Investing in Rhinestone

We’re excited to announce our investment in Rhinestone, which is building blockchain infrastructure for modular smart account wallets. Rhinestone empowers developers to create a versatile smart account module that seamlessly integrates with user-facing components, allowing users to effortlessly install, remove, or interchange modules within their accounts. A significant milestone has been recently reached on Ethereum's path towards account abstraction. This accomplishment involves the deployment of a shared, audited, and core contract within ERC-4337. This development empowers wallet and infrastructure providers to build a more secure and streamlined user experience by leveraging innovations related to account abstraction.However, it is important to note that the account abstraction landscape is getting crowded and that the infrastructure still faces certain limitations:

- Users are restricted to a specific user interface (UI) and a predetermined set of features.
- The lack of interoperability among existing smart contract wallet solutions leads to user fragmentation.
- Once a wallet is deployed, the ability to upgrade and modify its features is restricted and not accessible to the user.
- The majority of smart wallet implementations are built from scratch, resulting in identical features across different solutions.

To address these challenges, the Rhinestone standard focuses on standardizing the upgradeability of smart accounts in a modular manner. This standardization aims to provide a solution that enables the enhancement and customization of smart wallets.

Rhinestone is developing an implementation standard, built on top of ERC-4337, that provides a more opinionated approach. This standard consists of three components:

- Modular smart account implementation — to achieve modularity, the smart account is divided into two parts. The first part is a contract that holds the account's state and immutable code. The second part comprises stateless modules, which only need to be deployed once.
- Feature modules for smart accounts — these are stateless smart contracts that can be deployed once and utilized by multiple clients (smart accounts). They represent self-contained features categorized based on their functionality.
- Registry for module management — this is a third-party entity responsible for regulating the addition and removal of modules from smart accounts. It maintains a whitelist of approved modules and facilitates their integration. The registry specification is designed to be flexible, allowing adaptation to evolving attack vectors and protocol changes. Users have the flexibility to switch between different registries, each with its own governance structure, promoting decentralization, competition, and user choice.

Overall, Rhinestone's approach aims to enhance the modularity, security, and flexibility of smart accounts by introducing a standardized implementation that supports feature modules and a modular structure.In the previous month, they unveiled their partnership with Biconomy, introducing a plug-and-play embedded wallet for their customers through the Module Store. This store serves as a marketplace featuring smart account modules that unlock tailored dapp experiences, enhancing the overall Web3 user experience. We’re very excited to see this live soon with the first set of modules seeded by Rhinestone and Biconomy.

We've been very impressed by Kurt and Konrad, and their ongoing project is rapidly gaining significant traction among both established and emerging account vendors.

The Module Store announcement has captured the attention and sparked the imagination of numerous wallet and account vendors already, so if you are interested please reach out and we’ll introduce you to the team.