Original author: Biteye, core contributor Louis Wang
Original editor: Biteye, core contributor Crush
In September 2021, ERC4337 was formally proposed as a standard for account abstraction, aiming to improve the account experience in the Ethereum ecosystem through smart contracts.
By using this method, there is no need to modify the Ethereum consensus layer, making it easier to implement, and any potential increase in gas consumption will be greatly reduced with the development of L2 and the launch of subsequent upgrades.
On February 28, 2021, an important milestone for ERC4337 was reached when the entry point contract (EntryPoint) was deployed to the Ethereum mainnet, and it has since been expanded to over 20 EVM-compatible blockchains.
Since its launch six months ago, an increasing number of users, infrastructure, and dApps have started to build their on-chain applications based on this entry point contract. So, what are the user metrics for participants? How is the performance of infrastructure builders and dApps?
We will explore the performance of ERC4337 since its launch six months ago through an analysis of the entry point contract data.
01 Introduction to ERC4337
The Ethereum account system can be simply divided into EOA (Externally Owned Account) and CA (Contract Account). EOA is the native account of Ethereum, used to trigger Ethereum transactions.
CA is essentially a smart contract, thus providing good flexibility and programmability, which can lead to a better user experience. However, it cannot directly initiate Ethereum transactions, and when using CA, it still cannot escape the problems caused by EOA, such as private key risks.
In the ERC4337 account abstraction standard, users can fully control their own CA and use any verification method they wish for verification, while the task of initiating Ethereum transactions will be carried out by Bundlers.
The simple process is as follows:
Users use CA to initiate UserOperation (UserOp), a new type of transaction proposed by ERC4337, and send it to a separate UserOp mempool.
Bundlers will package UserOp in a transaction in this mempool and initiate a transaction to the entry point contract with their EOA account. Since it is a transaction initiated by Bundlers, the gas will also be paid by them.
The entry point contract is used for standardizing transaction execution and preventing the bundler from being subjected to DoS attacks from malicious transactions. All Bundlers need to call it to execute UserOp.
Users need to pre-deposit gas in the entry point contract to pay the Bundler, or it can be paid by a Paymaster, which can be any third party willing to pay the gas.
If the user has not created a contract wallet, the wallet factory contract will automatically create a smart contract wallet for the user.
02 User Analysis
User Growth
Currently, over 680,000 account abstraction wallets based on the ERC4337 standard have been created, initiating over 2 million UserOps.
From the above figure, we can see that AA's user volume has mainly experienced three growth phases:
The first was brought by the project The Capx App, a learn-to-earn app that rapidly developed by utilizing the advantages of AA's packaging operations for token transfers. The platform has already built an app chain based on zk-rollup technology using Polygon's SDK.
The second growth came from CyberConnect's Cyber Trek event, incentivizing users to create Cyber Accounts based on AA.
The third growth was from ZepetoX, a metaverse project on Arbitrum. Zepeto is a virtual fashion social platform launched by the South Korean internet giant Naver (the parent company of the social app LINE) in August 2018, and ZTX is their new project extended to Web3.
User Activity
The growth of UserOps basically follows the user growth curve, with the only difference being that there are four growth phases for UserOps, as the CyberConnect airdrop was distributed on the Optimism mainnet, requiring users to claim it with an AA wallet.
As account abstraction based on ERC4337 will call more contracts, it will incur additional gas costs, so most UserOps occur on Layer2 chains with lower gas costs.
Among them, Polygon, Arbitrum, and Optimism account for the majority, with shares of 48.89%, 27.25%, and 20.05% respectively.
The art creation trading platform Zeroone on Avalanche went live on August 18, bringing in over 40,000 UserOps, while the Base chain saw a small increase due to the recent Onchain Summer event.
Overall, user activity is gradually increasing.
Looking at the activity of each AA wallet specifically, 88.24% of wallets have been used five times or less. Combining the user growth and UserOp growth charts above, it can be seen that most AA wallet users are brought in by a wave of users from projects, meaning that there are not many additional applications beyond the operations specified by the projects.
There are mainly two reasons for this:
First, most 4337AA wallets are in-app wallets built by the project itself;
Second, because most mainstream projects have not yet integrated AA compatibility. Therefore, there are no situations where users use CyberWallet to claim ZTX commemorative NFTs, which means that user behavior is limited to these apps.
There are also a small number of AA wallets with particularly high usage frequencies, even in the thousands or tens of thousands, such as wallet 0x93, which has initiated over 11,000 UserOps, used by Capx for token distribution, indicating that only a few project parties have use cases and truly leverage the advantages of AA wallets.
