Base, Coinbase’s tokenless blockchain, is among the leaders in the recent trend of account abstraction. Smart wallets, which allow more automation and security, are meant to look more like Internet accounts while retaining all the possibilities to own and move tokens.
The rise of Base was expected, but the blockchain showed up on the maps in May with a noticeable uptick in wallet usage. Base was among the top blockchains to use the ERC-4337 upgrade on Ethereum.
Read: Everything you need to know about Ethereum’s new token standard, ERC-4337
While Base did not carry the most wallets, it became the most used, showing its capabilities to draw in users with low fees. Base is also one of the chains used to accrue significant inflows from the Ethereum ecosystem and may continue to shift the landscape for the most influential scaling solutions.
Account abstraction finally meets real application
In total, smart wallets or ERC-4337 accounts are now more than 6.4M. Several scaling blockchains are starting to employ the standard, with varying degrees of activity. Base stands out for the most activity, with a sudden uptick in May.
The Base performance shows its wallets are among the biggest gas burners and produce the most transactions. Base users are also part of the “on-chain summer” trend, which may boost the usage of the Coinbase smart wallet.
The new type of wallet still has a small share of total crypto ownership. More than 500M wallets are estimated to exist for various blockchains. Most of the influential scaling blockchains are offering the new wallet standard.
In just under a year, account abstraction wallets increased from an initial 400K new accounts. In 2023, Polygon was the leading chain in ERC-4337 wallets.
Base revives account abstraction narrative
Multiple Web3 projects have been seeking easier, intuitive wallets. Previous attempts included the WAX wallet, which resembled an account. Other small-scale games and platforms offered wallet-as-a-service and their niche solutions. Games like Vulcan Forged also attempted to build a proprietary wallet, which was discontinued because of vulnerabilities.
Other startups are getting VC backing to build specialized abstracted wallets. The idea may become hype for multiple crypto projects.
For now, Base and Polygon successfully deploy the new type of wallet to decrease the fees for usual activities. Base supports wallet usage with DeFi growth, airdrops, and NFT activity.
The ERC-4337 standard allows new tools to transfer assets and may be the first mass drive for easy and secure smart wallets. The first signs of this new trend happened in H2 2023. At that time, Optimism and Arbitrum were the dominating creators of smart wallets, and Base was just building up its presence. Now, Base is quickly becoming a leader in account abstraction.
Talk of ERC-4337 wallets has been around for months and has even been used as a form of hype. Account abstraction and new types of wallets were the main goals of several crypto startups.
A category of “account abstraction tokens” was also created, but none of those chains is among the top users of ERC-4337 technology. As with other crypto trends, the promised developments and use cases are not always coinciding. Real account abstraction occurs only on the most widely used L1 and L2 blockchains.
Which blockchains carry the most ERC-4337 wallets
The largest number of ERC-4337 wallets are still found on Polygon, the earlier L2 solution used to scale Ethereum during previous bull markets. Polygon leads all other chains with more than 5.6M accounts. But even with that number, Base shows more recent activity.
Base reports only around 124K accounts but significant revenues based on transactions and cross-chain activity. May was a month of peak activity for Base, surpassing others like Avalanche, Arbitrum and Ethereum. The chain reported more than 29K active wallets.
Also read: Onchain Summer: What new engagement trend aims to revive crypto enthusiasm?
ERC-4337 wallets send out User Operations, which are used as the basis of transactions. For that reason, each chain offers its Bundler service to check, verify, and send out those transactions. Bundlers are also among the leading sources of app-based revenues.
Cryptopolitan reporting by Hristina Vasileva
