The launch of the ERC-4437 standard at WalletCon in Denver on March 1 was met with much anticipation and excitement. The concept of “smart accounts” promised to revolutionize the user experience on Ethereum Virtual Machine-compatible blockchains by eliminating the need for seed phrases and signing in certain transactions. However, the reality is far from the initial optimism that surrounded this technological advancement.
John Rising, a proponent of Ethereum account abstraction, recently shared some worrying statistics that shed light on the disappointing state of ERC-4437 adoption. Using data from the account abstraction data platform BundleBear, Rising revealed that the monthly account retention rate for smart accounts has been abysmal. Only 6.89% of all initial smart accounts have managed to maintain their presence for more than six months. This low retention rate is an alarming indication of the challenges faced by this new technology.
Another concerning aspect revealed by Rising’s data is the lack of transaction activity among ERC-4437-enabled smart accounts. On average, a smart account has only initiated five user operations, which include the execution of transactions or activities from the account. This limited engagement and usage indicate that users have been slow to adopt the ERC-4437 standard and fully explore its capabilities.
In addition to the low user retention and transaction activity, the core infrastructure providers known as “bundlers” have faced their fair share of problems. Despite being essential components that enable smart accounts to function on EVM-compatible chains, bundlers have struggled to generate profits. Some projects have even unintentionally overpaid in gas fees to the bundlers, further adding to their financial woes. This financially unsustainable environment poses a significant obstacle to the widespread adoption of ERC-4437.
Jesse Pollak, the lead of Coinbase protocols and the creator of Base, offers a contrasting perspective on the adoption of ERC-4437. He disagrees with Rising’s characterization of the adoption numbers as “sobering,” asserting that the adoption of new technology often follows a slow but eventually exponential trajectory. Pollak argues that growth is indeed happening, citing increasing interest from various teams to adopt this technology. However, it is important to note that Pollak’s viewpoint may not capture the complete reality of the situation, as the data suggests otherwise.
According to data from Dune Analytics, August witnessed the highest number of active account abstraction wallets, with over 420,000 active smart accounts across seven blockchains. However, since then, the number of active smart accounts has been on a steady decline, with only 143,000 monthly active accounts recorded in October. This decline further reinforces the challenges faced by ERC-4437 adoption and raises questions about its long-term viability.
While the current state of ERC-4437 adoption may seem disheartening, it is crucial to remember that technology adoption takes time. Challenges and setbacks are inevitable, particularly when introducing revolutionary changes to the existing ecosystem. The road to mass adoption may be long and uncertain, but it is not impossible. With ongoing efforts to standardize the technology and growing interest from various teams, there is still hope for the future of ERC-4437.
The data provided by John Rising paints a sobering picture of the current state of ERC-4437 adoption in Ethereum. The low retention rate, limited transaction activity, and financial challenges faced by infrastructure providers indicate that widespread adoption is far from ideal. However, it is essential to approach this reality with caution and acknowledge that slow progress does not necessarily equal failure. Continued efforts to address the existing challenges and promote standardization may pave the way for a brighter future for ERC-4437 in Ethereum.