One message. That’s all it takes for hackers to drain your entire wallet. A signed offchain message is now powerful enough to hand over control of your funds — no onchain transaction required.

EIP-7702: The Risky New Delegation Mechanism

Activated on May 7, 2025, Pectra’s centerpiece EIP-7702 introduces a transaction type called SetCode, which allows users to delegate control of their wallets via a simple signature.

Arda Usman, a Solidity smart contract auditor, confirmed: “An attacker can use this offchain signature to install malicious code into an externally owned account (EOA) and move ETH or tokens — without the user ever signing a transaction.”

This feature effectively transforms user wallets into smart contracts, opening the door to silent yet devastating attacks.

A Stealth Threat Via Innocent-Looking Messages

Yehor Rudytsia, an onchain researcher at Hacken, emphasized that this transaction type allows arbitrary code to be installed in wallets. Previously, such a change required an actual transaction; now, only a signature is enough.

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This shift means phishing attempts, fake DApps, or Discord scams can now result in complete wallet takeovers. “We believe this will become the most common attack vector following the Pectra upgrade,” Rudytsia warned.

Wallet applications that fail to correctly interpret transaction type 0x04 are especially vulnerable.

Hardware Wallets Are Not Immune Anymore

The once-clear distinction between hot and cold wallets is fading. Rudytsia highlighted that hardware wallets are now just as vulnerable if users unknowingly sign malicious messages: “Once signed, all funds can be gone in a moment.”

To stay safe, users should:

• Never sign messages they do not fully understand.
• Look out for delegation requests, especially those involving nonce values.
• Be aware that some delegation signatures can be replayed on any Ethereum-compatible chain.

While multisig wallets offer more robust protection, single-key wallets — including hardware ones — must adopt new safeguards to prevent exploitation.

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What is the Pectra Upgrade? 

Pectra introduces innovations in Ethereum’s execution (Prague) and consensus (Electra) layers, featuring 11 Ethereum Improvement Proposals (EIPs). Notably, EIP-7702 enables account abstraction, allowing wallets to function like smart contracts, offering flexibility in gas fee payments and transaction batching. Additionally, EIP-7251 increases the maximum effective balance for validators from 32 ETH to 2,048 ETH, enabling large validators to operate with fewer nodes. Pedro Gomes, founder of WalletConnect, stated that the upgrade targets both large-scale holders and end users utilizing smart wallets, batch transactions, and smart sessions. 

Innovations of the Ethereum Pectra Upgrade 

Pectra boosts blob data capacity, enhancing the efficiency of Layer 2 (L2) solutions. EIP-7691 raises the blob count per block from 3 to 6, with a maximum of 9. Furthermore, Verkle Trees and PeerDAS optimize data storage. Users can now pay gas fees with tokens like USDC instead of ETH, lowering barriers for new users. 

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Testing Process and Timeline 

Despite challenges on the Holesky and Sepolia testnets, Pectra succeeded on the Hoodi testnet. The Ethereum Foundation aims to activate the upgrade on the mainnet today. Developers are updating clients. Users do not need to “upgrade” their ETH; they should remain vigilant against scams. Pectra makes Ethereum more scalable and user-friendly, though competition with rivals like Solana persists. In the long term, the Verkle transition and Fusaka will further strengthen the network. Technical analysis indicates a neutral signal in the short term, with selling pressure dominating on a weekly basis. 

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The EIP-7702 proposal, co-authored by Buterin, Sam Wilson, Ansgar Dietrichs, and Matt Garnett, introduces a new transaction type that would allow ordinary Ethereum transactions to temporarily function as smart contract wallets during a transaction. Wallets would then revert to their original state after the transaction.

Designed as an alternative to the EIP-3074 proposal, EIP-7702 is also more compatible with EIP-4337, a more comprehensive account abstraction design.

Currently under review by the Ethereum community, EIP-7702 is considered significant for the future of account abstraction on the network.

Account abstraction methods allow ordinary wallets on Ethereum to function as smart contract wallets, enabling features such as wallet recovery, paying others’ transaction fees, and executing multiple transactions in a single batch.

The post Vitalik Buterin Proposes New Ethereum Account Abstraction Method appeared first on Coin Engineer.

EIP-7702 proposes a novel transaction type that would make it possible for standard Ethereum account addresses, also known as externally owned accounts (EOAs), to temporarily function as smart contract wallets during a transaction. After the transaction is complete, the EOAs will revert back to their original form.

The EIP-7702 serves as a new option to the EIP-3074, which was previously considered for inclusion in the future Pectra upgrade. However, according to Uniswap founder Hayden Adams, it now includes quantum resistance and improved compatibility with the 4337.

Among the broader standards for smart contract wallets, ERC-4337 is considered to be “endgame account abstraction.” The objective of EIP-7702 is to achieve compliance with ERC-4337.

Under the proposal, it was noted that “this EIP is designed to be very forward-compatible with endgame account abstraction without over-enshrining any fine-grained details of ERC-4337.”

Wallets are able to function as smart contracts and operate with a variety of advanced features thanks to account abstraction. These features include multi-factor authentication, wallet social recovery, and the ability for users to transact with any token they choose.

It is possible that EIP-7702 will alter the manner in which account abstraction is implemented in future network updates as the Ethereum community determines how to evaluate the proposal.

The new transaction type, which was proposed in EIP–7702, has fields for contract code and a signature. It also provides the same functionalities that were proposed in EIP–3074, such as batch and sponsored transactions.

In order to incorporate EOAs into ERC-4337 bundles in a manner that is consistent with the EntryPoint that is already in place, it is necessary to grant them the ability to temporarily transform themselves into contracts.

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