What is ERC-4337 and ERC-6551？

There are many complex concepts in the crypto realm, such as smart contracts, cryptocurrency wallet terms such as private key and public key, and restrictive infrastructure between centralized and decentralized entities. This makes it a huge challenge for ordinary users to aboard. With some user-friendly and innovative protocol standards being proposed on Ethereum, things seem to be getting easier.

Like standard protocols such as ERC-20, ERC-721 and ERC-1155, the new protocols ERC-4337 and ERC-6551 also play an important role in expanding the Ethereum ecosystem.

1 About EIP and ERC?

Every technical change proposed to the Ethereum ecosystem initially started with an Ethereum Improvement Proposals (EIP). Once a change is accepted, authorized, and confirmed by the on-chain governance model, it becomes an Ethereum Request for Comments (ERC）.

2 ERC-4337

ERC-4337: Bringing smart contract functionality to wallets.

ERC-4337 is an Ethereum standard that implements Account Abstraction on the protocol without changing any consensus layers. ERC-4337 was first proposed in 2021, and in March 2023, ERC-4337 was deployed to the Ethereum mainnet, enabling transactions and contract creation in a single contract account. Essentially, account abstraction creates a new type of account, turning a user’s crypto wallet into a smart contract-enabled account.

The two types of accounts in Ethereum each have different functions. Externally owned accounts (EOA) are owned and controlled by users, while smart contract accounts (contract accounts) are smart contracts deployed into the network. Both accounts can receive, hold and send ETH or tokens.

Most of the existing wallets on Ethereum currently create EOA accounts, such as MetaMask. These wallets are subject to the rules set by EOA accounts. Restricted conditions include that account access is entirely dependent on private keys, and all transactions must be signed. As a result, wallet setup procedures and private key security measures are often complex and user-friendly. If the user loses the seed phrase, it means that the account and the funds in it can no longer be accessed.

ERC-4337 removes such limitations. Through ERC-4337, users can enjoy a single account with both smart contract and externally owned account functions.

In general, account abstraction is implemented to provide two benefits to wallets: one, to make crypto wallets more user-friendly, and two, to prevent loss of crypto wallet access.
It can make it easier for ordinary users outside the encryption industry to access Ethereum, and it can solve some key problems that users currently face from creating wallets to using wallets, making wallets easier to use.

3 ERC-6551

ERC-6551: Changing the Game on NFTs

ERC-6551 is an emerging Ethereum NFT standard that was released on the Ethereum mainnet on May 7, 2023. The ERC-6551 standard improves the functionality of NFTs by enabling smart contract accounts. The key feature of ERC-6551 is the token bound account (TBA: token bound account). Token bound accounts provide NFT with an interface to ERC-721-based smart contract accounts and a permissionless registry.

ERC-6551 gives every ERC-721 token the full functionality of an Ethereum account. Token bound accounts allow ERC-721 tokens to own other on-chain assets and interact with utilities without requiring changes to existing ERC-721 smart contracts or infrastructure.

What innovative use cases does ERC-6551 bring?

1 Composability: You can bundle your related assets (NFTs, tokens, identities, etc.) into one NFT, making it easier to manage and transfer your assets across different platforms.

2 On-chain identity: Let NFT become a real on-chain identity. In other words, your NFT can interact with dapps independently without relying on the wallet that holds it.

3 Practicality: NFTs are currently unable to interact with other on-chain assets or platforms on their own, which limits their functionality. With TBA, NFT is no longer just a certificate of ownership, NFT is more valuable and practical.

Through ERC-6551, the function of NFT is equivalent to a wallet with an address, and each NFT on Ethereum has its own wallet. Meanwhile, ERC-6551 builds on the ERC-4337 designed to simplify the wallet experience for users. Therefore, integrating the TBA function for NFT in the new form of wallet standard “smart account” greatly optimizes the user experience of Web3.

4 Summary

Whether it is ERC-4337 or ERC-6551, these game-changing, user-friendly and innovative standards have greatly improved the user experience of Web3. For ordinary users and cryptocurrency beginners, it will be easy to create their own smart wallet account and experience decentralized applications easily. As the technical barriers to entry in the crypto space continue to be lowered or eliminated, it is expected to accelerate the mass adoption of cryptocurrencies and Web3.