In a recent proposal, prominent Ethereum developers, including Vitalik Buterin, Sam Wilson, Ansgar Dietrichs, and Matt Garnett, suggested a new transaction type to enhance Externally Owned Accounts (EOAs).
The proposal, currently in draft status, outlines the creation of a new transaction type that temporarily converts EOAs into smart contract wallets during transaction execution, offering functionalities similar to those outlined in EIP-3074.
According to the draft proposal, EIP-7702 would allow for transaction batching and sponsored transactions paid for by another account. The proposed transaction type would include a contract_code field and a signature, enabling EOAs to adopt smart contract functionalities temporarily.
The core intention is to provide enhanced usability and security for EOAs, addressing common issues like batching transactions, sponsorship of transactions, and privilege de-escalation.
The standard would also allow for de-escalated privileges by enabling users to sign subkeys with limited permissions. For example, a wallet administrator could allow subkey holders to spend only ERC-20 tokens, use only part of a wallet balance, or access select applications.
Alternative to EIP-3074
The draft proposal provides an alternative to EIP-3074, an existing standard that offers many of the same capabilities.
However, EIP-7702 aims to address forward-compatibility issues. Unlike EIP-3074, it does not introduce opcodes, which would supposedly become obsolete in an “endgame account abstraction” where all users use smart contract wallets.
Buterin and co-proposers believe endgame account abstraction is likely when quantum computing breaks the cryptography used in standard Externally Owned Accounts (EOAs) or standard user-controlled Ethereum wallets.
EIP-3074 could also create an invoker contract ecosystem separate from the smart contract wallet ecosystem. With EIP-7702, the proposers aim to avoid a division of efforts.
Despite its potential benefits, Buterin noted that EIP-7702 might face similar criticism as its counterpart, as it requires trust in code and may lead to centralization. He believes that any proposal to handle privilege de-escalation faces the same challenge.
Ongoing developments
EIP-7702 is currently in the draft stage, and its future is unclear.
However, developers intend to include EIP-3074 in Ethereum’s next upgrade, Pectra, in late 2024 or early 2025.
Another related standard, ERC-4337, provides account abstraction features with similar applications, including group-access wallets and bundled and sponsored transactions. Developers deployed the standard to Ethereum in March 2023.
Together, such standards allow services to administer user wallets without maintaining direct custody of user funds, providing a key alternative to fully centralized services.
