Protocols are the new platforms. The promise of a unified Ethereum Virtual Machine (EVM) standard is fragmenting into a war of competing execution environments like Solana VM, Move VM, and CosmWasm. Each creates its own developer ecosystem and user experience silo.
wallet-wars-smart-accounts-vs-embedded-wallets
Blog
The Future of User Sovereignty in a Multi-Standard World
An analysis of how the battle between smart account standards (ERC-4337, EIP-3074, embedded models) threatens to fragment user identity and assets, arguing that true self-custody depends on portable layers built above the protocol wars.
introduction
THE INTEROPERABILITY TRAP
Introduction: The New Lock-In
The proliferation of competing standards is creating a more insidious form of vendor lock-in than the walled gardens it was meant to replace.
Interoperability is a tax. Users don't bridge assets; they pay a liquidity and security tax every time they cross chains. Solutions like LayerZero and Axelar abstract this but centralize the trust model, while Across and Stargate optimize for cost at the expense of generalized messaging.
Sovereignty requires constant management. A user's digital identity and assets are now scattered across dozens of wallets, chains, and account abstraction standards. The cognitive load to maintain security and liquidity across Arbitrum, Base, and Solana negates the promise of a seamless multi-chain experience.
Evidence: The Ethereum L2 ecosystem now has over $40B TVL locked across more than 40 distinct rollups and app-chains, most requiring separate bridging interfaces and wallet configurations for optimal use.
thesis-statement
THE FRAMEWORK
Thesis: Sovereignty is Portability, Not Implementation
True user sovereignty is defined by the ability to move assets and data, not by the technical details of a single chain.
Sovereignty is exit power. A user locked in a high-performance chain with no bridges is a serf. The right to port assets across L2s, rollups, and appchains defines freedom. This is the core thesis.
Implementation is a commodity. The technical stack (EVM, SVM, Move) matters for developers, not users. Users care about cost and speed, not whether their transaction compiles to Solidity or Rust. Portability abstracts this away.
Standards enable portability. Protocols like LayerZero and Axelar create the messaging fabric. Bridges like Across and Stargate execute the asset transfers. Without these, multi-chain sovereignty is impossible.
Evidence: The $2B+ in daily bridge volume proves the market demand for portability. Users constantly arbitrage between Arbitrum, Optimism, and Base, treating chains as interchangeable liquidity pools.
key-trends
THE FUTURE OF USER SOVEREIGNTY
The Fracturing Battlefield: Three Fronts in the Wallet Wars
The proliferation of competing account standards is fragmenting user experience and control. Here are the three core architectural battles defining the next era of on-chain interaction.
01
The Problem: Key Custody is a UX Dead End
Seed phrases and private keys are a single point of failure, creating a ~$1B+ annual loss from user error and phishing. This model is incompatible with mainstream adoption.
- User-hostile onboarding: Recovery is impossible for non-technical users.
- Security paradox: The most secure practice (cold storage) creates the worst UX.
- Fragmented identity: Keys are siloed per chain, forcing users to manage dozens.
~$1B+
Annual Loss
0%
Recovery Rate
02
The Solution: Smart Account Wallets (ERC-4337)
Abstract the key with a programmable smart contract wallet. This enables social recovery, batch transactions, and sponsored gas. It's the foundation for intent-based systems like UniswapX and Across.
- User sovereignty: Recovery logic is programmable and non-custodial.
- Session keys: Enable ~500ms UX for games without key exposure.
- Modular security: Integrate hardware signers, MPC, or biometrics.
ERC-4337
Standard
~500ms
Session UX
03
The New Battle: Standardization vs. Monoculture
While ERC-4337 dominates Ethereum, chains like Solana (with native fee sponsorship) and Cosmos (with interchain accounts) promote their own models. The fight is over whose abstraction becomes the default cross-chain primitive.
- Vendor lock-in risk: Wallets tied to a single chain's account model.
- Interop solutions: LayerZero's Omnichain Fungible Tokens and CCIP aim to bridge these standards.
- Winner's reward: Control the gateway for 10M+ next-gen users.
