Why Smart Accounts Are the True 'Layer 0' for Applications

The Problem: EOAs (Externally Owned Accounts) are insecure, non-programmable, and create a terrible UX. The Solution: A standard for account abstraction that separates the signer from the smart contract wallet, enabling social recovery, batched transactions, and gas sponsorship.

• UserOps enable transaction batching, paying gas in any token, and session keys.
• Bundlers act as specialized block builders, with ~$50M+ in bundler revenue to date.
• Paymasters allow apps to sponsor gas, removing the final UX hurdle for mainstream users.

The Problem: Running a reliable bundler and paymaster is complex infrastructure. The Solution: Specialized RPC providers that abstract the complexity, offering high-performance node infrastructure and robust gas sponsorship policies.

• Stackup dominates bundler market share with >60% of all ERC-4337 bundles.
• Pimlico powers paymaster services for major wallets like Safe{Wallet}, enabling ERC-20 gas payments and conditional sponsorship.
• Together, they form the critical middleware layer between wallets and the blockchain.

The Problem: Developers need a secure, flexible smart account to build on. The Solution: Battle-tested smart account frameworks that serve as the default 'operating system' for onchain apps.

• Safe{Wallet} is the incumbent with $40B+ in secured assets and a modular account standard used by Coinbase Smart Wallet.
• ZeroDev provides a lightweight, developer-first SDK enabling embedded wallets and ERC-4337 features out-of-the-box.
• Both enable multi-chain smart accounts via CCIP-Read, making users chain-agnostic.

The Problem: Requiring a signature for every onchain action makes apps like games unusable. The Solution: Programmable session keys that grant limited permissions for a set time, enabling seamless 'logged-in' experiences.

• Dynamic powers session keys for gaming apps, allowing gasless transactions and pre-approved actions.
• Turnkey provides non-custodial key management infrastructure to securely generate and rotate these keys.
• This turns a blockchain app from a series of transactions into a continuous user session.

The Problem: A smart account is useless if it's locked to one chain. The Solution: Cross-chain messaging protocols that allow a smart account's state and logic to be verified and used on any chain.

• Safe{Wallet}'s modular accounts use CCIP-Read to enable a single account address across Ethereum, Polygon, Base.
• LayerZero's Omnichain Fungible Token (OFT) standard allows native cross-chain asset transfers directly from the smart account.
• This creates a unified identity layer, making the user, not the chain, the primary abstraction.

The Problem: Infrastructure commoditizes. The Solution: Value accrual shifts to the layer that owns the user relationship and enables novel monetization.

• Bundlers & Paymasters capture fees on every user operation, a $100M+ annual revenue opportunity.
• Wallet SDKs become gatekeepers, capturing distribution and potentially taking a fee on sponsored gas.
• Application Developers win by building products with 10x better UX, unlocking new markets like mainstream gaming and social.

Account abstraction relies on bundlers/sequencers for transaction ordering and gas sponsorship. A dominant, centralized sequencer like EigenLayer or Pimlico becomes a single point of failure and censorship. This recreates the very problem L2s were meant to solve.

• Single Point of Failure: Network downtime is application downtime.
• Censorship Vector: A sequencer can blacklist user operations.
• MEV Extraction: Centralized ordering maximizes value capture for the sequencer, not the user.

Gas abstraction via paymasters is a killer feature, but it creates a powerful economic gatekeeper. A dominant paymaster like Pimlico or Biconomy controls the subsidy model and can impose rent-seeking fees or dictate which tokens are 'money'.

• Rent Extraction: Transition from transparent gas fees to opaque service fees.
• Token Policy Power: They decide which ERC-20 tokens are acceptable for fee payment.
• Protocol Dependency: Apps become permanently coupled to a paymaster's economic stack.

Smart accounts are not natively portable. A user's Safe{Wallet} account on Polygon may have different keys, session states, and recovery modules than their account on Arbitrum. This fragments identity, liquidity, and social graphs across chains, defeating the purpose of a unified 'Layer 0'.

