What are smart accounts

Learn everything about smart accounts and their importance.

On Solana, all data is stored in accounts. Traditional crypto wallets are a gateway for interacting with these "light accounts" and signing transactions. But, these light accounts are non-programmable, controlled by private keys, and rely on seed phrases for recovery.

Smart accounts revolutionize the concept of light accounts, offering a dynamic and programmable alternative. This shift is enabled by separating the account and its controlling object (typically the private key). Instead of relying on a private key for transaction authorization, smart accounts use programs or smart contracts.

They bring programmability and intelligence to traditional crypto wallets, allowing developers to set parameters and define rules and logic to build novel asset management and self-custody solutions.

Smart accounts move the industry forward from a one-size-fits-all custody model to one based on programmability and customization. They eliminate existing pain points like seed phrases and unlock new use cases that enable features like:

  • Multi-signature: multisig wallets are controlled by multiple private keys with assigned roles to enable secure intra and inter-company management of onchain assets.

  • Gas abstraction: pay transaction fees in any token, not just the native network token.

  • Spending limits: set budgets for small transactions without needing multi-sig or 2FA approval.

  • Batched transactions: group multiple blockchain actions into a single transaction for seamless app interactions.

To recap the important aspects of smart accounts, here are some definitions:

  • Light accounts are non-programmable accounts that store onchain data and are controlled by a private key.

  • Smart accounts are an upgraded version of light accounts that introduce programmability and are controlled by smart contracts that define the authentication rules.

  • Account abstraction is the process of turning an account into a smart account. At a technical level, this involves decoupling the account from the object authorized to control that account (traditionally a private key).

You can learn more about smart accounts in our blog here.

Smart accounts and Squads

Safe and Squads are two core protocols pushing smart account adoption forward. Safe (launched in 2018) has established itself as the EVM smart account standard - securing over $100 billion in value across 8+ million smart accounts.

Squads Protocol, which launched in 2021, is the smart account standard on Solana and the SVM - securing $10 billion across 40+ thousand smart accounts.

Squads, built on top of Squads Protocol, enables businesses to use this smart account technology to have ownership of their assets with multi-signature logic and manage various on-chain assets together in an intuitive, secure and decentralized way.

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