How To Build Next-Gen Smart Wallets With ERC-4337

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The evolution of blockchain wallets has moved far beyond simple externally owned accounts (EOAs). As decentralized applications grow more complex and mainstream adoption accelerates, wallets must become programmable, user-friendly, and secure by design. ERC-4337 introduces Account Abstraction without protocol-level changes, enabling a new generation of smart wallets that redefine how users interact with Ethereum and EVM-compatible networks.

This article explores how to build next-generation smart wallets using ERC-4337, covering architecture, core concepts, implementation steps, and practical coding examples. By the end, you will understand how to design a smart wallet that supports gas abstraction, social recovery, batched transactions, and modular security—features impossible with traditional EOAs.

Understanding the Limitations of Traditional Wallets

Traditional Ethereum wallets rely on EOAs controlled by a single private key. While simple and efficient, this model presents several challenges:

  • Users must hold native tokens to pay gas fees
  • Losing a private key results in permanent asset loss
  • No native support for transaction batching
  • Limited extensibility for security or logic upgrades
  • Poor onboarding experience for non-technical users

These limitations have hindered mass adoption. ERC-4337 addresses them by introducing smart contract wallets that behave like EOAs but are fully programmable.

What Is ERC-4337 Account Abstraction?

ERC-4337 is a standard that enables account abstraction without modifying Ethereum’s consensus layer. Instead of protocol changes, it introduces a new transaction flow using a special object called a UserOperation.

Key components include:

  • Smart Account – The wallet implemented as a smart contract
  • UserOperation – A transaction-like structure submitted by users
  • Bundler – Collects UserOperations and submits them on-chain
  • EntryPoint – A singleton contract that validates and executes operations
  • Paymaster – Optional contract that sponsors or customizes gas payments

Together, these components enable flexible wallet behavior while remaining fully compatible with Ethereum.

High-Level Architecture of an ERC-4337 Smart Wallet

A typical ERC-4337 wallet architecture looks like this:

  1. User creates a UserOperation instead of a normal transaction
  2. UserOperation is sent to a bundler
  3. Bundler submits a bundle to the EntryPoint contract
  4. EntryPoint validates the wallet and optional paymaster
  5. Wallet logic executes the transaction
  6. Gas fees are handled programmatically

This separation allows wallet developers to customize authentication, gas logic, and execution without changing Ethereum itself.

Designing a Minimal Smart Wallet Contract

At the core of ERC-4337 is the smart account contract. Below is a minimal wallet implementation that supports signature validation and execution.

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.19;

import "@openzeppelin/contracts/utils/cryptography/ECDSA.sol";

interface IEntryPoint {
    function depositTo(address account) external payable;
}

contract SmartWallet {
    using ECDSA for bytes32;

    address public owner;
    IEntryPoint public entryPoint;

    constructor(address _owner, address _entryPoint) {
        owner = _owner;
        entryPoint = IEntryPoint(_entryPoint);
    }

    modifier onlyEntryPoint() {
        require(msg.sender == address(entryPoint), "Not EntryPoint");
        _;
    }

    function validateUserOp(
        bytes32 userOpHash,
        bytes calldata signature
    ) external view returns (bool) {
        return owner == userOpHash.toEthSignedMessageHash().recover(signature);
    }

    function execute(
        address target,
        uint256 value,
        bytes calldata data
    ) external onlyEntryPoint {
        (bool success, ) = target.call{value: value}(data);
        require(success, "Execution failed");
    }

    receive() external payable {}
}

This wallet:

  • Stores an owner
  • Validates signatures
  • Executes arbitrary calls
  • Restricts execution to the EntryPoint

Creating and Submitting UserOperations

Unlike normal Ethereum transactions, ERC-4337 uses a structured UserOperation object.

A simplified JavaScript example:

const userOp = {
  sender: smartWalletAddress,
  nonce: await walletNonce(),
  initCode: "0x",
  callData: encodeExecute(target, value, data),
  callGasLimit: 300000,
  verificationGasLimit: 100000,
  preVerificationGas: 21000,
  maxFeePerGas: ethers.parseUnits("20", "gwei"),
  maxPriorityFeePerGas: ethers.parseUnits("2", "gwei"),
  paymasterAndData: "0x",
  signature: signUserOpHash()
};

The UserOperation is sent to a bundler via RPC rather than the mempool.