• Chain-Locked Assets: Moving funds requires slow, expensive bridging.
• Broken UX: Social recovery settings don't sync across chains.
• Liquidity Silos: DeFi positions are stranded, reducing capital efficiency.

For smart accounts to be the true base layer, they need seamless cross-chain operation. This depends on insecure bridges or nascent interoperability layers like LayerZero and Axelar, which add their own trust assumptions and have been major attack vectors.

• Trust Assumption Pileup: User security = (Wallet module security * Bridge security).
• Bridge Hack Liability: A Wormhole-style exploit compromises the entire account abstraction stack.
• Latency Overhead: Cross-chain user ops add minutes of delay, breaking composability.

Smart accounts with social recovery, batched transactions, and gas sponsorship create a compliance nightmare. Regulators can target the centralized infrastructure providers (bundlers, paymasters) as money transmitters, forcing KYC on entire application ecosystems.

• Provider Liability: Coinbase or Pimlico as regulated gatekeepers.
• Privacy Erosion: Recoverable accounts may require verified identities.
• Geo-Blocking: Paymasters must censor transactions by jurisdiction.

The promise of smart accounts is abstracting complexity. But the implementation—EIP-4337, custom modules, signature aggregators—shifts complexity from users to developers. Poorly audited module libraries become systemic vulnerabilities, and the cognitive overhead stifles innovation.

• Audit Surface: Each custom module is a new smart contract vulnerability.
• Developer Friction: Teams spend cycles on wallet infra, not core product.
• Integration Fragility: Breaking changes in Safe{Core} or ZeroDev kits cascade through all apps.

Externally Owned Accounts (EOAs) are the single biggest bottleneck to mainstream adoption. They are insecure, rigid, and force applications to contort their logic.\n- No native recovery leads to $3B+ in annual lost funds.\n- Atomic composability is impossible, killing complex user flows.\n- Every app must rebuild auth, gas sponsorship, and session keys from scratch.

Smart Accounts transform the user from a passive key-holder into an active, programmable entity. This is the 'Layer 0' for app logic.\n- Bundlers & Paymasters abstract gas, enabling sponsored transactions and gasless onboarding.\n- Signature abstraction enables social recovery, multisig, and hardware security modules.\n- Atomic batched transactions unlock single-click DeFi strategies and seamless UniswapX-style intents.

Smart Accounts enable the shift from transaction-based to intent-based interaction, the core innovation for mass-market UX.\n- Session keys allow temporary, limited permissions for gaming or trading, similar to Blast's auto-rebasing.\n- Users express a goal (e.g., 'buy ETH cheapest'), and off-chain solvers (CowSwap, Across) compete to fulfill it.\n- This moves complexity off-chain, reducing L1 congestion and enabling ~500ms latency for applications.

Smart Accounts create the first viable, user-centric business model for on-chain applications beyond pure token speculation.\n- Paymaster subsidies can be monetized (e.g., take a fee on sponsored gas).\n- Bundler sequencing creates a new MEV market for user operations.\n- Granular user activity data from account abstraction enables targeted services and better risk models for protocols like Aave.

ERC-4337 creates two new, critical infrastructure layers that will consolidate into high-value services.\n- Bundlers are the new block builders, deciding UserOperation order and creating a $100M+ potential market.\n- Paymasters are the new customer acquisition engine, allowing apps to pay for user transactions.\n- Expect vertical integration from Stackup, Alchemy, and layerzero to capture this stack.

The path to smart account dominance is not guaranteed. Key systemic risks must be navigated.\n- Bundler/Paymaster centralization could recreate the validator centralization problem.\n- Wallet fragmentation across different smart account implementations (Safe, Biconomy, ZeroDev) hurts composability.\n- L2-specific implementations may create walled gardens, undermining the portable identity promise.