Million in one transaction: How Ethereum update became weapon for scammers

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EIP-7702: The Ethereum innovation that turned into a million-dollar trap

What is EIP-7702

EIP-7702 is an Ethereum improvement proposal that changed the very nature of interaction with the network. Traditionally, Ethereum had two types of accounts. The first was the externally owned account (EOA), a regular wallet that simply signs transactions with a private key. The second was the contract account, which contains code and can execute complex scenarios.

The introduction of EIP-7702 allowed these two models to merge. A regular wallet gained the ability to temporarily behave like a smart contract, which means that within a single transaction, it can execute several actions at once. For the user, this looks like a simplified version of so-called account abstraction: no need to sign each action separately and pay for dozens of transactions. A single confirmation can complete an entire scenario.

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How it works technically

In the classic EOA model, actions were limited to simple transfers or calling functions in a smart contract. In the case of EIP-7702, the wallet loads temporary code that runs only for the duration of one transaction. This code can contain a sequence of different instructions: for example, first execute a swap on a decentralized exchange, then send part of the tokens to another address, and simultaneously interact with a liquidity protocol.

Once the transaction is complete, the temporary code disappears, and the account returns to its normal state. This approach genuinely solves many issues, making DeFi operations easier and cheaper. But this very flexibility has become the foundation for new attacks.

Why wallets don’t warn about danger

The main reason is that transactions under EIP-7702 technically look like a regular code update. The wallet interface receives only general information: the user is signing a transaction containing initCode, and this code will be executed within the block. On their own, these data don’t carry an obvious danger signal. The wallet cannot recognize that the code hides a command to “transfer all tokens.”

Another complication is that the standard is still new, and most clients and wallets don’t yet understand the logic of EIP-7702. In the case of classic transactions, a wallet can clearly show “you are sending 2 ETH to address X.” With 7702, however, it only sees a general set of instructions that will be executed in real time on the virtual machine. Explaining this to the user would require a complex integration and, effectively, a built-in code analyzer — something that doesn’t yet exist in mainstream wallets.

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As a result, the user only sees a “usual swap” or an “approve,” while the real logic of the transaction remains hidden. This gap between technical complexity and visual representation creates an ideal field for abuse.

The road to EIP-7702

EIP-7702 did not appear out of nowhere. Ethereum has long been moving towards account abstraction, where the line between a wallet and a smart contract disappears. Earlier steps, particularly EIP-4337, moved transaction processing into special “bundlers.”

The new proposal became a simpler but more radical variant, where logic is executed directly in the user’s account without additional layers. This made transactions more efficient but also opened new opportunities for attacks.

Balancing innovation and risk

The $1 million theft illustrates the paradox of Ethereum’s development. Every new improvement opens the door to convenience and flexibility, but at the same time creates a new level of danger. Developers envisioned multi-operation transactions and cheaper DeFi scenarios, but in practice the first widespread use case turned out to be sophisticated phishing.

EIP-7702 has opened a new era for Ethereum, where a regular wallet can become a smart contract for a few seconds. It is a step toward a universal account model, but also a reminder that innovation always comes with risk. Where developers see efficiency, scammers see a way to drain millions with a single signature.

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