User Behavior
Focusing on the scenarios where users use AA wallets on-chain, Polygon has the most diverse interaction scenarios.
CyberConnect and ZTX are the main contracts that AA wallets interact with. From the number of contract calls, the majority of behaviors are mainly direct transfers and NFT minting, accounting for 90% of all user operations.
Taking Polygon as an example, it can be observed that direct transfers are only a small part of user interaction behaviors, but they have the highest usage frequency, which also confirms that only a small number of people have truly found suitable AA usage scenarios.
03 AA Infrastructure
Currently, most AA wallets using ERC4337 are built in a Lego-like fashion, using different third-party modules to build their own in-app AA wallets. The advantage is convenience and easy implementation, but the downside is lack of universality. Later, we will analyze the market situation of various modules and the main participants.
Bundler
Bundlers use EOA to trigger transactions, allowing users to avoid the hassle of EOA. This module has strong public goods properties and is also expected to have a wealth effect.
Bundler's income comes from two parts: gas spread, which is the difference between the maximum priority gas fee and the actual gas expenditure, and the bundler spreads the fixed gas expenditure among multiple users to profit from this friction; and potential MEV (Miner Extractable Value) income, where bundlers, similar to block builders, can join their transactions to capture a portion of the MEV profit when they discover that a user's UserOp contains MEV profit.
Currently, there are approximately 1.5k bundlers, with Pimlico, Alchemy, Biconomy, and Stackup being the most mainstream players, collectively occupying over 97% of the bundler market.
Pimlico, through extensive collaboration with various dApps, holds a 43.48% market share and has packaged the most UserOps.
Bundlers can package multiple UserOps into one transaction, but in reality, 97.18% of transactions only contain one UserOp.
This means that there are currently not enough UserOps, resulting in bundlers being completely underutilized, further leading to almost no profit space for bundlers.
Currently, all bundlers have generated approximately $38k in profit, with 88.38% being at a break-even point. Alchemy leads with $20k in profit, followed by Stackup and Pimlico with $11k and $5.8k, respectively.
Paymaster
As an optional component in the ERC4337 standard, 96% of UserOp gas is actually paid by Paymasters, indicating that the vast majority of users' dApps have enabled this feature, creating a gasless experience for users.
Currently, there are 117 Paymasters who have collectively paid $465k in gas fees, with Stackup, Pimlico, Alchemy, and Biconomy occupying the majority.
Pimlico has paid for the most UserOps, accounting for 43.45% of the total, totaling $144k.
Next, Stackup accounts for 14.5%, while Alchemy and Biconomy account for approximately 16.43% and 23.29%, respectively.
A notable point is that Pimlico's Paymaster pays a significantly lower average Gasfee per UserOp compared to Stackup and Alchemy, resulting in a similar total gas fee payment despite paying for twice as many UserOps.
The potential cause of this difference is that different UserOps call different contracts. Pimlico has paid for a large number of dApp applications and direct transfers, many of which are low gas-consuming operations, leading to the aforementioned difference in gas fees.
Wallet Factory
In terms of market share, currently only ZeroDev monopolizes 62.86% of the market share, benefiting from its collaboration with CyberConnect. The second-ranked is the SimpleAccountFactory from the Ethereum Foundation's official ERC4337 contract repository. There have not yet been large-scale wallet applications, and there are no on-chain cases for wallets like Soulwallet.
04 Conclusion
Since the launch of ERC4337 six months ago, we can see a clear trend of significant growth in both user and transaction numbers based on ERC4337's AA. Each application adopting ERC4337 brings a wave of growth.
However, currently, users and transactions are concentrated on a few chains and a few applications, and the types of UserOps by users are very limited. This is partly because most AA wallets are in-app and lack universality, and also because 4337 is still in its early stages, with mainstream applications not providing login interfaces.
Finding suitable application scenarios for AA is a prerequisite for the wider use of 4337. With the maturity of blockchain infrastructure, we expect to see more application products and full-chain games emerge in the next 12-24 months. As Web3 project business logic becomes more complex and full-chain games naturally become more complex, AA wallets will be key to lowering user barriers and improving user experience.
As one of Vitalik's three designated Ethereum paths, account abstraction is of great significance and is an important prerequisite for achieving mass adoption in the future. We are very much looking forward to and firmly believe that account abstraction will be an important part of the future of blockchain.
References
[1] https://sixdegree.xyz/research/Half-Year-Data-Report-of-ERC4337-by-Sixdegree.pdf
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