The Ethereum Pectra Upgrade: Innovations and Emerging Threats

Ethereum’s recent upgrade, known as Pectra, went live on May 7, 2025, during epoch 364032, bringing with it promising enhancements in scalability and smart account functionality. However, this upgrade also introduced a significant vulnerability that could allow malicious actors to drain funds from users’ externally owned accounts (EOAs) using just an off-chain signature.

Understanding the Risk of the Pectra Upgrade

At the core of this vulnerability lies Ethereum Improvement Proposal (EIP) 7702. This proposal introduced a new transaction type referred to as SetCode (type 0x04). This transaction allows users to delegate control over their wallets simply by signing a message, dramatically changing the way account controls can be managed.

A New Mechanism for Control

Arda Usman, a respected Solidity smart contract auditor, has emphasized the gravity of this new capability. "It becomes possible for an attacker to drain an EOA’s funds using only an offchain signed message," he explained. If a user inadvertently grants this signature—perhaps through phishing or misleading sites—attackers gain the ability to overwrite the wallet’s code. They can install a malicious proxy contract that will then forward calls to the attacker’s contract.

The Attack Vector: Phishing and Deceptive Practices

The vulnerability introduced by Pectra creates an enticing target for hackers. Yehor Rudytsia, an on-chain researcher at Hacken, noted that with this new transaction type, attackers can install arbitrary code on a user’s account, essentially transforming their wallet into a programmable smart contract.

“Before Pectra, a user had to sign a transaction to allow their funds to be moved. Now, simply signing a message can allow any operation to be executed by a contract that the user approved via SetCode,” Rudytsia explained.

Immediate Threats to User Security

The timeline of this vulnerability is concerning. Since the Pectra upgrade was activated on May 7, 2025, any valid delegation signature is now actionable. Usman warns that smart contracts relying on outdated assumptions—such as using tx.origin or basic checks for EOAs—are particularly susceptible to exploitation.

Wallet interfaces that fail to recognize or properly represent the new transaction types, especially transaction type 0x04, are at heightened risk. This poses a significant challenge for users and developers alike.

Hardware Wallets: A False Sense of Security

In light of these developments, the standing view of hardware wallets as inherently safer options has been called into question. Rudytsia emphasized that these wallets now hold the same vulnerabilities as hot wallets regarding malicious message signing. “If an attacker gets a valid delegation signature, all the funds can vanish in an instant,” he said.

Strategies for Staying Safe

There are preventative measures users can take, but these require vigilance and awareness. Users should avoid signing messages they don’t fully understand. Rudytsia stresses the importance of wallet developers to implement clear warnings for users presented with delegation messages.

New delegation signature formats introduced by EIP-7702 are especially precarious, as they do not conform to existing EIP-191 or EIP-712 standards. These signatures often manifest as simple 32-byte hashes, which could evade standard wallet warnings. Usman provided an essential tip: “If a message includes your account nonce, it’s probably affecting your account directly.”

Replay Attacks and Chain Risks

Compounding the risks, EIP-7702 also allows signatures with a chain_id of 0, enabling signed messages to be replayed on any Ethereum-compatible blockchain. "This means it can be exploited anywhere," Usman warned, underscoring the extent of the potential threat.

In contrast, multisignature wallets remain relatively secure under this upgrade, as they require multiple signers to authorize funds. However, single-key wallets—whether hardware or not—must implement advanced signature parsing and red-flagging tools to mitigate risks effectively.

A Comprehensive Upgrade: Additional EIPs

Beyond the vulnerabilities, the Pectra upgrade introduced more changes to Ethereum’s infrastructure. Alongside EIP-7702, the upgrade included EIP-7251, which increased Ethereum’s validator staking limit from 32 to 2,048 ETH, and EIP-7691, which enhanced the number of data blobs per block for improved layer-2 scalability.

These enhancements, while essential for the network’s growth, necessitate a reevaluation of best security practices among users and developers alike as they navigate a progressively complex landscape.

As Pectra reshapes the Ethereum ecosystem, it’s clear that vigilance and education will be essential for users to protect themselves against emerging threats.