From Innovation to Exploitation
Ethereum’s EIP-7702 upgrade, intended to enhance smart wallet functionality, has rapidly come under intense scrutiny. According to Yu Xian, founder of security firm SlowMist, the new mechanism is being exploited by organized coin theft gangs who are using it to automate fund transfers from compromised wallets.
In a public alert on X (formerly Twitter), Xian revealed:
How the Exploit Works
The delegation function introduced in EIP-7702 allows users to temporarily authorize other contracts to act on their behalf—a flexibility feature designed to power up wallet utility.
However, attackers are now leveraging leaked private keys or mnemonic phrases to delegate permissions to malicious contracts. Once authorized, these contracts automatically drain the user’s wallet of ETH and ERC-20 tokens, often in seconds.
This delegation-based theft doesn’t rely on phishing. Instead, it’s pure exploitation of wallet authorization, which makes it much harder to detect or prevent with standard safety tools.
Community on High Alert
The Ethereum developer community is now actively discussing mitigation strategies across GitHub, Discord, and other dev hubs. However, as of now:
- No immediate patch or fix has been deployed
- Discussions focus on wallet hygiene and user education
- Some suggest restricting delegation parameters or introducing stricter approval flows
Security experts are urging users to review delegation permissions, rotate mnemonic phrases, and avoid using EIP-7702-enabled wallets unless absolutely necessary.
Rising Risk for Token Holders
This incident exposes a major systemic vulnerability in Ethereum’s push toward smart wallet innovation. If left unresolved, it could:
- Shake user trust in Ethereum’s ecosystem upgrades
- Lead to millions in stolen assets across decentralized wallets
- Stall the adoption of future proposals involving account abstraction or enhanced authorization
For now, users are advised to check wallet permissions, disable unknown delegations, and consider hardware wallet solutions for high-value holdings.
