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⚙️ Smart contract wallet (SWA)

A smart contract wallet is a type of cryptocurrency wallet that utilizes programmable code, known as smart contracts, to manage and control digital assets on the blockchain. Unlike traditional wallets that rely solely on private keys, smart contract wallets enable advanced features such as multi-signature approvals, spending limits, and account recovery options, enhancing both security and flexibility for users.

Differences Between Smart Contract Wallets and Externally Owned Accounts (EOAs):

  1. Control Mechanism:
    • EOAs: Controlled directly by users through private keys. Possession of the private key grants full control over the account and its assets.
    • Smart Contract Wallets: Governed by programmable smart contracts that define specific rules and conditions for transactions, allowing for automated and conditional operations.
  2. Functionality:
    • EOAs: Primarily support basic functions like sending and receiving tokens.
    • Smart Contract Wallets: Offer advanced features such as multi-signature transactions, customizable security protocols, and direct interaction with decentralized applications (DApps).
  3. Security Features:
    • EOAs: Security is solely dependent on the safeguarding of the private key; loss or compromise of the key can result in loss of assets.
    • Smart Contract Wallets: Provide enhanced security measures, including multi-factor authentication and programmable access controls, reducing reliance on a single private key.
  4. Transaction Initiation:
    • EOAs: Can independently initiate transactions on the blockchain.
    • Smart Contract Wallets: Typically require interaction with an EOA to deploy and execute smart contracts, as they cannot initiate transactions autonomously.

In summary, while EOAs are straightforward and user-controlled through private keys, smart contract wallets leverage the programmability of smart contracts to offer enhanced security, flexibility, and functionality, allowing users to tailor their wallet's behavior to their specific needs.