Ethereum’s upcoming Pectra upgrade, expected to be implemented in late 2024 or early 2025, will bring a range of enhanced functionality and user experience improvements to crypto wallets. The Ethereum Improvement Proposal (EIP) 3074 has been approved for inclusion in the next update, allowing normal crypto wallets to operate like smart contracts.
One of the key features of EIP-3074 is that it provides standard externally owned accounts (EOAs), such as MetaMask wallets, with smart contract capabilities. This enables functions like transaction bundling, where users only need to sign once, and sponsored transactions, where a wallet can delegate funds for use by another party. This is similar to the concept of account abstraction introduced in ERC-4337.
However, there are some concerns regarding the security implications of this update. A developer known as 0xngmi expressed on April 11 that the downside of EIP-3074 is that it could potentially allow an address to be fully drained with just one bad signature, including all tokens, NFTs, and DeFi positions.
Harrison Leggio, co-founder of Gaslite, acknowledged the security concerns but pointed out that people will always find ways to lose their money, highlighting the risk of giving private keys to trading bots.
Another notable feature of EIP-3074 is the ability to sponsor transactions, which software engineer Laurence Day described as the most useful application of the proposal. This allows users to store assets in a wallet that doesn’t hold Ether and have the gas fees sponsored by a contract controlling the wallet.
Additionally, EIP-3074 includes a social recovery feature that eliminates the need for the traditional 12-to-24-word seed phrase typically used for wallet recovery.
To achieve these new functionalities, EIP-3074 introduces two new operating instructions called AUTH and AUTHCALL, which effectively turn wallets into smart contracts. AUTH verifies signatures and actions, while AUTHCALL calls the target contract(s) with the originator address as the caller, instead of the message sender.
The Pectra update follows the recent implementation of the Dencun update, which aimed to reduce layer-2 transaction fees. Ethereum co-founder Vitalik Buterin also outlined plans for the “Purge” in early April, which involves removing old and unnecessary network history to streamline the Ethereum network.
Overall, these developments highlight the ongoing efforts to enhance Ethereum’s capabilities and improve the user experience.