• The Ethereum Foundation has announced a major change to the Ethereum ecosystem with account abstraction, which will remove Externally Owned Accounts (EOAs) from the network.
• EIP-4337 upgrades smart contract wallets with elements of account abstraction, such as decentralized bundlers, token fee payment, an alternative mempool and other features.
• The core motivation behind this upgrade is to completely remove any need at all for users to also have EOAs.
Overview of Account Abstraction
Account abstraction is a core advancement in web3 account management that seeks to make user accounts more user-friendly. Initially, the goal was to generalize the web3 account model so that all accounts are treated similarly — regardless of whether they are EOAs or smart contract accounts. The Ethereum Foundation has decided to prioritize smart contract wallets as the default account model for users and is actively working towards removing EOAs entirely from the ecosystem.
EIP-4337: Upgrading Smart Contract Wallets
Security Fellow for the Ethereum Foundation Yoav Weiss announced EIP-4337 while speaking at ETHDenver. This update upgrades the capabilities of smart contract wallets with elements of account abstraction including decentralized bundlers, token fee payment, an alternative mempool and other features. Vitalik Buterin originally proposed this concept back in September 2021 on an Ethereum message board with an idea for “an account abstraction proposal which completely avoids the need for consensus-layer protocol changes”
Goal: Eliminating Need For EOAs
One key aspect of EIP-4337 that has seemingly gone unnoticed by many is its plan to remove Externally Owned Accounts (EOAs) from the ecosystem entirely. According to documentation on the Ethereum Foundation website, this upgrade will “completely remove any need at all for users to also have EOAs” in order to achieve its key goal — allowing users to manage their accounts without having technical knowledge or understanding about how blockchain works underneath it all.
Implications On Scalability & Future Of Web 3
This move towards eliminating EOAs could have significant implications on scalability if it becomes successful as it would reduce node load and allow more transactions per second on Ethereum’s network — potentially making it much faster than what we currently experience today. It could also pave way for new advancements and innovations in web 3 development as developers can focus their efforts on creating better user experiences rather than worrying about technical complexities associated with private keys and other security measures related to traditional accounts management models.
The shift away from externally owned accounts marks a major milestone in Ethereum’s evolution towards becoming a fully decentralized platform where users don’t need any prior knowledge or technical understanding about blockchain technology in order manage their own funds securely without relying on third parties or centralized entities controlling their money flow or access points into digital assets markets around world . With recent developments such as eth 2 staking coming soon , these changes could further accelerate adoption among mainstream audiences who are looking for easy ways into crypto space .
• Ethereum co-founder Joseph Lubin praised SEC Chair Gary Gensler as a “shining knight of decentralization”.
• Lubin spoke candidly about recent regulatory enforcement actions, holding Gensler as a catalyst for driving decentralization.
• Kraken recently settled with the SEC and paid a $30 million penalty for their staking program which was seen as an unregistered security offering.
Ethereum Co-Founder Praises Gary Gensler
Ethereum co-founder Joseph Lubin has praised Securities and Exchange Commission (SEC) Chair Gary Gensler as a „shining knight of decentralization“. At ETHDenver, Lubin discussed recent regulatory enforcement actions, crediting Gensler for driving progress in the decentralized field.
Kraken Settles With SEC
The example of SEC enforcement action against Kraken was used to explain how their staking product was centralized and thus deemed an unregistered security offering under securities laws. The Howey Test is used to determine whether a contract or transaction meets the definition of a security by focusing on investors‘ expectations of profits from others‘ efforts. Kraken settled with the SEC, paying a $30 million penalty over allegations that its staking program was operating unregistered securities offerings.
Gensler Promoting Decentralization
Lubin said that Gensler and the SEC were doing great job encouraging projects to become more decentralized. He called Gensler a „shining knight“ for his efforts in this area. His praise came despite widespread criticism from the crypto community over perceived unfair enforcement actions and recent regulatory rumblings.
Ripple CEO’s Response
Ripple CEO Brad Garlinghouse disagreed with claims that compliance can be achieved through registration alone, saying no such registration process exists yet. He noted that current regulations are outdated which could be preventing innovation in cryptocurrency and blockchain technology fields.
In conclusion, it is clear that there are still issues between regulations surrounding cryptocurrencies and blockchain technologies and companies trying to innovate within this space have been met with resistance from regulators like the SEC. Despite this tension, Ethereum co-founder Joseph Lubin praised Gary Gensler for his efforts to foster decentralization in the crypto industry, calling him “a shining knight of decentralization” at ETHDenver 2021
• The New York Attorney General (NYAG) recently filed a lawsuit against Seychelles-based exchange KuCoin citing concerns over „falsely representing itself as an exchange“.
