Visa Proposes Automatic Payments Using Ethereum Layer 2 System StarkNet

Payments processor Visa (V) recently proposed a system known as “account abstraction” that uses smart contracts can be used to enable automated programmable payments on Ethereum, per a crypto thought leadership post.

This solution involves the creation of a smart contract that acts as an intermediary between a user account and a contract account, allowing for the creation of a self-custodial wallet that can make automatic recurring payments without requiring the active participation of the user.

Such a move would allow recurring payments to be conducted entirely over blockchain networks, which currently are devoid of such capability, Visa said. The company proposed deploying the system on the Ethereum layer 2 network — StarkNet.

Currently, there are two types of accounts on the Ethereum network: Externally Owned Accounts (EOA) controlled by a private key, and Contract Accounts (CA), which are essentially smart contracts.

EOAs can initiate transactions, but CAs cannot. However, by using Account Abstraction it is possible to create a smart contract that can initiate transactions on behalf of an EOA, enabling the creation of a self-custodial wallet that can make automatic recurring payments, Visa said.

Account Abstraction (AA) is a proposal that aims to combine user accounts and smart contracts into a single type of account on the Ethereum blockchain. This is possible by allowing for the creation of validity rules for individual transactions.

One use case for AA is the creation of "delegable accounts," which allow for the automation of payments through the use of smart contracts.

With a delegable account, a user can delegate the ability to initiate a payment to a pre-approved smart contract, known as an "auto payment contract,” Visa said.

Here’s how it could hypothetically work: When a user visits a merchant's website and agrees to allow for auto payments, the auto payment contract's address is added to the user's allow list.

The merchant could then trigger a payment by calling the charge function of the auto payment contract, causing the user's account to initiate a payment that will be valid due to its presence on the allow list.

As of Tuesday, Visa did not reveal any plans to use the system as part of its offered services.

Solana-Based Raydium Exchange Victim of 7-Figure Exploit

Solana-based decentralized exchange platform Raydium confirmed in a tweet that it had been the victim of an exploit.

At press time, around $2 million worth of different cryptocurrencies was sitting in the account of an attacker that managed to maliciously withdraw user funds from Raydium exchange pools.

“Initial understanding is owner authority was overtaken by attacker, but authority has been halted on AMM & farm programs for now,” Raydium wrote in its tweet, referring to automated market makers.

Raydium, which allows users to trade between different cryptocurrencies without the use of an intermediary, is one of the premier platforms in Solana’s beleaguered decentralized finance (DeFi) ecosystem. According to its own numbers, Raydium has around $45 million locked in trading pools and facilitated around $4 million in trades in the past 24 hours. It is unclear whether that $4 million includes the improper withdrawals from the attacker.

The Solana DeFi ecosystem was hit especially hard by the collapse of the FTX exchange due to its heavy ties to the Sam Bankman-Fried trading and investment empire.

Hardware Wallet Startup Cypherock Raises $1M to Skip Seed Phrases

When creating a self-custody crypto wallet, users are asked to write down and store a seed phrase that can be used to recover the wallet. But if this phrase is misplaced, users risk losing all of their crypto assets. Worse, your written seed phrase could be captured on camera for the world to see.

Hardware wallet startup Cypherock believes it has the solution to this potentially fraught scenario and has raised seed funding to build it.

Cypherock exclusively told Decrypt this week that it has raised $1 million in a seed round with investments from ConsenSys Mesh, Infinite Capital, Gnosis and its co-founder Stefan George, Polygon co-founder Sandeep Nailwal, Mahin Gupta, OrangeDAO, and others.

Rohan Agarwal, co-founder and CEO of Cypherock, told Decrypt that the current approach to securing crypto wallets creates multiple opportunities for potential mishaps.

"You have to keep your wallet secure because they have been hacked before," he said.

"And you have to keep your seed phrase secure, as well. So you now have two single points of failure that you have to keep secure."

The company’s Cypherock X1 hardware wallet, which launched in October 2022, uses four encrypted near-field communication (NFC) cards to store users' private keys and what would be the seed phrase. Tapping any of the cards to the wallet approves a transaction, and Cypherock advises that users store each in a different geographic location.

"These cards use the same secure hardware used in the banking industry for making debit cards and credit cards," Agarwal told Decrypt. "So using the same secure hardware, but our own software that is written inside these cards, we take that security infrastructure and port it to Web3."