Pectra update & EIP-7702: Navigating Risks to Reap Rewards
Introduction
The upcoming Ethereum Pectra upgrade, merging the Prague and Electra layers, introduces EIP-7702, an ambitious proposal set to redefine what Externally Owned Accounts (EOAs) can do. By allowing EOAs to permanently set their own code, EIP-7702 aims to let them act like smart contracts for execution purposes, unlocking features like transaction batching, gas sponsorship, and enhanced security.
Yet, our prediction with 7702:
Big bugs are coming. Many users will be scammed. But eventually it will become great and shiny."
It's vital to understand that EIP-7702 allows an EOA to permanently set its code via a new transaction type. This delegation persists until the EOA owner explicitly changes or clears it.
This permanence is key to its long-term implications, both good and bad.
1. The gathering Storm - Immediate Risks of EIP-7702
The prediction of "big bugs" and scams isn't mere fear-mongering. EIP-7702 fundamentally alters core Ethereum assumptions, creating new avenues for exploits.
Exemplary, already in "Last Call", Peeramid Labs managed to identify invariant that caused high severity vulnerability to many deployed protocols.
Tim Pechersky
| Invariant | Pre-7702 Assumption | How EIP-7702 Changes It | Primary Risk Example |
|---|---|---|---|
| tx.origin == msg.sender implies top frame | Used for flash loan/sandwich protection, EOA check. | Delegated EOA can call other contracts; tx.origin remains EOA, msg.sender is EOA. | Bypass of flash loan protections in existing contracts. |
| EOA Nonce Stability | Increments once at tx start if EOA is tx.origin. | Delegated EOA code can use CREATE/CREATE2, incrementing nonce mid-tx. | Unexpected invalidation of pending transactions. |
| EOA Balance Control | Decreases only if EOA is tx.origin. | Any call to a delegated EOA can execute code spending its assets. | Unauthorized fund depletion if delegated code is malicious/buggy. |
| EOA Codesize Zero | extcodesize(eoa_address) == 0. | Delegated EOA has codesize 23 (for the indicator). | Contracts misidentifying EOAs as contracts, breaking conditional logic. |
1.1. Broken Foundations: Past Invariants Shattered
EIP-7702 knowingly breaks several established rules, or invariants, that many existing smart contracts rely on for security.
- tx.origin == msg.sender: This check, often used to ensure an EOA is interacting directly or to guard against certain attacks, is weakened. A 7702-enabled EOA can now execute code and call other contracts while tx.origin (the EOA) and msg.sender (also the EOA) remain the same, potentially bypassing protections in older contracts.
- EOA Codesize: Previously, EOAs had no code (extcodesize returned 0). Now, a delegated EOA will show a codesize of 23 (for its delegation indicator code). Contracts using codesize to differentiate EOAs from contracts might behave unexpectedly.
- Nonce and Balance Control: An EOA's nonce can now change mid-transaction if its delegated code deploys a contract. Similarly, its balance can be affected by any interaction, not just transactions it originates.
1.2. The Delegation Trap: Wallet Vigilance is Key
The power of EIP-7702 lies in an EOA signing an authorization to delegate its logic to a contract. If a user is tricked into delegating to a malicious contract, that contract gains significant control over the EOA's assets and actions. This is a "one signature to lose it all" scenario.
Wallets are the primary defense. The EIP authors stress that wallets must not provide a generic interface for signing arbitrary delegations. Instead, they need:
- Clear Warnings: Distinct UIs for EIP-7702 authorizations, explaining the gravity of setting account code.
- Delegate Scrutiny: Information about the contract being delegated to (audited, known, etc.).
- Curated Lists: Ideally, guiding users to well-audited, safe delegate contracts rather than allowing arbitrary addresses.
Without robust wallet safeguards, phishing attacks and misleading prompts could easily lead to widespread scams.
| Scam Vector | How it Works (Technical) | Impact on User | Wallet Mitigation Strategy | User Mitigation Strategy |
|---|---|---|---|---|
| Phishing via Malicious Delegate Contract | User signs EIP-7702 authorization for an attacker's contract. Wallet UI doesn't clearly warn or identify the contract. | Attacker gains control of EOA execution, steals funds. | Prominently display delegation target, warn for unaudited contracts, maintain allow/blocklists, clear UI for new signature type. | Only delegate to well-known, audited contracts. Be wary of unsolicited signature requests. |
| chain_id = 0 Replay on Unexpected Chain | User signs delegation with chain_id = 0 for one chain, attacker replays it on another chain where target address is malicious. | EOA compromised on an unintended chain. | Warn strongly about chain_id = 0 implications. Default to current chain ID. Verify target contract code on all relevant chains if chain_id = 0. | Understand risks of chain_id = 0. Prefer chain-specific delegations. |
| Unclear Signature Prompt | Wallet presents EIP-7702 authorization as a generic "transaction" or "signature" request without detailing its impact. | User unknowingly gives up control of their EOA. | Distinct UI for EIP-7702 authorizations, explaining it sets account code. Simulate potential impact if possible. | Scrutinize all signature requests. Understand what each signature type authorizes. |
Table 2: EIP-7702 Scam Vectors via Wallet Delegation
1.3. The chain_id = 0 Dilemma
Authorizations can specify a chain_id. If set to 0, the signature is valid on any EVM chain where the EOA's nonce matches. This is convenient for multi-chain users but risky. An attacker could deploy a malicious contract at the same address on a different chain and trick the user's EOA into delegating to it there, if nonces align. Wallets must strongly warn about this and default to the current chain's ID.
