Ethereum’s upcoming Pectra upgrade, expected to be implemented in late 2024 or early 2025, will bring a range of new functionalities and improved user experiences to crypto wallets.
The Ethereum Improvement Proposal (EIP) 3074 has been approved for inclusion in the next update. This proposal allows regular crypto wallets to function like smart contracts. One of the key features of EIP-3074 is that it enables standard externally owned accounts (EOAs), such as MetaMask wallets, to have smart contract capabilities. This opens up possibilities such as transaction bundling, where users only need to sign once, and sponsored transactions, where a wallet can delegate funds for use by another wallet, similar to the concept of account abstraction introduced in ERC-4337.
However, there are some concerns regarding the security of EIP-3074. An anonymous developer known as 0xngmi pointed out in an April 11 X post that the downside of this proposal is that “it’ll be possible to fully drain an address (all tokens, all NFTs, all DeFi positions…) with only one bad signature.”
Harrison Leggio, co-founder of Gaslite, acknowledged the security concerns but also highlighted that people will always find ways to lose their money, citing examples of individuals giving their private keys to trading bots.
One of the most useful applications of EIP-3074, according to software engineer Laurence Day, is its sponsored transactions feature. This allows users to store assets in a wallet that doesn’t hold Ether, and the gas fees can be sponsored by a contract controlling the wallet.
Additionally, EIP-3074 includes a social recovery feature that eliminates the need for the conventional 12-to-24-word seed phrase.
The implementation of EIP-3074 involves adding two new operating instructions, AUTH and AUTHCALL, which turn wallets into smart contracts. AUTH verifies signatures and actions, while AUTHCALL calls the target contract(s) with the originator address as the caller, as explained by anonymous Web3 adviser Cygaar.
The Pectra update follows the recent implementation of the Dencun update, which reduced layer-2 transaction fees on Ethereum. Ethereum co-founder Vitalik Buterin also shared plans for the “Purge” in early April, which aims to remove old and unnecessary network history to simplify the Ethereum network.
Related: A look into the history of Crypto: From the crypto winter to Ethereum milestones.
Source: Cygaar
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