AA will exist as a high-end account layer in the long term, rather than being the only standard; x402 will complement cross-chain and payment interconnectivity. Together, they will drive Web3 from the geek era to the mass era.

Summary

Ethereum will undergo a significant upgrade named Fusaka on December 3, 2025. This is the third milestone update for Ethereum since The Merge and the Dencun upgrade, aimed at significantly enhancing the network's scalability, reducing transaction costs, and optimizing node operation efficiency, with a particular focus on upgrading and optimizing account abstraction-related features. Account Abstraction (AA), as a major upgrade to Ethereum's account system, aims to address the fundamental security and experience bottlenecks of the EOA era, where "private key equals account," enabling on-chain accounts to possess modern capabilities such as programmability, recoverability, and permission control. The implementation of ERC-4337 accelerates the formation of the smart account ecosystem, but challenges such as high costs, unclear business models, ecological fragmentation, and cross-chain limitations have led to a "technology leading, promotion lagging" adoption process. With the reduction of Rollup costs, BLS signature aggregation, and EIP-7702 providing a painless upgrade path, AA is gradually entering a stage of scalable application. In the next five years, AA will become the "high-end smart layer" of on-chain accounts, but it will not replace EOA; instead, it will coexist with the x402 interoperability protocol, jointly driving Web3 from the geek phase to the mass era and laying the foundational hub value for a unified internet account system.

I. Development History and Comprehensive Landscape of AA Accounts

Ethereum will undergo a significant upgrade named Fusaka on December 3, 2025. This is the third milestone update for Ethereum since The Merge and the Dencun upgrade, aimed at significantly enhancing the network's scalability, reducing transaction costs, and optimizing node operation efficiency, with a particular focus on upgrading and optimizing account abstraction-related features. In Ethereum's system, the evolution of account structure essentially constitutes the core logic of the entire on-chain user experience, asset security, and even industrial upgrades. The dual account system of EOA (Externally-Owned Account) and CA (Contract Account) that we are familiar with today is a technical legacy since Ethereum's launch in 2015. However, as the user base surpasses ten million and Web3 gradually takes on asset custody and user operation infrastructure in the 2023-2025 phase, this system has exposed increasingly severe structural bottlenecks. These bottlenecks not only limit the industry's scalability but also restrict user growth and the realization of real applications. The emergence of Account Abstraction (AA) is precisely to address the inherent structural flaws of Ethereum's account system, enabling the on-chain world to possess "modern financial-level" security, experience, and autonomy, ultimately becoming a reliable asset infrastructure for global users. The core reason for the bottlenecks in the current system lies in the fact that EOA has hardcoded the security model of "private key = asset" into the protocol's foundation. This model is simple in engineering but constitutes the greatest resistance to large-scale adoption in practice.

The operational structure of EOA resembles a "mechanized assembly line," rather than the "one-click execution" familiar to modern internet users. Additionally, in terms of permission control, EOA cannot achieve any fine-grained settings: it cannot set daily limits, define multi-signature rules, create parent-child accounts, freeze partial permissions, or enable automated strategies. EOA is like a universal key that contains all assets and permissions; if it is leaked once, all assets and permissions will be exposed.

