Recently 21Shares, a leading company in the issuance of ETPs linked to crypto, analyzed the impact of the technical improvements that will be made by the upcoming Pectra update to the Ethereum blockchain, scheduled for Q4 2024/Q1 2025.
On paper, Pectra should bring greater efficiency to the capital locked in staking and greater flexibility in terms of transaction management.
In particular, the EIP-7702, recently proposed by Vitalik Buterin, if included in Pectra (replacing EIP 3074) could provide new smart contract functionalities to users’ EOA wallets adding very interesting features.
Let’s see what it’s all about.
21Shares: the largest ETP manager studies the improvements that will be made to the Ethereum blockchain thanks to Pectra
According to Adrian Fritz, Head of Research at the largest crypto ETP issuer 21Shares, the impact of the upcoming Pectra update on the Ethereum blockchain could be crucial for the future cryptographic ecosystem.
Pectra, arrives after the recent implementation of Dencun, and will be a combination of the two upgrades Electra and Prague, respectively aimed at changing the consensus level and the execution level of the network.
According to the schedule set by the Ethereum Foundation and its team of developers, the update and the next hard fork of the network will arrive between the end of 2024 and the beginning of 2025.
The Nethermind client has already revealed to the public that the implementation on the testnet was successful and now the next appointment is with pectra-devnet-0.
Nethermind is ready for pectra-devnet-0 🫡
Tests are passing ✅
First interop with Grandline works ✅Looking forward to debugging the devnet next week!
— Marek Moraczyński (@M25Marek) May 9, 2024
Pectra represents a response to the evolution of the environment surrounding the Ethereum blockchain, with numerous improvements that will be made thanks to the 6 EIP (Ethereum Improvement Proposal) that will be included within it:
EIP-6110: Provide validator deposits on the chain
EIP-7002: execution-level activatable outputs
EIP-7549: Moving the committee index outside the attestation
EIP-2537: precompilation for operations on the BLS12-381 curve
EIP-3074: AUTH and AUTHCALL opcodes
EIP-7251: Increase MAX_EFFECTIVE_BALANCE
As the famous ETP issuer 21Shares analyzes, the Pectra update as a whole will help strengthen network stability and enhance user experience.
In particular, one of the main focuses of the update is aimed at increasing the stake quota to participate in consensus from 32 ETH to 2,048 ETH, avoiding the fragmentation of capital by large validators who currently have to use a multitude of different wallets to manage the stake on the Beacon chain.
It is worth mentioning the EIP 3074, which aims to bring significant improvements to the management of resources in a wallet, including smart contract functionalities to EOA accounts.
Simplifying, we can summarize the effects in the introduction of the so-called “sponsored transactions” that will allow the use of the Ethereum network even in the absence of ETH to pay the gas.
The same EIP also wants to introduce the possibility of performing multiple actions in a single transaction and at the same time adding a social recovery solution for all inactive wallets after one year.
EIP-3074 è stato approvato per entrare nel prossimo hard fork di Ethereum: Pectra.
Questo EIP cambierà radicalmente il modo con cui gli utenti interagiscono con la chain, rendendo l’esperienza di utilizzo dei wallet crypto molto più semplice, economica e potente.
Spariamoci un… pic.twitter.com/xkib3uKVlv
— Alessandro Mazza (@crypto_ita2) April 15, 2024
21Shares reminds us that Pectra will also solve the problem of so-called “empty accounts“, that is, those users with assets or funds invested equal to zero, by excluding them from the network.
This is how you should free up network space, which will lead to a general lightening of the system and, consequently, to a simpler and faster processing of transactions.
Vitalik’s EIP-7702 could replace EIP-3047: debates among Ethereum community experts begin
Until a few days ago it was clear that EIP-3047 would be included in the Pectra hard fork, now it is no longer so obvious after Vitalik Buterin proposed the new EIP-7702 which could replace the first one by addressing some critical issues.
As stated by the ETP crypto issuer 21Shares, this proposal, similar to EIP 3047, aims to transform users’ EOA portfolios into more sophisticated accounts, but with a more streamlined modus operandi.
Vitalik today proposed EIP-7702 which aims to cover the benefits of EIP-3074 but with generally better alignment to the AA roadmap. 👏
— lukasschor.eth (@SchorLukas) May 7, 2024
While the EIP-3074 proposed by developers Ayush Bherwani and 0xDanki aims to implement the ability for EOA wallets to authorize smart contracts and perform transactions on their behalf, Vitalik’s EIP 7702 allows the same wallets to temporarily become accounts authorized to sign smart contracts during a transaction, reverting back afterwards.
This is a subtle difference but with very visible effects because in the first approach it is necessary to introduce new operating codes (auth and authcall) in addition to the implementation of invoker contracts that would complicate the work of the Ethereum network.
Vitalik’s EIP-7702 compared to the first one turns out to be more flexible (although technically more complex to implement) but at the same time guarantees full compatibility with account abstraction and with the ERC-4337 standard.
It is worth noting how EIP-3047 entails risks associated with the authorization of smart contracts, adding the possibility of emptying a complete address with a single signature (as it happens on Solana), while currently “n” signatures are required, where “n” is the number of assets owned by an EOA.
At the moment this EIP, as described in the previous paragraph, has already been included in Pectra’s implementation program, but after Vitalik’s intervention it may be replaced.
The debates of the community and industry experts continue unabated to understand which will be the best solution to adopt.
EIP-3074 and EIP-7702: Enhancing Ethereum Wallets
Author: @0xDankiii & Ayush Bherwani
EIP-3074 is an #Ethereum proposal enabling externally owned accounts (#EOAs) to authorize smart contracts to make transactions on their behalf. This reversible authorization retains control of… pic.twitter.com/8qzNFo3Tgi
— Logan Liu (@0xLoganLiu) May 16, 2024
According to Adrian Fritz’s comment, 21Shares is in favor of Vitalik’s proposal as it expands the functionalities and potential of cryptographic wallets, while maintaining the security component intact. Here are his words:
“At 21Shares, we look favorably upon EIP 7702, which also reflects our thesis that cryptocurrencies will never be able to onboard millions more people without providing them with an intuitive interface that resembles the user-friendly experience they are familiar with on Web2 applications.”
The wish for Ethereum blockchain is that these improvement proposals will be successfully implemented following the established timeline and that they can bring improvements on the same level as what was done with Dencun, which significantly reduced the cost of fees on the network’s layer-2.
