A smart wallet is a crypto wallet that you control, built on a smart contract in the blockchain. It offers better security options (such as account recovery), customizable features through programmable logic, and a smoother user experience (including gas fee abstraction and combined transactions).
How Do Smart Wallets Work?
Classic crypto wallets usually connect to Externally Owned Accounts (EOAs). These accounts depend on one private key for access and signing transactions, meaning users need to approve each action they take on the blockchain with their account.
Smart wallets come in different styles. Although ERC-4337, which aims to simplify account management, isn’t active yet, it has received the green light from Ethereum’s governance. Instead of requiring changes to the consensus layer, ERC-4337 utilizes UserOperation objects that encapsulate what the user wants to do, and these are grouped into one transaction to be added to an Ethereum block.
The Benefits
Smart wallets offer a bunch of advantages, enhancing how users interact and making blockchain tech easier to use. Here are six main perks of smart wallets:
- No Third-Party Installs
- No Seed Phrases
- Highly Flexible
- Gas Abstraction
- Batched Transactions
The Risks
Smart wallets are definitely a game-changer in the world of crypto wallets, but they still come with their own set of risks.
- Smart Contract Bugs
- Malicious Guardians
Some Top Smart Wallets
Here is some top smart wallets you can know:
- OKX Smart Wallets
- Fuse
- Locksmith
- Coinbase Smart Wallet
Conclusion
Keeping seed phrases safe on paper can be a hassle. But with a smart account, all you need is a passkey to easily access and manage your wallet with just a few clicks. Plus, you can combine several actions into one transaction, so you won’t have to deal with multiple approvals.
Smart wallet is key to boosting the use of smart wallets in the crypto world. Once you see how easy smart wallets are, you’ll never want to go back to the old-school crypto wallets. Just a heads up, this article is for informational and educational purposes only, not financial advice. Always do your own research and make sure you get how smart wallets work before putting your assets on the platform.