3+
Major Models
10M+
User TAM
USER SOVEREIGNTY
Standard Showdown: A Protocol-Level Comparison
A feature and risk matrix comparing the dominant standards for managing user assets and intent.
| Sovereignty Metric | EOA (Externally Owned Account) | ERC-4337 Smart Account | ERC-6551 Token-Bound Account |
|---|---|---|---|
Asset Control Model | Direct Private Key Ownership | Modular Smart Contract Logic | NFT-Centric Delegation |
Recovery Mechanism | Social / Multi-Signer | Parent NFT Holder | |
Atomic Multi-Operation | |||
Gas Sponsorship (Paymaster) | |||
Native Batch Transactions | Via ERC-4337 Integration | ||
On-Chain Reputation Footprint | Address-Only | Full UserOp History | Parent NFT + TBA History |
Key Rotation Cost | Wallet Migration (~$50 Gas) | Single Signature Update (~$10 Gas) | Parent NFT Transfer (Market Price + Gas) |
Primary Attack Vector | Private Key Compromise | Smart Contract Bug / Logic Error | Parent NFT Compromise |
deep-dive
THE USER SOVEREIGNTY STACK
The Portability Layer: Building Above the Fray
A new abstraction layer is emerging to manage the complexity of competing standards, returning control to users.
The portability layer abstracts standards. Users no longer need to know if an asset is ERC-20, ERC-404, or ERC-721. Protocols like UniswapX and CowSwap execute intents across these formats, letting the infrastructure handle the conversion.
Sovereignty shifts from chains to agents. The future user is a smart wallet or autonomous agent (like those built on Safe{Core} or Privy) that holds assets and executes intents across any standard or chain it deems optimal.
This makes chains commodity execution layers. The value accrues to the intent-solver network (e.g., Across, Socket) and the agent management layer, not the underlying L1 or L2 executing the final state change.
Evidence: UniswapX already routes over 30% of its volume through intent-based fills, bypassing direct AMM liquidity and proving demand for this abstraction.
risk-analysis
THE FRAGMENTATION TRAP
The Bear Case: Why Portability Might Fail
The push for user sovereignty through asset and identity portability faces fundamental economic and technical headwinds.
01
The Liquidity Silos of Rollup-Centric Design
Ethereum's L2-centric roadmap creates competing economic zones that disincentivize true portability. Rollups optimize for internal capital efficiency, not cross-chain flows.\n- Economic Moats: Protocols like Arbitrum, Optimism, and Base build sticky liquidity to capture fees.\n- Fragmented Security: Users must trust multiple, often weaker, sets of sequencers and provers, increasing systemic risk.\n- Capital Inefficiency: ~$40B+ TVL is locked in bridge contracts, representing dead capital that could be used for yield.
$40B+
Locked in Bridges
10+
Major L2 Silos
02
The Interoperability Standard War
The battle between IBC, LayerZero, CCIP, and proprietary bridges creates a winner-take-most market that undermines universal standards.\n- Vendor Lock-in: Protocols like Axelar and Wormhole create their own ecosystems, fragmenting developer mindshare.\n- Security Trade-offs: Each standard has different trust assumptions (e.g., optimistic vs. light client vs. oracle networks), confusing users.\n- Combinatorial Explosion: Supporting N chains requires N*(N-1)/2 connections, a quadratic scaling problem for security and integration.
4+
Major Standards
~$2B
Bridge Market Cap
03
The User Abstraction Paradox
Solving complexity with intent-based architectures (UniswapX, CowSwap) and account abstraction simply shifts trust to a new layer of centralized solvers and bundlers.\n- Solver Oligopoly: Efficient cross-chain settlement relies on a few sophisticated players, recreating MEV cartels.\n- Opaque Execution: Users trade control for convenience, unable to verify optimal routing across chains like Ethereum, Solana, and Avalanche.\n- Regulatory Attack Surface: Centralized relayers and sequencers in systems like Across and Circle's CCTP become easy KYC/AML choke points.
