Alchemy reports deploying over 1 million smart accounts

In the fourth quarter of 2023, Alchemy saw an unexpected surge in ERC-4337 smart contracts, creating over 960,000 accounts.

This explosion of interest underscores the zeal of app developers to tackle user experience challenges, per Alchemy’s report.

Will Hennessy, Alchemy’s account abstraction lead, expressed his surprise, attributing the rapid adoption to the Ethereum Foundation’s deployment and developers’ eagerness to address user experience challenges.

“The Ethereum Foundation just deployed ERC-4337 contracts in March 2023, so this early adoption is faster than expected,” he said via his personal X account. “It shows how hungry app developers are to solve [user experience] problems like gas sponsorship.”

Different from traditional wallet accounts, smart accounts let users create ‘user operations’ instead of just transactions. According to Hennessy, this innovation “shows how hungry app developers are to solve [user experience] problems like gas sponsorship.”

This feature improves efficiency, especially in trading and gaming. ERC-4337 introduces sponsored transactions, allowing entities to cover gas fees for users, which Hennessy highlights as “a departure from current methodology, where fees are paid exclusively in the network’s native currency.”

This standard also improves security and convenience through multi-signature transactions and simplified account recovery, marking a significant step towards making web3 more user-friendly. Hennessy emphasizes that account abstraction’s role in facilitating the easy adoption of web3 apps will continue to attract a diverse user base.

“Account abstraction makes it easy for anyone to start using a web3 app,” he said. “By lowering the barrier to entry with social login and gas sponsorship, apps are able to onboard more users, including those who might have lower intent.”

User operations by ‘bundlers’ saw a substantial 194% increase in Q4, driven largely by apps such as Grindery, FanTV, and Cyberconnect.

Hennessey adds that “current retention is primarily determined by how useful the application is. They’re working on new features to continually engage users.”

The introduction of paymasters, allowing gas fees to be paid in ERC-20 tokens, has proven popular, covering an estimated $1.16 million in gas fees.

Hennessey emphasizes that “flexibility around transaction fee payment remains a popular demand from users.”