Mass Adoption Narratives: Account Abstraction

If we want to onboard the public, we need to improve the current UX (user experience) of decentralized blockchain services. What does that mean? Basically, anyone should be able to get on their phone or computer and have an easy, intuitive way to access web3.

Eventually, using web3 will have to be easier than using web2. However, it’s unrealistic to expect that we can go from the current state of the industry to that point without first creating web2-like interfaces in order to increase adoption. But how, you ask? To answer, I want to show you what a few projects are doing with account abstraction. Today, we’ll look at a few of the features being introduced by dappOS and Instadapp.

As it stands, web3 is lacking its version of Windows/MacOS, which means we have to rely on traditional web2 operating systems to access all of its services. However, dappOS is working to change that.

The way that Windows made personal computing easy for people was by converting all the confusing technical stuff into an easy-to-navigate screen that laid everything out in a plain way.

DappOS is doing the same thing for web3 by giving users a central hub to connect to, from which they can access all sorts of decentralized apps (dapps).

So far, they’ve partnered with some big names in the industry, including MakerDAO, Polygon, Avalanche, zkSync, and GMX. They also made the cut to be part of Binance’s heralded incubation program last year.

Their UX simplification can be boiled down to two main properties: interchain accounts and account recovery.

Anyone who’s used DeFi knows that each chain is completely siloed off from all the others. This ultimately creates a strong barrier to entry for anyone who isn’t extremely passionate about web3.

Using dappOS, users would be able to use their funds across integrated blockchains as if it was all the same wide-open area. Currently, users can access Optimism, BNB chain, and Polygon. So, say the bulk of your funds are on Polygon and you see that Velodrome (a popular dapp on Optimism) has really amazing rewards on one of its pools. However, Velodrome isn’t on Polygon, and you don’t want to deal with bridging a bunch of money over. Using dappOS, you’d be able to deposit funds into Velodrome without all the extra steps of bridging.

Perpetual Protocol, which is a perps DEX on Ethereum and Optimism, was one of the first projects to integrate with dappOS. They gave a great summary of just how much easier an interchain account improves UX:

In the grand scheme of things, 25 minutes of time savings may not be a lot. However, considering most people won’t even bother to stay on a website if the load time is more than a couple seconds, this is an exponential improvement over the status quo.

Interchain accounts also improve liquidity across various chains and apps. It takes a ton of networking and potentially unhealthy (dilutive) bootstrapping for newer protocols to attract users. As a result, the market for TVL is still dominated by early projects with first-mover advantage.

With interchain accounts, funds will more naturally go to more capital-efficient protocols that improve on a lot of the early DeFi apps, leading to a more efficient space altogether.

One of the most annoying parts of setting up a new wallet has to be dealing with private keys/seed phrases. DappOS aims to once again improve UX by giving users three alternative recovery methods – we’ll go through them in order from most to least complicated:

The first method is a two-key system with a functional key and a guardian key. The functional key is stored on the user’s mobile device, PC, etc. to be accessed whenever they interact with a dapp. The guardian key serves as a backup and ideally is stored on an unused device, on paper, etc. Whenever the user has to enter their functional key manually, it’s verified by the guardian key The second method simply allows the user to store their guardian private key via a centralized, trusted service such as iCloud or AWS.

The third method allows users to set up a guardian email account. From the guardian account, the user can send an email to reset their guardian key. That email is received by a dappOS node, which will then produce a ZK proof to verify the request. Once the proof is successfully generated, the account information will be reset according to the user’s request.

The team at Instadapp echoes a core theme of mass adoption by saying that “one day users won't have to worry about what chain they're using or what token they're paying gas in.” While Instadapp’s products have largely focused on UX improvement since its inception, the team has recently generated some chatter around their latest invention: Avocado.

Avocado is a blockchain aggregator, which essentially means that it organizes a ton of web3 services into a single, clean, decentralized app. Anyone with a Metamask, Trust Wallet, or Coinbase Wallet account will be able to connect their address to Avocado, where they’ll get a new address that aggregates all of their web3 activity.

Even though Avocado was just launched in March, it already supports an impressive variety of chains: Ethereum, Optimism, Arbitrum, Polygon, Avalanche, BNB chain, Gnosis Chain, and it just recently became one of the first dapps to enable integration with Polygon zkEVM just 9 days after its mainnet beta went live.

So, how does it all work?

Similar to dappOS, Avocado connects to the underlying dapps on each supported chain via its own RPC and broadcaster network.

Without getting too technical, whenever the user interacts with a dapp, they’re sending information to the blockchain. The RPC/broadcasters are the agents that help facilitate that transfer of information.

The RPC network finds an available broadcaster, which basically sends the user’s transaction requests to the blockchain. If the information encrypted into the request matches the user’s private key, the transaction is confirmed on-chain. By having its own RPC/broadcaster network, Avocado can therefore serve as the middleman between the user, the dapps, and the underlying blockchain.

Avocado Gas Tank is a designated portion of USDC set aside by the user to pay gas fees. That’s right – when using Avocado, the only gas token you need is USDC, which means you don’t need to worry about owning a bunch of different native gas tokens to use dapps on different blockchains.

This reiterates the benefit posed above about liquidity becoming looser between chains. Another hassle of switching blockchains is making sure you have the appropriate gas token for any specific chain that you want to use, and then keeping enough of that gas token in your account to be able to handle future transactions. Having one single gas token that can be used on all chains is a great way to clean up UX, and the fact that it’s a stablecoin makes it even more user-friendly.

While Instadapp’s top focus is making web3 easy for the user, part of that also involves integrating with as many dapps as possible. To bootstrap this process, Avocado currently charges a 20% premium on gas fees, half of which goes to the underlying dapp. To oversimplify a bit, if the current fee to trade on Uniswap is $2, and Avocado charges $2.40, $0.20 would go to the Uniswap protocol. The other $0.20 goes to Instadapp’s treasury. Going forward, these incentives will be determined by holders of Instadapp’s native token, INST.

From a speculator’s perspective, INST is a token to watch this year. Products like Avocado could facilitate the mass adoption of web3, which is the ultimate “addressable market” in crypto. For 2023, it’s one of the Instadapp’s primary goals to also generate more revenue to pass along to users:

Obviously, if Avocado proves successful, that would mean a ton of rewards for INST stakers, which is always great for demand.

Based on what these two projects alone are working on, you can get a sense of how web3 developers are confronting the industry’s growing pains, and there are dozens of other projects working on similar solutions. The bottom line is that the products within DeFi and related fields can continue to improve exponentially, but the source of sustainable growth for the entire industry has to be a clean and easy way to actually use the products. 2023 could very well kick-start the mass adoption as protocols like dappOS and Instadapp emerge as web3’s foundation.