Gelato’s Guide to Account Abstraction: from ERC4337 to EIP7702

Overview (TL;DR)

This guide demystifies account abstraction, from ERC-4337 to EIP-7702, covering these major sections:

Introduction to Account Abstraction

• What are the limitations of traditional EOAs?

• How does account abstraction improve user experience?

Understanding ERC-4337

• What is a UserOperation and how does it work?

• What is a Bundler and what role does it play?

• What is an EntryPoint contract?

• What is a Paymaster and how does it handle transaction fees?

Current State of ERC-4337

• What adoption metrics exist for ERC-4337?

• What are the implementation challenges and gas inefficiencies?

• How does Gelato's implementation differ from standard approaches?

EIP-7702: An Update to Account Abstraction

• Is EIP-7702 a replacement for ERC-4337, or are they compatible?

• How does EIP-7702 differ from ERC-4337?

• What key innovations does EIP-7702 introduce?

• How does EIP-7702 allow EOAs to execute contract code?

Implementation Considerations

• How are wallets and infrastructure adapting to these standards?

• What are the UI/UX implications of account abstraction?

• What storage architecture challenges exist with EIP-7702?

Practical Applications and Demonstrations

• How does Gelato implement EIP-7702 with ZeroDev?

• How can Passkeys (WebAuthn) be integrated with EIP-7702?

• Deploying 7702 enabled rollups with Gelato RaaS

• What resources are available for developers?

Introduction to Account Abstraction

Ethereum accounts are divided into EOAs (Externally Owned Accounts) and contract accounts. EOAs face issues:

1. Security risks — no recovery option if keys are lost or stolen.

2. Limited functionality — EOAs can only perform simple transactions and approvals.

3. Accessibility barriers — users need Ether to pay gas, even if they only want to use other tokens.

ERC-4337 introduced account abstraction without consensus changes, enabling programmable “smart wallets.” EIP-7702, expected with the Pectra hard fork, extends EOAs with smart contract account features directly at their addresses, allowing them to execute code without migrating assets or changing addresses.

Understanding ERC-4337

ERC-4337 introduced UserOperations processed by a decentralized bundler network and executed via the EntryPoint contract.

What is a UserOperation

A UserOperation encapsulates a user’s intent with fields like sender, nonce, calldata, gas limits, and signatures. They are sent to an alternate mempool. Gelato provides APIs for sending and retrieving UserOps.

What is a Bundler

A bundler collects UserOps and submits them to EntryPoint. Gelato’s bundler includes features like MEV protection, instant inclusion, and optimized gas handling.

What is an EntryPoint

The EntryPoint contract verifies and executes UserOps across all smart accounts. Gelato optimizes its fee handling by setting maxFeePerGas=0 and settling post-execution.

What is a Paymaster

Paymasters sponsor gas on behalf of users. Gelato’s Paymaster uses 1Balance for cross-chain settlement, ensuring exact gas usage billing and enabling gasless UX.

ERC-4337: Promises vs. Limitations

ERC-4337 adoption: 25.5M smart accounts, 132M UserOps, with ~$5.7M gas sponsored by paymasters. Base leads adoption, while Arbitrum saw steep declines. UserOps remain ~2% of Base’s volume.

Challenges include gas inefficiency, app incompatibility, multi-chain state sync issues, and fragile infra. UserOps are more expensive than native transactions, especially on Ethereum mainnet.

Gelato addresses inefficiency by post-execution settlement via 1Balance and by offering RaaS with cheaper rollup deployments.

EIP-7702: An Update to Account Abstraction

EIP-7702 allows EOAs to execute contract code at their own address, merging EOA simplicity with smart account programmability. It builds on EIP-3074’s delegation concepts but applies them natively.

Is 7702 a replacement for ERC-4337?

No. EIP-7702 is complementary. EOAs can gain smart account features while still interoperating with ERC-4337 bundlers and paymasters.

Differences from ERC-4337

ERC-4337 uses proxy smart accounts. EIP-7702 allows EOAs themselves to adopt code directly with new EVM opcodes like SET_TX_CODE_TYPE. This simplifies UX and infra since the account address doesn’t change.

Implementation Layers

• Smart Contract Layer: EOAs attach contract code for batching and logic execution.

• Infrastructure Layer: Bundlers and paymasters adapt to support upgraded EOAs.

• Wallet Layer: SDKs updated for SET_CODE_TX_TYPE, enabling embedded wallets with gas sponsorship.

• RPC Standardization: Standards like ERC-5792, ERC-7677, and ERC-7715 enable interoperability.

UI/UX Implications

Users keep the same address, gain batching and sponsorship, and interact seamlessly with apps. However, EOAs retain seed-based sudo access, and developers must design for replay protection and storage issues.

EIP-7702 with ZeroDev and Gelato

ZeroDev lets EOAs upgrade into smart accounts via a 7702 authorization message attaching Kernel proxy code. Gelato handles UserOps, gas, and infrastructure.

This enables features like gas sponsorship, batching, and session keys without migration.

Passkeys + EIP-7702 Demo with Gelato

Demo UI: gelato-eip-7702-demo.vercel.app
Demo Repo: github.com/gelatodigital/gelato-eip-7702-demo

Gelato’s demo marketplace integrates Passkeys (WebAuthn) with EIP-7702, enabling biometric-authenticated smart accounts.

Conclusion

ERC-4337 and EIP-7702 complement each other. ERC-4337 enables programmable smart wallets via bundlers, while 7702 makes EOAs natively upgradeable to smart accounts. Gelato solves cost inefficiencies with 1Balance and RaaS, enabling developers to deliver gasless, efficient UX.

Developer Library

• Demo UI: gelato-eip-7702-demo.vercel.app

• Demo Repo: github.com/gelatodigital/gelato-eip-7702-demo

• Gelato Docs: docs.gelato.cloud

• ZeroDev Docs: docs.zerodev.app

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