• The NYAG classified Ethereum, LUNA and TerraUSD (UST) as securities and commodities.
• Coin Center disputes the NYAG’s assessment of Ethereum, arguing that there is a difference between „a token pre-sale and the token itself.“
New York Attorney General Files Against KuCoin
The New York Attorney General (NYAG), Letitia James, recently filed a lawsuit against Seychelles-based exchange KuCoin, citing concerns over „falsely representing itself as an exchange“. The AG added that users could buy and sell „popular virtual currencies, including ETH, LUNA, and TerraUSD (UST), which are securities and commodities.“ This paves the way for Ethereum’s U.S. securities status to be determined in a court of law.
What is the Howey Test?
Applicable securities laws use the Howey Test to determine whether a contract, scheme, or transaction meets the definition of a security. It focuses on resolving if investors paid money in a common enterprise with the expectation of profits from the efforts of others. Although these rules date back to the 1930s, before computers and digital assets, specific cryptocurrencies and Initial Coin Offerings (ICOs) have met this definition according to regulators.
Reactions from Crypto Community
Neeraj Agrawal from Coin Center disagreed with the NYAG’s recent assessment of Ethereum as a security. In support of this view he linked an article arguing that there is a difference between „a token pre-sale and the token itself.“ Lawyer Jake Chervinsky commented that it was one of first times a regulator has claimed in court that ETH was a security. Ryan Selkis hinted at potential coordinated attack on crypto following news about suit being filed by NYAG against Kucoin.
Ethereum Security Status Uncertain
Uncertainty looms over Ethereum’s security status following news about suit being filed by NYAG against Kucoin. If found guilty then it could mean big trouble for cryptocurrency exchanges operating illegally in New York State since they will have to comply with registration requirements under federal or state laws regarding sale or purchase of securities or commodities depending on their jurisdiction .
Despite disagreement from some members within crypto community , Ethereum’s security status remains uncertain pending outcome of case involving Kucoin . Once court decides whether or not ETH is indeed security , then further implications can be drawn upon how it will affect regulation around cryptocurrencies going forward .
• Ripple survey found that 100% of respondents believe crypto and blockchain can result in efficiency and cost savings for payments industry.
• Regulatory uncertainty sole barrier to adoption of crypto payments with 90% saying further growth hinges on regulators providing clear rules.
• Primary benefit of cryptocurrencies and blockchain is their ability to drastically lower transaction costs and time, leading to savings for businesses and consumers.
Ripple Survey Results
A survey conducted by Ripple, Inc. and the U.S. Faster Payments Council has revealed overwhelming support for cryptocurrency and blockchain technology as a means to revolutionize the antiquated payments industry. The survey found that 100 percent of respondents believed that these technologies could bring about greater efficiency, cost savings, faster settlement times, and more transparent capital flows. However, there remains a strong need for regulatory clarity before this evolution can be fully realized with 90 percent stating that further growth in crypto payments adoption depends on regulations being provided by governing bodies..
Benefits Of Crypto In Payments
Crypto-based solutions are expected to save the payments industry an estimated $10 billion dollars in costs by 2030 due to its ability to reduce transaction fees, speed up settlements, eliminate pre-funding requirements and make capital flows more transparent. 97 percent of survey participants also believe that crypto will be playing a significant role within three years in facilitating faster payments worldwide.
Barriers To Adoption
The majority of respondents cited regulatory uncertainty as the primary barrier preventing wider adoption of crypto-based payment systems with only 10 percent expressing confidence that there were no benefits whatsoever associated with them currently available. This lack of clarity regarding regulations has made it difficult for companies working in this space to expand globally without fear of breaking any laws or violating any guidelines set out by governments or financial institutions..
Cost Savings For Businesses And Consumers
Cryptocurrencies and blockchain technology have the potential not only to reduce transaction costs but also shorten settlement times significantly which could lead to substantial cost savings for both businesses and consumers alike who are often charged exorbitant fees when sending or receiving money across borders or even domestically in some cases.. .
Overall, the survey results clearly demonstrate widespread enthusiasm among professionals working in the payment space regarding the potential applications of cryptocurrencies and blockchain technology but suggest that regulatory clarity is needed before these innovations can reach their full potential.