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- Wallets gain smart contract-like powers but also face complex security threats.
- Delegated access can be misused if wallet interfaces fail to show destination contracts.
- Developers must rethink contract security as EOAs now function as both callers and callees.
Ethereum’s upcoming Pectra upgrade is set to change user account behavior drastically. With EIP-7702, the network will endow wallets with programmable powers that are very much like smart contracts.
This proposal allows externally owned accounts to support such advanced functionalities as delegated access and social recovery. Even wallets will maintain the ability to initiate transactions effectively, directly securing flexibility with existing utilities.
Nevertheless, the extra power is perilous for the users, developers, wallet providers, and centralized exchanges. Verification of delegation requests, such as those signed without a correct chain ID, is now necessary.
Zero chain ID puts delegations at risk of replay attacks over any EVM-compatible blockchain. Miscreants can use this to initiate fraudulent transactions using the same signature on other networks.
Wallet interfaces are supposed to display the exact destination contract at any delegation approval procedure. This helps avoid some confusion and enables users to understand exactly the permissions they are giving.
Users should also understand that a contract address can manifest differently across blockchain networks. Positive access on one network doesn’t mean the contract works the same on another.
The user’s private key manages the account even when a wallet gives away control. If compromised, attackers can overwrite any previous delegation and take the account’s full assets.
Developers and Exchanges Confront New Risks From Delegated Wallet Capabilities
EIP-7702 also impacts developers’ formulation and implementation of smart contracts. Developers can no longer use the ‘tx.origin == msg.sender’ condition for identity checks.
Delegated EOAs are able to serve as both senders and receivers in one transaction. This exposes to reentrancy hazards and calls for new strategies for safe interactions.
A redelegation to a new contract could also cause storage conflicts that impact data integrity. Developers are advised to use ERC-7201 namespacing to prevent namespace collision during delegation changes.
Moreover, contracts need to deal properly with token callbacks to avoid loss of assets during transfers. ERC-721 and ERC-777 standards mandate that these callbacks be used when sending or receiving tokens.
Centralized exchanges are also challenged by verifying whether a transaction was genuine. Delegated wallets can emulate contract behavior, which allows false deposit signals to be generated.
To this end, exchanges must improve transaction tracing mechanisms before confirming user balances. This step ensures that there is no loss due to spoofed or fraudulent wallet actions from different networks.
The Ethereum’s Pectra upgrade provides enhanced wallet functionality and introduces complicated risks throughout the ecosystem. Each stakeholder has to meet the technical change and safety desires in this new structure.
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