Implementing Gas Abstraction With Paymasters

One of the most powerful features of ERC-4337 is gas abstraction, which allows users to pay fees in alternative ways or not at all.

A simple Paymaster contract:

contract SimplePaymaster {
    address public owner;

    constructor() {
        owner = msg.sender;
    }

    function validatePaymasterUserOp(
        bytes calldata,
        uint256 requiredGas
    ) external view returns (bool) {
        return requiredGas < 500000;
    }

    receive() external payable {}
}

Use cases include:

  • Free transactions for onboarding
  • Subscription-based wallets
  • Paying gas with ERC-20 tokens
  • Sponsored transactions for games or DAOs

Supporting Social Recovery and Multi-Signature Security

ERC-4337 wallets can implement custom authentication logic, including social recovery.

Example guardian-based recovery logic:

mapping(address => bool) public guardians;
uint256 public recoveryCount;

function recover(address newOwner, address[] calldata approvals) external {
    uint256 valid;
    for (uint i = 0; i < approvals.length; i++) {
        if (guardians[approvals[i]]) valid++;
    }
    require(valid >= 3, "Not enough guardians");
    owner = newOwner;
}

Benefits:

  • No single point of failure
  • Protection against key compromise
  • User-friendly recovery processes

Enabling Transaction Batching and Automation

ERC-4337 wallets can execute multiple actions in a single operation.

function executeBatch(
    address[] calldata targets,
    bytes[] calldata data
) external onlyEntryPoint {
    require(targets.length == data.length);
    for (uint i = 0; i < targets.length; i++) {
        (bool success,) = targets[i].call(data[i]);
        require(success);
    }
}

This enables:

  • One-click DeFi workflows
  • Gas-efficient multi-step actions
  • Automated recurring transactions

Upgradeability and Modular Wallet Design

Next-gen wallets should be upgradeable. ERC-4337 supports this via proxy patterns.

Common approaches:

  • UUPS proxies
  • Diamond standard
  • Module-based permissions

This allows wallets to:

  • Add new authentication methods
  • Upgrade security logic
  • Integrate new chains or standards
  • Evolve without asset migration

Security Considerations for ERC-4337 Wallets

Smart wallets introduce new attack surfaces. Best practices include:

  • Strict EntryPoint access control
  • Reentrancy protection
  • Gas limit enforcement
  • Signature replay prevention
  • Auditing custom Paymasters
  • Monitoring bundler behavior

Security must be designed from day one, not added later.

User Experience and Onboarding Improvements

ERC-4337 enables wallet UX similar to Web2 applications:

  • Email or passkey-based login
  • No upfront gas fees
  • Automatic wallet creation
  • In-app recovery options
  • Seamless multi-chain usage

This dramatically lowers the barrier to entry for new users.

Real-World Use Cases for Next-Gen Smart Wallets

ERC-4337 wallets power:

  • Consumer crypto apps
  • DAO treasury management
  • Gaming wallets
  • Enterprise custody solutions
  • Subscription-based services
  • Layer-2 onboarding flows

They represent the foundation of Ethereum’s future UX.

Conclusion

ERC-4337 is not merely an incremental improvement—it is a paradigm shift in how wallets are built and used. By decoupling user identity from private keys and enabling programmable execution, it transforms wallets into intelligent, autonomous agents rather than passive key holders.

Next-generation smart wallets built with ERC-4337 offer:

  • True gas abstraction
  • Custom authentication and recovery
  • Batched and automated transactions
  • Upgradeable and modular security
  • Web2-like onboarding experiences

From a developer’s perspective, ERC-4337 unlocks unprecedented flexibility without requiring Ethereum protocol changes. From a user’s perspective, it removes nearly every friction point that has historically limited blockchain adoption.

As Ethereum continues to scale through rollups and modular infrastructure, smart wallets will become the primary interface between users and decentralized systems. ERC-4337 is the blueprint for that future—one where wallets are secure, intuitive, programmable, and invisible in their complexity.

Building on ERC-4337 today means building for the next decade of Ethereum innovation.