As the decentralized finance space continues to evolve, technological advances are continually emerging.
As these advances are explored and become battle-tested, they will come to offer ever-better solutions for securely managing digital assets.
Among these innovations is account abstraction (AA), a concept that promises to revolutionize the way smart contracts and accounts interact within blockchain networks, particularly on Ethereum.
Account abstraction is a concept primarily discussed within the Ethereum ecosystem, aimed at decoupling the tight relationship between the transaction format and the signature scheme.
In simpler terms, account abstraction allows users to separate the account's logic from the signature verification process.
This separation enables a more flexible and customizable approach to account management and authentication, paving the way for new and innovative use cases within the blockchain ecosystem.
This has, naturally, some important parallels with how we achieve this separation on the Qredo Network, using our innovative dMPC technology to distribute transactions across the network.
As we say, at Qredo, the network is the vault. This also gives us a natural interest in developments within technology such as account abstraction, so that we can find synergy where appropriate. We also always seek to apply emergent technology with the caution and rigour we've learned through our journey to find and provide secure solutions on the blockchain.
The way in which account abstraction aims to accomplish the separation of account logic from signature verification is to allow smart contracts to initiate transactions and handle their own authentication and authorization processes. This creates a more uniform and flexible environment, where any account – be it an EOA or a smart contract – can interact with another account directly.
Today we explore the concept of account abstraction, and its potential use cases alongside multi-party computation (MPC) technology. We also explore the applications of AA relative to Qredo's existing suite of services, which in fact, do address many of the challenges AA aims to solve, using our secure protocol, which has already proved itself extremely robust.
The challenge with applying any emergent technology such as AA is that it must be done with the utmost diligence in regard to exposing users to potential new vulnerabilities. This is simply to sound a note of caution which is fitting with our true purpose as an organization – at Qredo, we set out to supply truly secure, decentralized self-custody of digital assets. That is our direction as an organization.
As such, we recognise that when exploring and developing new emergent technological solutions such as those within AA, one must take a precautious approach whilst continuing to develop, using multiple redundancies and backup processes for additional protection and exploring the new application of AA at a speed and manner which allows you to pre-empt and avoid many potential vulnerabilities before they occur.
This experience, albeit with a secure technology with a much longer history than AA, namely MPC (having been researched since the late ‘80s), gives us a unique vantage point at Qredo to discern how account abstraction may be applied within the blockchain sphere, and to predict, and avoid some pitfalls along the way.
Account Abstraction is a proposed solution to enhance the flexibility, security, and privacy of blockchain transactions.
Currently, most blockchain networks, such as Ethereum, utilize two types of accounts:
Externally Owned Accounts (EOAs) and Contract Accounts. EOAs are controlled by private keys, while Contract Accounts hold smart contracts and are managed by the contract's code. In this system, EOAs are the only entities that can initiate transactions.
With Account Abstraction, developers can implement custom logic for the transaction process, opening up a world of possibilities. For instance, they can create more complex multisig wallets, design new authentication mechanisms, or implement transaction fee payment in alternative tokens.
Account Abstraction may enable better privacy solutions by allowing smart contracts to obfuscate transaction details. One example is the implementation of "mixers," which help in hiding the origin and destination of transactions. This makes it difficult to trace the flow of funds and enhances the privacy of the blockchain.
Layer 2 solutions, such as Optimistic Rollups and ZKrollups, are gaining traction in the blockchain space as a way to address scalability issues. Account Abstraction can simplify these solutions by unifying the account model and enabling seamless interaction between Layer 1 and Layer 2 transactions. This can lead to more efficient and user-friendly blockchain networks.
Quantum computing poses a potential threat to blockchain networks, bringing with it the potential to break current cryptographic algorithms. Account abstraction can help mitigate this risk by allowing developers to implement quantum-resistant cryptographic algorithms within smart contracts, which may safeguard the network from potential future attacks.
AA can help simplify account recovery, making it more efficient for users to regain control over lost or compromised accounts. Account abstraction also looks to upgrade the management of digital assets by implementing multiple keys and role-based authorizations. These features empower users to assign various roles and permissions to distinct keys, thereby ensuring greater control over access to digital assets.
