Ecosystem

User experience on Ethereum has historically suffered from the limitations of Externally-Owned Accounts (EOAs), which is the type of account most Ethereum users use today. By contrast, smart wallet accounts offer many UX and security improvements, such as the ability to:

• Batch multiple transactions, removing the need for separate "token approval" transactions before every other token operation.
• Pay gas fees in other tokens than Ether, or having third-parties sponsor transaction fees (with ERC-4337)
• Delegate some operation to trusted third-parties, such as allowing onchain games to withdraw small amounts of tokens without signing pop-ups for each and every transaction.
• Change transaction authorization logic, enabling the use of Passkeys (and mobile phone authentication methods) for signing transactions.
• Update the set of keys used to control the wallet, enabling the switch to quantum-resistant encryption algorithms in the future.
• Define account recovery rules, reducing the risk of losing access to your account when losing a private key or a device.

However, smart wallet accounts have historically been an all-or-nothing, wallet-specific proposition for users. There was no transition path to such wallets.

As part of the Pectra upgrade , EIP-7702 changes this situation by allowing a clean path for existing EOAs to obtain all of the UX benefits of smart wallet accounts and account abstraction, without the need for users to switch to a different account address. This represents a large User Experience upgrade for all Ethereum EOA users.

Ethereum addresses are hexadecimal strings (0x...) which are unreadable to humans. Phishing scams and exploits have used this to trick users into sending funds to invalid addresses, for example by generating lookalike-addresses and tricking users into copy/pasting them without noticing the difference.

Additionally, Ethereum's transition to layer 2s has changed user needs when sending funds. The hexadecimal address isn't sufficient anymore; the user needs to ensure that they are sending funds to the correct hexadecimal address on the correct chain, increasing the potential for mistakenly sending funds to the wrong place or the wrong chain.

Address naming registries like ENS partially solve this problem by allowing more human-readable names like username.eth to be automatically turned into the hexadecimal address. This is easier to share and to accurately transfer by humans. Additionally, some address format standards improve upon this further by including the destination chain information as part of the address itself. Such standards include:

• ERC-7828: Chain-specific addresses using ENS: user@l2chain.eth
• ERC-7831: Multi-chain addresses: user.eth:l2chain

Wallets that support either of these standards are able to automatically determine the destination address and chain from a human-readable string, and can bridge funds across chains as appropriate. This improves the user experience of Ethereum and its layer 2 ecosystem while reducing the potential for mistakes when sending funds.

Interoperability ensures the wallet can be used with independent third-party wallets and does not leak identifying metadata to the supplier.