Therefore, the Ethereum community began to rethink the question of "what should an account be," and the concept provided by AA is precisely the remedy: an account should be "code," not "private key." Under the AA paradigm, accounts can be programmed, verified, recovered, and upgraded. In other words, the limitations that were hardcoded into the EOA architecture can be abstracted away; wallets are no longer just signature containers but can become "smart accounts" with logic, strategies, and permission systems. The proposal of account abstraction was not achieved overnight but underwent a long design game, with core proposals including EIP-86, EIP-2938, ERC-4337, and the latest EIP-7702. Both EIP-86 and EIP-2938 require modifications to Ethereum's consensus layer, making them difficult to implement; whereas the brilliance of ERC-4337 lies in its construction of AA in a "parallel system" manner, bypassing the need for underlying protocol modifications through UserOperation and Bundler, allowing AA to be seamlessly enabled within the existing Ethereum ecosystem. The architecture of ERC-4337 essentially builds a new channel parallel to the transaction mempool, allowing users to submit UserOperations instead of transactions, which are then packaged, simulated, and aggregated by Bundler before being sent to the EntryPoint contract for execution, thereby enabling contract accounts to actively send transactions, execute in batches, perform atomic operations, and validate multi-signatures. Although the engineering complexity significantly increases, it provides a realistic path to fully enable AA without a hard fork. In the evolution of 2024-2025, Vitalik proposed EIP-7702, hoping to make the transition from EOA to AA more natural, but ecological support still needs to be improved. The significance of AA lies not only in addressing the structural flaws of EOA but also in bringing "generational leaps" in experience, security, and cost capabilities to Ethereum. Firstly, in terms of security, AA enables wallets to have a programmable permission system: users can enable social recovery mechanisms, no longer worrying about losing mnemonic phrases; they can set multi-signature rules, allowing families, institutions, or DAOs to manage funds more securely; they can create parent-child accounts, whitelists, and payment limits; they can even freeze certain permissions or use temporary keys to enhance the flexibility of usage scenarios. The "single point of failure" model of EOA is completely eliminated by AA, resulting in a significant increase in security. In terms of cost, after introducing Paymaster, users can pay gas fees with any ERC-20 token, or even have project parties cover the gas fees, achieving a truly "seamless fee" experience. Additionally, AA supports batch execution and transaction aggregation, significantly reducing the number of signatures and failure costs, thereby greatly lowering the overall cost of complex interactions. In terms of experience, AA brings the interaction experience of Web3 closer to that of Web2 for the first time. Users can execute combined operations with one click, without needing to understand complex concepts such as nonce, gas settings, and signature order; new users can even create wallets without mnemonic phrases, completing account initialization through biometrics, local recovery, or email verification; complex on-chain logic (such as strategy trading, automated liquidation, scheduled execution, etc.) can be embedded in account logic, making on-chain applications feasible as "smart products."

The ultimate vision of AA is to transform blockchain from an "experimental system for technical experts" to a "universal account infrastructure for global users." If the bottleneck of Web3 in the past decade stemmed from the primitive model of "key equals account," then the breakthroughs of Web3 in the next decade will come from the new paradigm of "account equals program." AA is not merely an upgrade of wallets but a complete rewrite of the entire on-chain interaction logic; it not only enhances user experience but also lowers development barriers, allowing DApps to design processes and define permissions like Web2 products, and to build a trustless security assurance system at the account level. As the ERC-4337 ecosystem fully explodes in 2024-2025, the industrial chain of Bundler, Paymaster, AA wallets, modular security plugins, and more will gradually take shape, and account abstraction is transitioning from "concept" to "infrastructure." Just as the evolution from Web1.0 to Web2.0 on mobile devices gave rise to super applications and trillion-dollar industries, the implementation of account abstraction is expected to become the underlying driving force for the next exponential growth of Web3. The limitations of the EOA era are being gradually dismantled, and AA is leading the entire industry toward a safer, more flexible, and more user-friendly on-chain world.

II. Prospects and Challenges of AA Accounts

Account Abstraction (AA) has once again become the narrative core of the Ethereum ecosystem from 2023 to 2025, but after experiencing enthusiasm and expectations, the structural dilemmas it faces have gradually emerged. The long-term prospects of AA are still highly anticipated—it promises a generational leap in security, usability, and automation experience, replacing the primitive model of "private key equals account" from the EOA era; however, in reality, the implementation of ERC-4337 has faced repeated skepticism, being regarded as "loud thunder, little rain." From the dimensions of industrial structure, cost model, ecological collaboration, and competitive protocols, the prospects and dilemmas of AA are intertwined, representing both the future of blockchain account systems and exposing the complexity of its protocol upgrade path.

