On May 7, 2025, Ethereum activated its Pectra upgrade, one of the most feature-rich updates in its history. Combining the Prague execution layer and Electra consensus layer improvements, this upgrade introduced 11 Ethereum Improvement Proposals (EIPs), aimed at enhancing functionality, usability, and flexibility across the network.

At the heart of Pectra lies EIP-7702, a game-changing proposal co-authored by Ethereum co-founder Vitalik Buterin. It brings traditional Ethereum wallets (Externally Owned Accounts or EOAs) closer to smart contract functionality—without requiring users to migrate to new addresses. But within days of its launch, security researchers uncovered a critical vulnerability in EIP-7702 that could allow attackers to drain wallets using only an offchain signature.

Here’s what the upgrade actually does—and what the Ethereum community needs to know about the associated risks.

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What Is the Ethereum Pectra Upgrade?

The Pectra upgrade is a landmark moment in Ethereum’s evolution, laying essential groundwork for account abstraction, a long-term goal that aims to unify the functionality of EOAs and smart contract wallets.

Among its 11 EIPs, EIP-7702 stands out for its innovative approach. Previously, Ethereum relied on EIP-4337, a non-native solution for account abstraction that required external infrastructure like bundlers and paymasters. EIP-7702 brings these capabilities natively into the Ethereum protocol.

Key Features of EIP-7702

EIP-7702 enables EOAs to act like smart contract wallets temporarily during a transaction by introducing a new contract_code field. This unlocks several new features:

• ✅ Transaction Batching: Sign once, execute multiple operations.
• ✅ Gas Sponsorship: Apps can pay for a user’s gas fees.
• ✅ Delegated Permissions: Users can give limited access to specific smart contracts.
• ✅ Programmable Wallet Logic: Multi-factor authentication and spending limits become possible.

Most importantly, users can now leverage these benefits without changing wallet addresses—a major UX leap forward.

Leading wallet providers like MetaMask and Ledger have already adapted. MetaMask introduced a Delegation Toolkit that enables users to manage wallet permissions, while Ledger took a cautious route, limiting interactions to contracts whitelisted by the Ethereum Foundation.

This upgrade positions Ethereum for a future where all accounts are programmable, flexible, and user-centric.

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A Critical Vulnerability Emerges: Offchain Signatures Can Drain Wallets

Just days after the Pectra upgrade went live, security researchers uncovered a serious vulnerability in EIP-7702 that affects any user with an EOA.

What’s the Issue with Ethereum Pectra Upgrade?

At the core of the problem is the ability to delegate wallet control through a signed message, without requiring an onchain transaction.

According to Solidity auditor Arda Usman, attackers can exploit the new SetCode  transaction type (0x04) introduced in EIP-7702. If a user is tricked—perhaps via a phishing website—into signing a seemingly innocuous message, an attacker can inject malicious proxy code into their wallet.

"Once the code is set," Usman explained, "the attacker can invoke it to transfer out ETH or tokens—all without the user ever approving a transaction."

This shifts Ethereum’s long-standing security model. Previously, EOAs required a signed onchain transaction to move assets. Now, a simple offchain signature can authorize code that enables full control over the wallet.

Replay Risk Across Chains

Security researcher Yehor Rudytsia from Hacken also warned that EIP-7702 allows signatures with chain_id = 0, which means a signed message could be replayed across multiple Ethereum-compatible chains, magnifying the potential risk.

“Hardware wallets are now just as vulnerable as hot wallets when it comes to signing malicious messages,” Rudytsia noted.

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How to Stay Safe Under the New Model

While no known exploits have been confirmed so far, the vulnerability is real, immediate, and active. Security experts urge caution when interacting with decentralized apps (dApps) or signing messages, particularly on new or unfamiliar platforms.

Security Tips for Ethereum Users

• 🚫 Never sign messages you don’t fully understand
• 🔢 Watch out for signatures involving your account nonce
• 🛑 Be skeptical of delegation requests from dApps
• 🔐 Consider using multisignature wallets, which are not impacted by this vulnerability
• ✅ Check wallet alerts — major providers like MetaMask have already suspended some features tied to EIP-7702
• 🕵️ Use wallets with transaction scanning tools, like Ledger’s “Transaction Check”

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Community Reactions: Innovation vs. Security

The Ethereum community is divided. On one side, developers hail the upgrade as a breakthrough.

“EIP-7702 lays the foundation we’ve needed for a long time,” said Ethereum engineer Preston Van Loon.

Others see it as a risky shortcut. Users on Telegram and X (formerly Twitter) have raised alarms, with one widely shared message stating: “Signing an evil message can be enough to empty your wallet.”

Wallet providers have responded in varied ways:

• MetaMask has suspended support for EIP-7702 features until further review.
• Ledger supports only interactions with whitelisted smart contracts vetted by the Ethereum Foundation.
• The Ethereum Foundation acknowledged the risks but emphasized that no successful attacks have occurred to date.

But even core developers admit that the upgrade reshapes Ethereum’s security model. The community now faces a crucial question: How much risk is acceptable in the name of progress?

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A Turning Point for Ethereum Wallets

The Pectra upgrade marks a major milestone on Ethereum’s journey toward account abstraction and a more flexible user experience. Features like transaction batching, smart wallet functionality, and offchain gas sponsorship are powerful tools that improve scalability and accessibility.

But these gains come with a serious cost: the erosion of Ethereum’s former assumption that only onchain actions could move funds. With offchain signatures now capable of delegating control, user vigilance becomes paramount.

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Ethereum Pectra: Upgrade or Downgrade?

Whether Pectra is a step forward or backward depends on your perspective. From a developer standpoint, it’s a visionary update—simplifying Ethereum’s infrastructure and giving users more power. But from a security lens, it introduces a new attack surface that could be difficult to close.

As the ecosystem matures, Ethereum must navigate this delicate balance between innovation and safety. Pectra may very well prove foundational for Ethereum’s long-term future, but in the short term, it places more responsibility in the hands of users.

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