Utilizing AA, users can delegate gas payment responsibilities to third parties, such as the dApps they connect to, instead of bearing those expenses directly. This functionality not only alleviates the complexities of interacting with blockchain networks but also encourages more effective expense management.
Account abstraction can provide support for batched and atomic transactions. These capabilities allow users to execute multiple transactions simultaneously or guarantee that a series of operations either all succeed, or all fail together.
By facilitating more advanced transaction methods, AA aims to boost efficiency and minimize risks associated with managing digital assets, aiming at a more robust and user-friendly experience for digital asset holders.
To fully grasp the potential of account abstraction and multi-party computation technology, it's crucial to understand that they are not adversaries. Instead, they can function as complementary solutions that can work together to bolster secure self-custody and digital asset management.
The future fusion of AA and MPC technologies will support enhanced security at the key generation and management level. Smart contracts may be better able to facilitate extensibility and foster an ecosystem-driven approach to development thanks to their joint implementation.
It is worth noting here that AA does not obviate the need for private key generation & management. The user still needs a private key to control access to their account. What AA does let you do is let you build in custom logic and safety nets to make it easier and safer to store private keys. It does this by providing facilities such as generating back-up keys for your wallet, splitting keys among trusted parties, and permitting multiple signatories.
MPC technology bestows numerous advantages, including crosschain interoperability, the capacity to provide support for non-EVM chains, patchability, and a consistent user experience across numerous chains without necessitating the duplication of effort.
This consistency can help to provide users with a better navigation and experience of interacting across different blockchain networks, reducing friction and paving the way for a more unified digital asset management experience. This is really something lacking in the current realisation of blockchain technology and something worth striving for.
MPC technology also substantially enhances security by enabling the distribution of keys between multiple parties. This decentralization of key management diminishes the risk associated with single points of failure, ensuring that the security of digital assets remains robust even in the event of a breach or compromise of a single team member.
Account abstraction and multi-party computation technology may end up being synergised over time to empower users with ever more robustly secure, adaptable, and efficient digital asset management systems, allowing individuals and institutions alike to better navigate the evolving landscape of decentralized finance.
At Qredo, we recognize the immense potential of account abstraction and its potential to help transform digital asset management and make it more secure.
Our own self-custody protocol is centered around the secure, streamlined deployment of digital assets, and effectively already addresses several of the core challenges that AA aims to overcome.
For example, our advanced dMPC technology delivers robust signature management without relying on the ERC-1271 implementation for each smart contract. This not only reduces dependency on smart contracts but also paves the way for further innovative functionalities and tools that are yet to emerge in the blockchain ecosystem.
One aspect currently limiting security for AA implementations is that contract accounts are smart contracts and are hence immutable. Once they are deployed, you cannot change them. This means that vulnerabilities which get missed in auditing cannot be readily patched. Qredo's approach, utilising MPC technology, does not suffer from this precise constraint.
Qredo's cutting-edge secure dMPC technology shields users from the vulnerabilities often associated with intricate wallet systems and contract accounts, which may be prone to bugs and security loopholes.
Qredo supplies a comprehensive digital asset management solution for users looking to use the most secure blockchain technology to support them in their quest for financial sovereignty.
We will continue to explore the applicability of account abstraction technology in support of this, our fundamental purpose in the space, whilst being diligent to anticipate, avoid and proof against any potential vulnerabilities which may be yet to be discovered in the application of AA.
Account abstraction and multi-party computation technology each represent important, arguably revolutionary strides in digital asset management.
By providing users with enhanced security, adaptability, and authority over their assets, these technologies are reshaping the way we interact with and manage digital wealth.
At Qredo, we provide our users with a vehicle, one might say, custom-made for racing the fast-paced lanes of decentralized finance. This vehicle has impeccable handling, but at the same time, it is armoured with the most advanced of protective designs.
As the digital asset space matures, we believe that the fusion of account abstraction and MPC technology, done right, may well unlock unparalleled possibilities for users and institutions alike.
Qredo will remain at the forefront of technological innovation, committed to empowering our users with the tools and resources needed to succeed in this dynamic and decentralizing financial system.
Together, we can pave the way for a more secure, accessible, equitable and interconnected future of digital asset management, with technology supporting us to transcend the limitations of conventional infrastructure, empowering individuals and organizations to thrive in a fairer, more secure and more transparent financial era.