From the cost perspective, the primary resistance to AA comes from gas fees. Compared to the 21,000 gas of EOA, the average gas for AA's UserOperation on the mainnet is about 42,000 gas, nearly doubling the cost. This is not due to waste but is structural: the validation calls of 4337 include validateUserOp, state access of EntryPoint, reading wallet contract bytecode, logging, initCode deployment, and data encoding overhead. Each step entails additional on-chain computation. Theoretically, it is correct to run complex logic in contract wallets, as true accounts should be programmable, verifiable, and controllable; however, the high costs of Ethereum L1 resources mean that all designs—no matter how elegant—ultimately translate into costs, which become the strongest barrier to adoption. A large number of potential users and projects are thus deterred.

At the commercial model level, another core component of AA, Paymaster, faces the issue of unclear ROI. The structure of Paymaster involves project parties paying gas fees on behalf of users in exchange for user growth or value retention. However, the problem lies in the lack of any mechanism that allows project parties to clearly calculate the causal link of "paying gas → new users → retention and conversion." The vast majority of wallets or DApps initially rely on subsidies to attract users, but once the subsidies disappear, the cost of user migration is extremely low, making it difficult to form network effects. More realistically, the Web3 ecosystem lacks the "advertising, retention, and traffic closed-loop" industrial chain seen in Web2, which often results in Paymaster's expenditures not yielding returns and struggling to develop a sustainable business loop. Therefore, the slow promotion of AA is fundamentally not a technical issue but rather a lack of "commercial traction." The market will not pay for concepts; it will only pay for profits. The issue of ecological fragmentation further exacerbates the dilemma of 4337. The complete stack of AA includes EntryPoint, Bundler, Paymaster, Wallet Contract, and Aggregator, and each wallet vendor and chain may have its own version of implementation. Due to the complexity of AA's structure, users' UserOperations are not directly processed by the chain but must go through Bundler's simulation and aggregation, meaning that even slight implementation differences between ecosystems can lead to "incompatibility." Incompatibility between wallets, high integration costs for DApps, and complex on-chain testing force project parties to reassess the cost-benefit ratio when facing AA. While EOA is primitive, it is extremely simple; AA, though advanced, faces the challenge of "ecological fragmentation" in its early promotion. For the vast majority of small and medium DApps, supporting 4337 does not bring obvious benefits but requires incurring additional technical costs, resulting in the conclusion that "if it can be avoided, it should be."

The lack of cross-chain capabilities also weakens the system-level value of AA. ERC-4337 is essentially an upgrade of the account system for the EVM Layer, relying on EntryPoint, UserOp mode, and EVM's verification logic, making it inherently difficult to extend to non-EVM chains. If a unified multi-chain experience is desired, more intermediate layers, multiple EntryPoints, multiple verifications, and cross-chain message transmissions must be introduced, significantly increasing costs and complexity. The Web3 world is already fragmented across multiple chains, and AA's inability to form a unified account system across chains prevents it from fulfilling the vision of "a unified account standard for Web3." Users' smart accounts on one chain cannot frictionlessly map to another chain, greatly diminishing the scalable value of AA. However, despite the evident structural dilemmas, AA remains a highly promising direction for the future. This is because the evolution trend of next-generation blockchain infrastructure is naturally aligning with AA rather than diverging from it. In particular, the large-scale rise of L2 (Rollup) has structurally alleviated the cost pain points of AA. The data compression capabilities of mainstream ZK Rollups and Optimistic Rollups can reduce the gas costs of 4337 by 70%-90%, while batch UserOperations can further lower the on-chain overhead of individual operations. Therefore, "Rollup + AA" is likely to become the mainstream combination in the next 35 years, relieving the Ethereum mainnet of the cost pressure of high-frequency AA operations. Concurrently, ERC-4337 is also continuously evolving, with the most significant change being the introduction of the BLS aggregation signature mechanism. By aggregating multiple user operations into a single signature and executing them in batches, the amount of data that needs to be published on-chain is significantly reduced, which not only improves TPS but also significantly decreases gas consumption. More critically, it enhances the on-chain transaction throughput capacity, making AA not just a "wallet upgrade solution" but a "more efficient on-chain operation protocol." Combined with the compression capabilities of Rollup, the core bottlenecks of AA in terms of performance costs are being unlocked, and the industry is beginning to see its commercial viability. Additionally, Vitalik's EIP-7702 provides a "temporary conversion" path from EOA to smart accounts, allowing users to enable AA capabilities in transactions without migrating assets or changing wallets. EIP-7702 significantly reduces ecological congestion, enabling wallet vendors to gradually upgrade without needing to reconstruct the underlying architecture, allowing users to enter the AA world with minimal awareness. This is an important turning point: AA no longer needs to "replace EOA" but can coexist compatibly with EOA, achieving ecological migration through gradual evolution.

