Why Modular Smart Account Designs Will Win the Long Game

Monolithic wallets are obsolete. They bundle signature schemes, fee payment, and transaction logic into a single, rigid contract, creating a single point of failure and stifling innovation. This is the same architectural mistake that plagued early Layer 1s.

Modularity enables specialization. A modular smart account like those built with ERC-4337 or Rhinestone separates the validation logic (the 'what') from the execution logic (the 'how'). This allows users to plug in specialized modules for social recovery, session keys, or batched transactions.

The network effect is in the module layer. Just as Uniswap won by enabling permissionless liquidity pools, the winning account standard will be the one that attracts the most developers to build composable modules. The account becomes a platform.

Evidence: Safe{Wallet}, the dominant smart account with over $100B in assets, is pivoting to a modular architecture with its Safe{Core} SDK, recognizing that its future is as a platform, not a product.

Monolithic accounts are feature-locked appliances. A single team defines all functionality, creating a slow innovation cycle and vendor lock-in for users. This is the Externally Owned Account (EOA) problem recreated at a higher abstraction layer.

Modular accounts standardize the interface, not the implementation. ERC-4337 defines the account abstraction 'socket', allowing any developer to build plug-in modules for recovery, session keys, or batched transactions. This creates a competitive market for features.

The winning design is a minimal core with a module store. Think Safe{Core} Protocol and its module registry. The account's security boundary is the core; everything else is a swappable, auditable component. This separates security from feature velocity.

Evidence: The Safe{Wallet} ecosystem demonstrates this. Over 80% of its $40B+ in assets use multi-sig, a single module. Its growth is now driven by third-party modules for DeFi, governance, and compliance, not by Safe's core team.

Modularity enables permissionless innovation. A smart account with a fixed feature set is a liability. A modular account with a pluggable architecture, like those built on ERC-4337 or ERC-6900, allows developers to swap in new signature schemes, recovery methods, and session keys without a full contract migration.

The kernel-module pattern separates concerns. The core account (kernel) manages ownership and module permissions. Specialized modules, like Safe{Wallet}'s Zodiac or Biconomy's modules, handle specific logic. This creates a security boundary where a compromised module does not drain the entire wallet.

Upgradeability is a non-negotiable feature. Cryptographic primitives evolve; quantum resistance is a future requirement. A modular design lets users adopt new signature schemes (e.g., passkeys, MPC) by installing a module, avoiding the existential risk of a frozen, outdated monolithic contract.

Evidence: Safe{Wallet}, the dominant smart account, processed over $40B in assets last year. Its entire utility stems from its modular architecture, which has spawned an ecosystem of hundreds of third-party modules for DeFi, governance, and automation.

Monolithic accounts optimize for yesterday's problems. They bundle signature schemes, fee payment, and recovery into a single contract. This creates a single point of failure for upgrades and limits interoperability with new L2s and rollup architectures like Arbitrum Stylus or zkSync's ZK Stack.

Modular designs separate concerns for resilience. Decoupling the signature validator from the execution logic enables permissionless innovation. New signature schemes like ERC-4337's account abstraction or ERC-7212's passkey verification integrate without redeploying the core wallet.

The market demands composable security. Users need cross-chain intent execution via protocols like UniswapX and Across. A monolithic account cannot natively leverage specialized solvers; a modular account delegates this to the best-in-class infrastructure.

Evidence: The rise of ERC-4337 Bundlers and Paymasters proves the demand for modularity. These components form a competitive market, driving down gas costs and improving UX, which a monolithic stack cannot replicate.

Monolithic wallets are obsolete. They bundle signature validation, transaction building, and gas sponsorship into a single, rigid contract, creating a single point of failure and stifling innovation. The modular design pattern, pioneered by ERC-4337 and frameworks like Safe{Core}, decomposes this stack into independent modules for signing, validation, and execution.

Specialization drives efficiency. A modular account uses a ZK-based session key module from Rhinestone for gaming, a gas sponsorship module from Biconomy for onboarding, and a batched intent solver from UniswapX for DeFi. This is impossible with a one-size-fits-all EOA or simple multisig.

Upgradeability is non-negotiable. A security flaw in a signing module is patched by replacing that module, not migrating the entire account and its asset history. This mirrors the kernel/user-space separation in operating systems, a proven architecture for managing complexity and risk.

Evidence: Safe's modular smart account ecosystem now secures over $100B in assets, with thousands of Safe{Core} modules deployed for recovery, automation, and compliance, demonstrating clear product-market fit for composable security.