In a recent proposal, notable Ethereum developers, including Vitalik Buterin, Sam Wilson, Ansgar Dietrichs, and Matt Garnett, have suggested a new transaction type aimed at enhancing Externally Owned Accounts (EOAs).

This proposal, which is currently in draft status, outlines the introduction of a new transaction type that would temporarily transform EOAs into smart contract wallets during transaction execution, offering functionalities akin to those outlined in EIP-3074.

As per the draft proposal, known as EIP-7702, the new transaction type would facilitate transaction batching and sponsored transactions paid for by another account. It would incorporate a contract_code field and a signature, enabling EOAs to temporarily adopt smart contract functionalities.

The primary goal is to improve the usability and security of EOAs, addressing common challenges such as batching transactions, sponsoring transactions, and privilege de-escalation.

Furthermore, the standard would enable privilege de-escalation by allowing users to sign subkeys with restricted permissions. For instance, a wallet administrator could authorize subkey holders to spend only ERC-20 tokens, utilize only a portion of a wallet balance, or access specific applications.

As an alternative to EIP-3074, the draft proposal aims to tackle forward-compatibility issues. Unlike EIP-3074, it avoids introducing opcodes, which might become obsolete in an "endgame account abstraction" scenario, where all users employ smart contract wallets.

Buterin and co-proposers anticipate that endgame account abstraction could become necessary when quantum computing renders the cryptography used in standard Externally Owned Accounts ineffective. EIP-3074 could potentially lead to a separate invoker contract ecosystem, diverging from the smart contract wallet ecosystem. With EIP-7702, the proposers seek to prevent such a division of efforts.

Despite its potential advantages, Buterin acknowledges that EIP-7702 may encounter similar criticism as its counterpart, as it necessitates trust in code and could contribute to centralization. He believes that any proposal involving privilege de-escalation faces this challenge.

EIP-7702 is presently in the draft stage, with its future uncertain. However, developers plan to incorporate EIP-3074 into Ethereum's upcoming upgrade, Pectra, expected in late 2024 or early 2025.

Another related standard, ERC-4337, which was deployed to Ethereum in March 2023, offers account abstraction features with similar applications, including group-access wallets and bundled and sponsored transactions. These standards collectively enable services to manage user wallets without directly holding custody of user funds, presenting a viable alternative to fully centralized services.