However, the biggest challenge to the future of AA comes from the suddenly emerging competitor in 2024-2025—the x402 protocol. Compared to AA, x402 resembles a "unified payment protocol at the internet level," using HTTP 402 as an entry point to unify payment interface logic between Web2 and Web3. AA aims to solve "on-chain account abstraction"; x402 aims to solve "internet payment abstraction." The target audience for AA is Web3 users; the potential audience for x402 is the entire internet. More importantly, x402 has a natural business loop: Providers and Facilitators can directly charge from the payment process, providing clear market traction. ERC-8004 under the x402 framework becomes a "tool protocol" rather than a foundational infrastructure requiring a network-wide migration, making its promotion much easier than that of AA. AA needs to persuade the ecosystem to migrate to its defined system, while x402 chooses to adapt to existing internet behaviors, giving it a clear advantage in commercial adoption. Therefore, the prospects for AA are clear, but the path is rugged. There exists a profound tension between the elegance of technology and the realities of industry: the future defined by AA is indeed better, but it must overcome multiple challenges such as costs, commercial incentives, ecological fragmentation, and competitive protocols before realization. As the Rollup era arrives, signature aggregation technology matures, and EIP-7702 opens up compatibility paths, the cost and compatibility issues of AA will gradually ease, while breakthroughs in business models and cross-chain capabilities are still needed. The key in the coming years is not whether AA is more advanced, but whether the industry can find a path for it to "naturally diffuse." The future of AA belongs to those ecosystems that can connect its "protocol capabilities → product experience → commercial value," rather than merely technical implementers. It may not be the easiest solution to promote, but it remains the most promising solution to reshape the on-chain account system.

III. Investment Value and Future Outlook of AA Accounts

Account Abstraction (AA) is transitioning in the blockchain industry from a "revolutionary technological concept" to a "structural infrastructure upgrade," and its investment value has evolved from early narrative dividends to a comprehensive judgment of engineering implementation, ecological collaboration, and commercial sustainability. In the next five years, AA will not become the unified entry point for the entire Web3, nor will it replace EOA as the standard account system, but it will firmly exist at the high-end level of wallets and account systems, becoming the core representative of "smart accounts" and deeply embedded in on-chain interaction experiences and transaction execution capabilities in the Rollup era. Therefore, for investors, the value of AA is not in short-term user explosions but in a "classic internet-style long-term investment opportunity in infrastructure."

From a structural trend perspective, the status of AA will significantly improve with the popularization of EIP-7702. 7702 allows EOA to temporarily transform into a smart account in a single transaction, meaning that the existing wallet system does not need to be forcibly migrated or restructure asset structures. Users can enjoy the capabilities of AA, such as permission control, social recovery, multi-signature logic, and automated strategies, without changing wallets, writing down mnemonic phrases, or migrating assets. This "painless upgrade" model smooths the adoption curve of AA, providing wallet vendors with greater motivation to incorporate it into their underlying architecture. Therefore, in the next three to five years, we are more likely to see the coexistence and integration of EOA and AA rather than replacement.

