John Rising, a prominent advocate for Ethereum account abstraction, has expressed concerns about the slow adoption of the ERC-4337 standard for smart accounts. He recently shared some data points on social media that shed light on the challenges faced by smart accounts, including low user retention, minimal transaction activity, and high operational costs for infrastructure providers.
The ERC-4337 standard was launched in March 1 at WalletCon in Denver, with high hopes for rapid adoption. Smart accounts, enabled by this technology, were expected to improve the user experience on Ethereum Virtual Machine-compatible blockchains by eliminating the need for seed phrases and sign-ins for certain transactions.
However, data from account abstraction platform BundleBear revealed that the monthly retention rate for smart accounts has been abysmally low, with just 6.89% of initial smart accounts remaining active for more than six months. This indicates a significant drop-off in user engagement and adoption of smart accounts.
Rising also pointed out that bundlers, the core infrastructure components that enable smart accounts to function on EVM-compatible chains, have been largely unprofitable. Despite some projects mistakenly overpaying in gas fees to the bundlers, the overall profitability of these essential components remains in question.
Additionally, the average smart account was found to have only performed five user operations, which are the execution of transactions or activities from the account. This low level of activity indicates a lack of engagement and utilization of smart accounts, raising concerns about the viability of this technology.
In response to Rising’s concerns, Jesse Pollak, the creator of Base and a leading figure in the Coinbase protocols, offered a more optimistic outlook. Pollak suggested that the adoption of the ERC-4337 standard would occur gradually before suddenly gaining momentum. He emphasized that the growth of smart accounts seems healthy, and more teams are showing interest in adopting this new technology, indicating a positive trend in the long term.
Despite the challenges highlighted by Rising, Dune Analytics data revealed that August saw the highest number of active account abstraction wallets, with over 420,000 active smart accounts across seven blockchains. However, the number of active smart accounts has been on a steady decline, with only 143,000 recorded in October, further indicating a decline in adoption and usage.
The slow adoption of the ERC-4337 standard presents significant challenges for the Ethereum community and industry stakeholders. The lack of user retention, low transaction activity, and unprofitability of infrastructure components raise concerns about the future viability of this technology. However, the potential for gradual growth and increased standardization, as indicated by Pollak, offers hope for the long-term success of smart accounts on EVM-compatible blockchains. It remains to be seen how the Ethereum community and industry players will address these issues and drive the widespread adoption of smart accounts in the future.