Why ERC-4337 Must Evolve or Face Obsolescence

ERC-4337's permissionless bundler model is a mirage; in practice, a few centralized services like Stackup and Alchemy dominate, creating a single point of failure and censorship. This recentralizes the user experience it aimed to decentralize.\n- Centralized Sequencing Risk: User ops are queued and ordered by a handful of entities.\n- Fee Extraction: No native mechanism for competitive fee markets among bundlers.

ERC-4337 is an Ethereum standard, forcing smart accounts to be re-deployed and managed per chain. This defeats the purpose of a unified "smart wallet" in a multi-chain world, unlike intent-based architectures like LayerZero's Omnichain or Across.\n- Siloed Liquidity: Gas abstraction and session keys don't work across chains.\n- Poor UX: Users manage separate account addresses and states on every network.

The real competition isn't other AA standards, but a paradigm shift. Intent-based systems let users declare what they want (e.g., "swap X for Y at best rate"), delegating the how to a decentralized solver network. This is fundamentally more efficient than ERC-4337's transaction simulation model.\n- Better Execution: Solvers compete, improving price and reducing MEV.\n- Native Cross-Chain: Intents are chain-agnostic by design.

Forward-thinking teams are already abstracting beyond ERC-4337 by building modular smart account SDKs. These treat the standard as a legacy settlement layer, adding proprietary bundler networks, key management, and cross-chain messaging on top. ERC-4337 becomes a commodity.\n- Vendor Lock-in Risk: Innovation shifts to proprietary middleware.\n- Fragmented Standards: Each SDK creates its own de facto "standard."

The Paymaster model for sponsored transactions lacks a sustainable economic flywheel. Paymasters eat costs hoping for downstream value capture, creating a venture-subsidized user experience that will collapse. Compare this to EIP-7702's native sponsorship or solvers earning via execution surplus.\n- VC-Burned Cash: Current growth is fueled by subsidies, not protocol revenue.\n- No Native Incentives: Bundlers and paymasters are utilities, not stakeholders.

To avoid becoming a legacy bridge, the standard must evolve aggressively. This means native cross-chain user ops, a decentralized bundler marketplace with stake-slashing, and modular hooks for custom validation. Without these, it will be bypassed by intent-centric and modular stacks.\n- Critical Upgrades: Required for long-term relevance.\n- Window Closing: EIP-7702 and alt-VMs are already moving faster.

ERC-4337's reliance on a public mempool for UserOperations is a fatal flaw. It exposes transaction intents, enabling frontrunning, censorship, and MEV extraction on a fundamental user action. This is a regression from private mempools used by Flashbots and intents systems like UniswapX.

• Intent Exposure: Every user's action is visible before execution.
• MEV Surface: Creates a new, predictable MEV vector for bundlers.
• User Experience: Guarantees of failure as bots snipe profitable transactions.

The economic model for permissionless bundlers is broken. High staking requirements, operational complexity, and the need for fast, reliable RPC endpoints will lead to consolidation among a few large players like Alchemy, Blockdaemon, and Pocket Network. This recreates the validator centralization problem.

• Staking Barrier: ~50 ETH stake for a single EntryPoint creates high capital cost.
• RPC Dependence: Requires low-latency access to multiple chains, favoring incumbents.
• Oligopoly Risk: The network converges to <10 dominant bundlers, a single point of censorship.

The paymaster abstraction, while powerful, turns every dApp into an unlicensed money transmitter. Sponsoring gas fees for users creates a liability for OFAC-sanctioned addresses and opens vectors for money laundering. Projects will avoid integration due to compliance overhead.

• Compliance Burden: Must screen every sponsored user address against sanction lists.
• Legal Liability: Becomes a financial service provider in multiple jurisdictions.
• Adoption Chill: Major institutions and regulated DeFi will not touch native gas sponsorship.

ERC-4337 does not solve cross-chain UX. A smart account deployed on Arbitrum is siloed from Optimism or Base. Users face the same seed phrase / gas token fragmentation, while intent-based architectures like LayerZero's Omnichain Fungible Tokens (OFT) and Circle's CCTP abstract chains away entirely.

• Chain Silos: Account state is not portable across rollups.
• Gas Complexity: Must manage native gas tokens on each L2.
• Losing to Intents: Cross-chain intent systems make chain-specific accounts obsolete.

The promised gas savings from BLS signature aggregation are theoretical for most users. It requires widespread, coordinated adoption of a new cryptographic primitive and bundler support. In practice, most accounts will use standard ECDSA, missing the ~30% gas savings and leaving the system inefficient.

• Adoption Hurdle: Requires new wallet SDKs, bundler upgrades, and user education.
• Default Inefficiency: Fallback to ECDSA negates the core scalability pitch.
• Real-World Lag: Competitive L2s will implement native optimizations faster.

The monolithic smart account contract model is threatened by modular abstraction layers. Celestia-inspired rollups can bake native account abstraction at the chain level. EigenLayer AVSs can offer decentralized bundler services or intent-solving networks that bypass ERC-4337 entirely.

• Chain-Level AA: Rollups like Manta Pacific implement AA in the protocol, making ERC-4337 redundant.
• Restaking Security: EigenLayer AVSs can secure bundler networks with $10B+ in pooled security.
• Architectural Bypass: New stacks treat intents as a first-class primitive, skipping the smart account middleman.

The current permissionless bundler model creates a race to the bottom on fees, disincentivizing robust infrastructure. This leads to centralization risk and unreliable user experience.

• Economic Misalignment: Bundlers earn only base layer tips, not a share of the dApp's value.
• Latency & Reliability: User ops queue in a public mempool, causing unpredictable delays and failed transactions.

ERC-4337 enforces rigid transaction construction. Intent-based systems abstract this complexity, letting users declare what they want, not how to do it. Solvers compete to fulfill the intent optimally.

• Better UX: Gasless, MEV-protected, cross-chain actions in a single signature.
• Economic Efficiency: Solvers internalize complexity, enabling cross-domain bundling (e.g., L2->L1->L2) that ERC-4337's Ethereum-centric design can't match.

L2s are bypassing ERC-4337 by baking AA directly into protocol rules. EIP-7702 proposes native sponsored transactions and signature abstraction for EOAs, making the entry point contract obsolete.

• Protocol-Level Efficiency: Removes the overhead of the UserOperation mempool and separate bundler network.
• Vendor Lock-in Risk: Builders relying solely on ERC-4337 risk fragmentation as L2s (zkSync, Starknet) push their native implementations.

ERC-4337 must decompose into a modular stack (e.g., separate reputation, ordering, execution layers) to compete. The monolithic bundler/entrypoint design is too inflexible.

• Adopt a Rollup-Centric Model: Let L2s act as canonical bundlers with fast pre-confirmations.
• Enable Specialization: Decouple paymaster services from transaction ordering to foster innovation akin to Flashbots SUAVE for intents.