The true landing ground for AA will be within the Rollup system. As L2s like zkSync, Scroll, StarkNet, and Base become mainstream execution environments, the cost pain points of AA will be naturally absorbed by the data compression capabilities of Rollups, with gas costs potentially decreasing by 70%-90% compared to L1. At the same time, BLS signature aggregation and batch UserOperations will further reduce the on-chain data size, transforming account operations under the AA model from "expensive but advanced" to "advanced and affordable." This means that the investment value lies not in L1 AA, but in deeply embracing AA wallets, Paymaster, and Bundler infrastructure that leverage Rollups. This direction corresponds to visible engineering value—it is not a concept but a real adoption driving force brought about by the reduction of on-chain costs.

From the perspective of the industrial chain, the investment value of AA mainly concentrates in four types of infrastructure: smart contract wallets, Paymaster service providers, Bundler infrastructure, and L2s that directly support AA. Smart wallets represent the front-end entry point for future user experiences, with projects like Safe, Argent, OKX Web3 Wallet, imToken (AA version), and Zerodev being the most certain "ecological targets." They achieve the leap from "key wallets" to "smart account wallets" through modular wallet architecture, social recovery, multi-signature, and automation strategies, demonstrating a strong compounding user retention capability.

Paymaster is one of the segments with the most potential commercial value in the AA system, serving as a bridge between fuel subsidies and user growth. Although the current business model of Paymaster is not yet fully mature, it is expected to become a "chain growth engine" as the Rollup environment and on-chain business scenarios become richer: project parties pay gas fees on behalf of high-value users, implement subsidy strategies, and create whitelist strategies, thereby generating marketing effects similar to Web2 "advertising exposure." Projects like Stackup and Pimlico are worth paying attention to for this reason.

Bundler, as the execution layer of AA, is also a foundational infrastructure with latent value, akin to the "transaction packaging logistics layer" in the blockchain world. Biconomy, Alchemy's AA Infra, and others will benefit as the ERC-4337 ecosystem grows. Bundler does not have direct user-facing opportunities but possesses a scalable and certain revenue model, potentially becoming a "low-volatility, scalable" infrastructure investment direction on-chain in the future.

At the same time, the future of AA must face the competition and complementary relationship brought by the x402 protocol over the next five years. x402 does not replace AA but becomes a unified payment entry point for the internet using the HTTP 402 model, covering both Web2 and Web3, possessing inherent cross-chain capabilities, and having a clear business loop (Provider + Facilitator charging model). ERC-8004 becomes a plugin within the x402 framework rather than a foundational protocol, thus having stronger promotional power. From an investment perspective, the value of AA lies in the intelligence of on-chain accounts, while the value of x402 lies in unifying the payment experience across the entire internet. The two will coexist and complement each other in the future rather than having a single winner.

In summary, AA will constitute the "mid-level infrastructure" of the Ethereum and Rollup ecosystem over the next five years: the underlying layer will still be EOA (weakened but existing), the mid-layer will be smart accounts (AA), and the top layer will be the unified interoperable network of x402. The user base of AA will not experience explosive growth, but its value will steadily increase with the rise in on-chain transaction volume, demand for strategy automation, specialization in asset custody, and loss prevention needs. In a world that is gradually migrating on-chain, AA represents a high-certainty structural investment direction; in a world where Rollup costs are decreasing, it is a "realizable future"; in an internet that coexists with x402, it is a backbone force shaping the on-chain account system.

IV. Conclusion

The core value of AA lies in completing the transition of the Ethereum account system from the primitive model of "private key = account" to the modern paradigm of "account = program." It fills a crucial gap in the migration from Web2 to Web3, making a secure, recoverable, and programmable wallet system possible. Although AA still faces structural bottlenecks such as high costs, weak business loops, and cross-chain limitations, it has become a foundational direction for upgrading on-chain experiences. In the future, AA will exist as a high-end account layer for the long term, rather than being the sole standard; x402 will complement cross-chain and payment interconnectivity. Together, they will drive Web3 from the geek era to the mass era, laying a critical foundation for a "unified internet account."

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