FinTech

Revolutionizing Web3 Onboarding: Beyond Seed Phrases and Towards Account Abstraction

By Ivo Georgiev, CEO and Co-Founder of Ambire Wallet

The transition to web3 promises a decentralized future, where individuals have greater control over their digital lives and assets. This vision is captivating, but for it to become a reality we must address a critical roadblock: today’s web3 wallet access and recovery processes – which are simultaneously underpinned by, and undermined by, the use of seed phrases.

For much of the web2 era, email/password combinations have served as the cornerstone of online account registration and management. As a result, most internet users are now accustomed to the ease of changing passwords or recovering accounts through email-based methods. Then came web3 and the concept of seed phrases, which are generated using a cryptographic algorithm to ensure that they are highly resistant to brute force attacks or unauthorized access.

Seed phrases are a stark departure from the email/password combinations most people are familiar with. They're essentially keys to your digital kingdom, but there's a catch – you can't change them, and if you lose them, there's often no way to recover your assets. On top of that, seed phrases are typically only presented to users once during the wallet creation process, and many new users lack the knowledge to securely store and protect their seed phrases.

As a result, while seed phrases have long served as the foundational access mechanism for various web3 wallets and cryptocurrency systems, they come with significant limitations that have hindered their widespread adoption and usability. Their complexity and lack of user-friendliness exacerbate the risk of human error, which has resulted in myriad user inconveniences and, in many cases, catastrophic fund losses.

Fortunately, there is hope on the horizon. Developers are actively working on more flexible, user-friendly ways for people to access and recover their web3 wallets. The solution lies in account abstraction, a concept that simplifies the private key aspect of cryptocurrency management. Rather than eliminating private keys altogether (which is not possible), this approach aims to abstract away public-private key combinations with easily recoverable and familiar password-based authentication mechanisms.

For example, smart wallets can implement a 2/2 multisig contract in order to safeguard against potential key loss and mismanagement. One key could be held by the user and abstracted with a password, while the other resides on the wallet provider's backend. In case of an emergency or a password reset, the backend key can trigger a time-locked transaction to change the user's key. This mechanism enables secure recovery while keeping the user's assets in the same place.

Another promising solution for decentralized wallet recovery mechanisms leverages DKIM (DomainKeys Identified Mail), a standard email authentication method that adds a digital signature to outgoing messages. Most web2 emails today are cryptographically signed through DKIM, and developers are now repurposing this technology to recover Ethereum accounts.

This approach enables a new generation of decentralized apps (dApps) that allow users to sign up with an email/password combination without compromising security. Additionally, solutions like DKIM enable users to change their password and recover their account through familiar processes mirror that of existing web2 applications. In other words, these recent innovations may very well give rise to “seedless” wallets, which fully abstractify their users’ keys and dramatically lower the barriers to web3 entry.

Of course, this approach is not a silver bullet, since you would still be entrusting security to your email provider. However, this level of trust is far more realistic for most people than entrusting a startup to safeguard their private keys. In fact, the team working on DKIM signatures received a grant from the Ethereum Foundation this year, which is a tacit endorsement of this novel approach.

The current limitations of seed phrases as web3's foundational access mechanism are self-evident. This outdated feature hinders accessibility and usability, and their rigid nature doesn't align with the principles of user-centric design that web2 has honed over the years.

Account abstraction, with solutions like DKIM Signatures, offers a way forward. It promises a more user-friendly, flexible, and secure pathway for individuals to embrace the benefits of web3. By prioritizing these user-centric onboarding experiences, we can accelerate the adoption of Web3 and truly democratize the digital realm.

It's time for the web3 community to rally behind these innovations and make the decentralized web accessible to all. As we envision a future where individuals have greater control over their digital lives and assets, let's ensure they can access them easily. Seedless web3 wallets are on the horizon, and they hold the key to unlocking the full potential of the decentralized web.

Ivo Georgiev, CEO Ambire Wallet

Ivo is the CEO and Co-Founder of Ambire Wallet, a web and mobile smart account wallet that makes self-custody easy and secure. In 2017, Ivo co-founded AdEx, a decentralized advertising platform focused on transparency and user privacy. Additionally, Ivo co-founded and developed the technology behind Stremio, helping grow to over 25 million sign ups. With a background in coding and building new products, Ivo is an entrepreneur who is passionate about building products that improve UX/UI design, security, and privacy. 

About Ambire Wallet

Founded in 2017, Ambire Wallet is a web and mobile smart account wallet that makes self-custody easy and secure. Ambire leverages account abstraction to enable huge UX improvements such as transaction simulation and batching, paying gas in stablecoins and more. With Ambire, anyone can create a secure & recoverable account without writing down a seed, installing anything, or needing $ETH for gas. Ambire Wallet is fully non-custodial, engages in multiple L1 and L2 networks, interacts with dApps, and offers long-term value through its native WALLET token mechanism. Ambire supports most EVM chains and L2s, including Ethereum, Polygon, Fantom, Avalanche, Optimism and others.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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