Ethereum's Upcoming Pectra Upgrade to Boost Crypto Wallet Functionality Despite Security Concerns
Summary:
The upcoming Pectra update to Ethereum blockchain is expected to bring significant enhancements to cryptocurrency wallets and their user interface. Including Ethereum Improvement Proposal (EIP-3074), this upgrade will give standard crypto wallets smart contract functionalities, including sponsored transactions. Also, it introduces a social recovery feature, thereby eliminating the need for the typical recovery phrase. However, concerns over security remain, with experts warning that a single faulty signature could empty an account.
The upcoming Pectra update to the Ethereum blockchain, expected between late 2024 and early 2025, will bring significant enhancements to crypto wallets and their user interface. The upcoming upgrade will consist of Ethereum Improvement Proposal (EIP-3074), enabling standard crypto wallets to operate like smart contracts.
Standard Externally Owned Accounts (EOAs) – such as MetaMask wallet – will gain smart contract functionalities through EIP-3074, including transaction grouping, enabling users to authorize only once, and sponsored transactions. The sponsored transactions will allow one wallet to designate funds for another to use, a feature introduced in ERC-4337 as account abstraction.
An anonymous developer from DefiLlama, known as "0xngmi", noted a downside to EIP-3074 in an April 11 X post, warning that a single incorrect signature could potentially empty an address completely.
However, Gaslite's co-founder, Harrison Leggio, noted in an X post that regardless of security anxieties, people will find ways to lose their money. He added, "People literally hand over their private keys to trading bots".
Laurence Day, a software engineer, suggested that the promising application of EIP-3074 is its addition of sponsored transactions, which would allow assets to be stored in Ether-less wallets sponsored by contract-controlled wallets.
EIP-3074 will also introduce a social recovery feature, eliminating the need for the usual 12 to 24-word recovery phrase. An anonymous Web3 advisor, "cygaar", clarified that by introducing two new operating commands – AUTH and AUTHCALL – EIP-3074 can transform wallets into smart contracts.
The AUTH operation verifies signatures and corresponding actions. The AUTHCALL subsequently "calls the target contract(s) with the originator address being the caller" superseding the message sender as per cygaar’s statement.
Coming on the heels of the Dencun update, which brought reductions in L2 transaction fees, the Pectra upgrade is eagerly anticipated. Vitalik Buterin, Ethereum's co-founder, also laid out the roadmap for the "Purge" earlier this month. The Purge aims to discard obsolete and superfluous network history to streamline it.
Published At
4/12/2024 9:12:01 AM
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