3-5
Dominant Solvers
>60%
Relayer Centralization
04
The Sovereign Chain Counter-Movement
Chains like Celestia, Monad, and Berachain prioritize maximal performance and cultural sovereignty, explicitly rejecting easy portability as a design goal.\n- Local Maxima Optimization: These chains optimize for throughput and community, creating high-switching-cost ecosystems.\n- Native Asset Dominance: Success is measured by internal TVL and activity, not by how easily value leaves.\n- The Alt-L1 Revival: The multi-chain thesis evolves into a multi-ecosystem thesis, where portability is a feature, not the foundation.
$1B+
Modular Chain TVL
Native-First
Design Philosophy
future-outlook
THE STANDARDIZATION FRONTIER
Outlook: The Inevitable Commoditization of the Smart Account
Smart accounts will become a low-margin, high-volume commodity, shifting competitive advantage to the application and aggregation layers.
Smart accounts become infrastructure. The core functionality of a smart account—signature abstraction, fee sponsorship, batch transactions—is standardizing via ERC-4337 and RIP-7560. This creates a commodity market where providers like Safe, ZeroDev, and Biconomy compete on price and uptime, not features.
Sovereignty shifts to the interface. User loyalty will migrate to the aggregation layer—wallets like Rainbow or Rabby—that manage multiple account instances and abstract the provider choice. The real moat is the user experience and cross-chain session key management.
Applications absorb the wallet. Leading dApps will embed their own white-labeled account using providers like Candide or Stackup. This turns the smart account into a feature, similar to how UniswapX abstracts intent-based swaps via Across and other solvers.
Evidence: Safe's dominance (over 50% market share) is already under pressure from cheaper, modular alternatives. The bundler market is following the MEV relay model, where profitability depends on transaction order flow, not software licensing.
takeaways
THE FUTURE OF USER SOVEREIGNTY
TL;DR for Busy Builders
The proliferation of chains and standards is fragmenting user control. True sovereignty requires solving for portability, privacy, and finality.
01
The Problem: Fragmented Identity
Users manage dozens of keys across chains, creating a ~$1B+ annual loss from human error and phishing. Wallets like MetaMask and Phantom are siloed custodians of context.
- Key Benefit 1: Single sign-on across EVM, SVM, and Cosmos via MPC or social recovery.
- Key Benefit 2: Portable reputation and on-chain credentials (e.g., Gitcoin Passport).
~$1B+
Annual Loss
-90%
Friction
02
The Solution: Intent-Based Abstraction
Users shouldn't navigate liquidity pools or sign 5 transactions. Let solvers compete. This is the core thesis behind UniswapX, CowSwap, and Across.
- Key Benefit 1: ~20% better prices via solver competition and MEV capture.
- Key Benefit 2: Gasless UX - users sign intents, not transactions.
~20%
Better Price
0 Gas
For User
03
The Problem: Data Sovereignty
Your transaction graph is public. Tornado Cash is a blunt instrument. Zero-knowledge proofs (ZKPs) are the only path to programmable privacy.
- Key Benefit 1: Selective disclosure of credentials (e.g., zkEmail, Sismo).
- Key Benefit 2: Private DeFi interactions via Aztec, Manta Network.
100%
On-Chain
~2s
ZK Proof
04
The Solution: Sovereign Execution Layers
Rollups are a start, but validiums and EigenLayer AVSs let you deploy your own security and governance stack. This is the endgame for Celestia and EigenDA.
- Key Benefit 1: ~$0.001/tx cost with data availability sampling.
- Key Benefit 2: Custom fraud/validity proofs tailored to your app.
$0.001
Per Tx
10K TPS
Sovereign Chain
05
The Problem: Cross-Chain Finality
Bridges like LayerZero and Wormhole introduce new trust assumptions. Users don't own the liquidity; they rent security from a multisig.
- Key Benefit 1: Native asset transfers via IBC or shared sequencing (e.g., Espresso, Astria).
- Key Benefit 2: Atomic composability across rollups, not just asset bridging.
~2-20 min
Delay
$500M+
Bridge TVL Risk
06
The Solution: Universal State Proofs
The final piece is a canonical, verifiable record of all chain states. This is the mission of Succinct, Polyhedra, and Herodotus.
- Key Benefit 1: Trust-minimized bridging via ZK proofs of consensus.
- Key Benefit 2: Historical data access for any chain, enabling new primitives.
<1 min
Proof Time
100%
Verifiable
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