As Ethereum prepares for the highly anticipated Pectra network upgrade scheduled for May 7, 2025, emerging security concerns are casting a shadow over DeFi platforms and smart contract developers. This upgrade introduces EIP-7702, a proposal that significantly alters how Externally Owned Accounts (EOAs) behave within the Ethereum Virtual Machine (EVM). While this development promises increased flexibility, experts warn it could undermine traditional security assumptions, potentially opening the door to sophisticated attacks.
EIP-7702 enables EOAs—wallet addresses controlled by users—to set their own account code through delegated logic, effectively transforming them into executable smart contracts. Historically, EOAs were considered simple, code-less wallets, with security measures relying heavily on this simplicity. This change means that EOAs can now execute complex logic and respond dynamically within transactions. As a result, the conventional security checks that assume EOAs lack code and cannot run logic—such as those using tx.origin and extcodesize—may no longer be reliable.
This evolution has significant implications for DeFi security. Reentrancy attacks, which were thought to be mitigated by the assumption that EOAs could not re-enter contracts during a transaction, are poised to make a comeback. Many DeFi protocols depend on tx.origin to prevent malicious reentrant calls, but with delegated EOAs capable of handling fallback functions, attackers might craft transactions that appear to originate from an EOA but carry out malicious reentries. Moreover, the typical check comparing tx.origin with msg.sender to detect reentrancy can be bypassed, exposing protocols to new vulnerabilities.
Tools used by developers to differentiate between EOAs and contracts, such as extcodesize checks, may also lose effectiveness. Since delegated EOAs will exhibit code, security measures relying solely on code size could falsely categorize malicious accounts as legitimate contracts or vice versa, making it easier for attackers to bypass these safeguards. Additionally, standard transfer mechanisms for ETH, ERC-20 tokens, and NFTs could behave unpredictably. Delegated EOAs may respond to incoming transfers with fallback functions, causing transactions to revert or behave unexpectedly, especially during NFT transfers that invoke callback functions during safe transfers.
Recent activity from security firms like CertiK highlights these concerns. They have observed suspicious transactions on Binance Smart Chain—already affected by similar delegation mechanics—where malicious actors seem to be testing vulnerabilities related to delegation and fund draining. These signals suggest that attackers are actively probing the new attack surface that EIP-7702 creates.
In light of these developments, DeFi developers are urged to reassess their security strategies. Relying solely on legacy checks like tx.origin or code size is no longer sufficient. Instead, implementing comprehensive reentrancy protections through established patterns, such as checks-effects-interactions and reentrancy guards, is essential. Multiple layers of validation, combining economic invariants with dynamic checks, can help bolster security. Developers should also prepare for the possibility that delegated accounts with code may behave differently, prompting a thorough review of token transfer and fallback functions to prevent unexpected reverts. Protocols that restrict interactions based on account type must be updated to accommodate delegation.
Industry experts emphasize the importance of proactive security reviews ahead of the upgrade. With the potential for new vectors of attack, protocols that depend on the assumption that EOAs are simple, non-programmable wallets are at increased risk of exploitation. Tielei Wang, Chief Security Officer at CertiK, notes that EIP-7702 heralds a major shift in Ethereum's account model, urging developers to act swiftly. Failure to update protocols could lead to severe vulnerabilities endangering user assets and trust.
Ultimately, as Ethereum's account model evolves through EIP-7702, DeFi platforms must adapt rapidly. Building resilience against delegation-based exploits is vital to safeguarding assets and ensuring the continued trustworthiness of the decentralized finance ecosystem.
Source: CERTIK's blog