1.4. Market Tremors and Ecosystem Trust
If EIP-7702 leads to major exploits on large contracts, the loss of confidence could impact ETH's price and trust in the ecosystem [User Query Key Point]. Ethereum's strength lies in its perceived security; widespread vulnerabilities could shake this foundation.
1.5. Deeper Technical Challenges
Other risks include:
- Front-running Initialization: Since code is set without atomic initialization, attackers could front-run the setup of a delegate contract unless its initialization logic requires the EOA's signature.
- Storage Collisions: Changing delegate contracts can cause issues if the new contract's storage layout conflicts with data left by the old one, potentially leading to corrupted state or exploits. Standardized storage layouts (like ERC-7201) are crucial.
2. The Dawn After the Storm – EIP-7702's Bright Future
Despite the initial hurdles, EIP-7702 aims for a "great and shiny" future, enhancing Ethereum's capabilities significantly.
2.1. EOAs Fortified: Approaching Multi-Sig Security
By delegating to robust smart wallet contracts (e.g., Safe-like systems), EOAs can gain features like social recovery, spending limits, and address whitelisting. This offers a significant security upgrade. However, the EOA's original private key always retains ultimate control and can change or clear the delegation, bypassing these rules. So, it's "near" multi-sig, not a replacement for true trustless multi-sigs where no single key has unilateral power.
2.2. L1 Security Oracles: User-Centric Protection
EIP-7702 enables EOAs, via their delegate contracts, to consult on-chain "security oracles" before executing transactions. These oracles could flag risky interactions (e.g., known phishing addresses, suspicious protocols), allowing the delegate code to block the transaction or require further confirmation. This embeds proactive security directly into the EOA's L1 logic.
2.3. Simplifying the Stack: Reducing Reliance on EIP-2771
EIP-7702 natively supports gas sponsorship and transaction batching [EIP-7702 Motivation]. This means an EOA's delegate contract can manage gas payments (e.g., via a paymaster) and bundle multiple operations. This could reduce the need for more complex meta-transaction standards like EIP-2771, simplifying dApp development.
2.4. Broader UX Gains and Innovation
The overall user experience stands to improve dramatically:
- Seamless Interactions: Batching (e.g., approve and swap in one click) and gas sponsorship (paying fees in tokens, or dApps covering them) will reduce friction.
- Session Keys: Authorizing dApps for limited periods/scopes without constant signature prompts will improve usability for games and DeFi.
- Innovation Platform: EIP-7702 is a step towards fuller account abstraction, potentially onboarding millions by making Web3 more intuitive and secure. It helps converge EOA and smart contract account experiences.
3. Navigating the Transition – Guidance for All
Successfully adopting EIP-7702 requires a collective effort.
3.1. Wallet Providers: The First Line of Defense
- Clarity is King: Use distinct, clear UI for EIP-7702 authorizations, explaining their impact.
- Scrutinize Delegates: Warn about unknown or unaudited delegate contracts. Provide context.
- chain_id = 0 Warnings: Issue strong alerts for chain_id = 0 delegations and default to current chain ID.
- Curated Options: Guide users towards vetted, audited delegate contracts.
- Easy Revocation: Provide simple ways to clear delegation (revert to standard EOA) or switch to a safe default.
3.2. Developer Diligence: Secure Code is Non-Negotiable
- Delegate Contract Developers: Prioritize security. Implement robust replay protection, secure initialization (e.g., requiring EOA signature for setup), manage storage carefully (e.g., ERC-7201), and get thorough audits.
- dApp Developers: Review existing logic. Don't assume EOAs have no code or that old invariants hold. Prepare for EOAs to potentially revert or consume more gas.
3.3. User Vigilance: Your Security is Your Responsibility
- Understand Signatures: Be extremely cautious with new signature types. Know that EIP-7702 authorization gives a contract control over your EOA's execution.
- Trust, But Verify Delegates: Prefer well-vetted delegate contracts. Delegating to unknown code is a huge risk.
- Beware chain_id = 0: Understand the cross-chain risks.
- Stay Informed: Follow guidance from security experts and your wallet provider.
Use it for right reason: Primary security use-case for 7702 is to help you securing non-transferrable assets, that cannot be easily moved from an EOA. Accounts holding large amounts of tokens locked in DeFi may find it challenging to migrate all assets to smart wallet.
While 7702 allows to keep such EOA "cooler", regular smart accounts are still more secure.
Conclusion: Balancing Peril with Progress
EIP-7702 is a transformative EIP, carrying both significant risks and immense potential. The initial phase may see vulnerabilities exploited, validating concerns about "big bugs" and scams. However, this turbulence is a prelude to a more powerful, flexible, and user-friendly Ethereum.
Achieving the "great and shiny" future requires proactive engagement from everyone: diligent wallet providers enhancing user safety, developers building secure delegate contracts and adapting dApps, and users exercising caution and educating themselves. By navigating the initial perils with a security-first mindset, the Ethereum ecosystem can unlock the profound benefits of EIP-7702, moving closer to true account abstraction and mainstream adoption.
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Our mission is to drive the world's economic progress through transparent and secure technology development with strong emphasis on community, human values and long term value.
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