosystem, the Ethereum co-founder pointed out some critical drawbacks of the approach, including issues of trust and centralization. 

“It seems that any proposal aiming to utilize EIP-3074 through ‘privilege de-escalation’ (also known as additional keys) will face a similar issue,” Buterin concluded.

Previously, the programmer discussed the benefits of Binius, a new zero-knowledge proof system.

Back in March, he described the next five years as “crucial” for Ethereum’s mass adoption and its acceptance in the “real world.”

In April, Buterin shared details of the next phase of the project’s roadmap — The Purge. It aims to simplify the network’s structure and reduce node load.