In a recent proposal, prominent Ethereum developers including Vitalik Buterin, Sam Wilson, Ansgar Dietrichs, and Matt Garnett proposed a new transaction type to improve Externally Owned Accounts (EOA).
This proposal, currently in draft status, outlines the creation of a new transaction type that temporarily converts EOAs to a smart contract wallet during transaction execution, providing similar functionality to that described in EIP-3074.
According to the draft proposal, EIP-7702 would allow batching of transactions and sponsorship transactions with payments from different accounts. The proposed transaction type includes a contract_code field and a signature, allowing EOAs to temporarily adopt smart contract functionality.
The core intent is to provide EOA with improved usability and security, solving common problems such as transaction batching, transaction sponsorship, and privilege escalation.
The standard also allows for reduced privileges by allowing users to sign subkeys with limited privileges. For example, a wallet administrator can allow child key holders to use only ERC-20 tokens, only a portion of the wallet balance, or access some applications.
Alternative to EIP-3074
The draft proposal provides an alternative to the existing standard, EIP-3074, which provides many of the same features.
However, EIP-7702 aims to resolve future compatibility issues. Unlike EIP-3074, it does not introduce opcodes that will supposedly become obsolete in the “end-game account abstraction” where all users use smart contract wallets.
Buterin and co-proponents believe that final account abstraction is possible when quantum computing breaks the encryption used in standard Externally Owned Accounts (EOAs) or standard user-controlled Ethereum wallets.
EIP-3074 may also create a caller contract ecosystem separate from the smart contract wallet ecosystem. With EIP-7702, the proposers aim to avoid division of effort.
Despite the potential benefits, Buterin noted that EIP-7702 could face similar criticism because it requires trust in the code and could lead to centralization. He believes all proposals to deal with cuts in powers face the same problems.
continuous development
EIP-7702 is currently in draft stage and its future is unclear.
However, developers plan to include EIP-3074 in Ethereum’s next upgrade, Pectra, in late 2024 or early 2025.
Another related standard, ERC-4337, provides account abstraction capabilities for similar applications, including group access wallets, bundles, and sponsored transactions. Developers deployed the standard to Ethereum in March 2023.
These standards allow services to manage user wallets without directly managing user funds, providing a key alternative to fully centralized services.