Visa Experiments With ERC-4337 Account Abstraction

Wednesday, May 17, 2023

Quick Take

  • Visa deploys experimental ERC-4337 contracts.
  • Pimlico launches an ERC-20 Paymaster.
  • Curve releases a UI for its crvUSD stablecoin.
  • Gravita launches its borrowing protocol.

Visa Experiments With ERC-4337 Account Abstraction

Visa deployed its own ERC-4337 account abstraction experimental Paymaster contracts on the Goerli testnet. First proposed by Vitalik in 2021, ERC-4337 is a standard that introduces an implementation for account abstraction at the application level. Account abstraction refers to using contract functionality to improve UX on user accounts.

In a report, Visa showcases two use cases for ERC-4337, including a Paymaster contract for fully sponsored transactions and a Paymaster contract for accepting ERC-20 tokens as payment for gas fees. Paymasters are contracts that can sponsor gas fees for contract accounts and are responsible for setting their own fee logic.

Pimlico Launches An ERC-20 Paymaster

Account abstraction infrastructure provider Pimlico deployed an ERC-20 Paymaster, allowing smart contract wallet providers to accept tokens as payment for gas fees. Pimlico’s ERC-20 Paymaster initially supports USDC for gas payments on any EVM chains supported by Chainlink. Support for additional tokens can be added upon request.

The Pimlico Paymaster is also open-source, entirely on-chain, and has been audited by Nethermind. Developers can use Pimlico’s Typescript SDK to integrate support for token gas payments. Pimlico takes a 10% fee by default on each transaction. The project joins Stackup and Alchemy in launching Paymaster services.

crvUSD Stablecoin Goes Live

Curve Finance released a user interface for crvUSD, its native over-collateralized stablecoin pegged to the USD. Anyone can now use sfrxETH, a liquid staking token by Frax Finance, as collateral for minting crvUSD. crvUSD features a novel liquidation mechanism called the Lending-Liquidating AMM Algorithm (LLAMMA).

Instead of an abrupt liquidation, which can lead to cascading liquidations for large positions, the LLAMMA gradually liquidates (“soft liquidation”) a user’s collateral into crvUSD. When collateral prices rebound, the system attempts to convert the crvUSD back into the collateral asset. Curve also plans to add support for stETH as collateral.

Curve Finance first teased plans for a stablecoin in July, released a whitepaper in November, and deployed mainnet contracts for crvUSD earlier this month.

Gravita Protocol Goes Live

Gravita, a new borrowing protocol supporting liquid staking tokens (LSTs), is now live on Ethereum mainnet. Users can now use WETH, Rocket Pool’s rETH, Lido’s wstETH, and Liquity’s bLUSD tokens as collateral for minting the GRAI stablecoin. Borrowers can obtain interest-free GRAI loans of up to 85% in LTV on LST collateral assets.

Borrowers are charged a fixed 0.5% borrowing fee on each loan. Over 800k GRAI has been minted so far. Gravita is a fork of Liquity Protocol, that features collateral debt positions called vessels as well as similar stablecoin mechanics to LUSD. The protocol also plans to launch a native governance token at a later date.

Lido Processes Celsius Withdrawl Request

Lido Finance processed a staking withdrawal request by Celsius for 428k stETH. According to Research Analyst Tom Wan, the withdrawal by Celsius constitutes over 96% of all Lido withdrawal requests. Roughly 49k ether remains available in Lido’s buffer vault at the time of writing.

Lido community members also published a new proposal seeking to introduce revenue share utility for the protocol’s LDO token. The proposal suggests redirecting a portion of future Lido DAO revenue to LDO stakers through a buyback and distribute mechanism.