The next Pectra improvement for Ethereum brings exciting new features and changes. As any truly monumental technology advancement in history goes—including the commercial airliner, automobile, industrial presses—this brings potential vulnerabilities that malicious actors can exploit. EIP-7702 creates a major attack vector. The crypto community does need to understand the dangers at play and how to protect themselves. KnowingCoin.com is here to break it down – no fluff, just the tools to own your chain and conquer the game.

Understanding EIP-7702 and its Vulnerability

EIP-7702 is an interesting proposal that would allow for a new contract_code field to EOAs. In layman’s terms, it would permit EOAs (user accounts) to temporarily function as smart contracts. While this opens up possibilities for more flexible and efficient smart contract interactions, it introduces a potential security loophole.

CertiK, a blockchain security company, flagged a potential vulnerability related to EIP-7702. Specifically, they found questionable transactions on Binance Smart Chain (BSC). What these transactions seemed to do was take advantage of the recently completed upgrade, opening questions about whether there was new potential for attack. The heart of the issue is understanding that EIP-7702 can significantly change many of the basic assumptions we make about Ethereum transactions.

The first and perhaps most paramount assumption is that tx.origin = msg.sender. This mechanism ensures that a user’s externally owned account (EOA) is the one directly starting the transaction, with no contract calls in between. EIP-7702 fundamentally breaks this assumption, as it allows an EOA to delegate its functionality to a contract. isContract(address) The isContract function address is a smart contract or externally owned account (EOA). However, it can be manipulated to return “true” for EOA address incorrectly. Therefore, the EOA actually does hold bytecode (the delegation stub) in its account.

The Risk of Offchain Signature Exploits

The vulnerability introduced by EIP-7702 opens up threat vectors for advanced offchain attestation signature abuse. Here's how it works:

  1. Malicious Proposal: An EOA could delegate itself to a contract, borrow ethers from other protocols via flash loans, and quickly execute a malicious proposal on a vulnerable contract.
  2. Malicious JavaScript Code: Hackers can inject malicious JavaScript code into websites or browser extensions. This code can tamper with transaction data before it's signed by the user.
  3. Tampering with Transaction Data: The malicious JavaScript code modifies the transaction data, changing the operation type to a delegatecall. A delegatecall allows the contract to execute code in the context of another contract, which can be dangerous if the attacker controls that other contract.
  4. Replacing Original Transaction Data: After the user approves the tampered transaction (thinking it's a legitimate request), the malicious code replaces the object with the original transaction data. However, it keeps the tampered signature, which is then shared with the rest of the signers.
  5. Stealing Funds: Once the transaction is executed, the hacker can steal funds by modifying the proxy implementation to point to a different code controlled by the attacker.

This second kind of attack is the most insidious. This is a way it deceives users, getting them to sign transactions without their knowledge. The user believes that they are signing up for one service, but the electronic signature is actually giving permission to a completely different service.

How to Identify and Avoid These Scams

Protecting yourself from these kinds of exploits just takes a little care and knowledge about how transactions operate. Here's some actionable advice to help you stay safe:

  • Be Suspicious of Unexpected Signature Requests: Always be wary of signature requests that seem out of the ordinary or that you didn't initiate yourself. Double-check the details of the request before signing anything.

  • Understand What You're Signing: Don't blindly approve signature requests without understanding what they authorize. Take the time to read and understand the details of the transaction.

  • Use Reputable Wallets and Extensions: Stick to well-known and trusted wallets and browser extensions. These wallets typically have security measures in place to detect and prevent malicious activity.

  • Keep Your Software Up-to-Date: Regularly update your wallet software, browser extensions, and operating system. Updates often include security patches that can protect you from known vulnerabilities.

  • Verify the Sender's Authenticity: Ensure the sender is who they claim to be, and the email or message is not spoofed.

  • Check the Email Address: Be cautious of emails with misspelled or suspicious domain names.

  • Look for white labeling: A reputable eSignature provider should offer white labeling to prevent phishing attacks.

  • Authentication methods: Check how signers are authenticated, such as:

    • Email address verification
    • SMS one-time passcode
    • Knowledge-based authentication (KBA)
    • Photo ID upload
    • Electronic or bank-based IDs

  • Digital signature security: Ensure each signature is secured with a digital signature, and the audit trail is securely embedded in the document and linked to each signature.

Advice for Wallet Developers

Wallet developers are the first line of defense against EIP-7702 and any similar vulnerabilities. Here are some steps they can take:

  • Implement Clear and Concise Transaction Decoding: Wallets should provide users with clear and easy-to-understand information about the transaction they are about to sign. This includes decoding the function being called, the parameters being passed, and the potential impact of the transaction.
  • Warn Users About Delegatecalls: Wallets should explicitly warn users when a transaction involves a delegatecall, as this is a common technique used in exploits.
  • Implement Risk Scoring: Develop a risk scoring system that analyzes transactions for potential red flags, such as unusual function calls, large fund transfers, or interactions with suspicious contracts.
  • Provide Tools for Verifying Contract Code: Allow users to easily verify the code of the contracts they are interacting with. This can help them identify potentially malicious code.
  • Educate Users: Provide users with educational resources about common scams and exploits. Help them understand the risks involved in signing transactions and how to protect themselves.
  • Implement Revocation Mechanisms: Unlike EIP-3074, EIP-7702 might not have a straightforward way to revoke the contract_code associated with an EOA. Wallet developers should consider implementing mechanisms that allow users to revoke delegation permissions if necessary.

The Importance of Digital Signatures

While appealing to the graphic nature of these vulnerabilities, it’s important to understand digital signatures. The first important distinction between a digital signature and a wet signature is visibility. With a digital signature, the user does not have the same level of cognition related to what they are actually signing. This increases the risk of nefarious bad-faith actors overriding the user and coaxing them into signing something they never planned to.

To start with, we’ll create an RSA key pair, beginning with a modulus, N. Ensure that N is the product of two large random prime numbers. Then, compute the integers e and d such that e * d = 1 mod φ(N) where φ is Euler’s totient function. Alice’s signature—“Hello Bob!”—is signed in a way that she appends her signature, which is calculated based on the message and her private key. Bob – or anyone else who receives the signed message – can use Alice’s public key to verify that the signed message is authentic.

  1. Key Generation Algorithm: This algorithm selects a private key uniformly at random from a set of possible private keys.
  2. Signing Algorithm: This algorithm takes a message and the signer's private key as input and produces a digital signature.
  3. Verification Algorithm: This algorithm takes a message, a signature, and the signer's public key as input and outputs whether the signature is valid for the message.

The security of digital signatures relies on the fact that it is computationally infeasible for an attacker to forge a signature without knowing the private key. As we've seen with the EIP-7702 vulnerability, attackers can still trick users into signing malicious transactions by tampering with the data before it's signed.

Our Pectra upgrade, featuring EIP-7702, brings plenty of thrilling potential and its accompanying dangers. Through elucidating the unknowns, we can better position ourselves to navigate the ever-changing landscape of Ethereum security. It is important to take smart, proactive steps to protect ourselves. Keep in mind, at KnowingCoin.com, we empower you with the know-how to rule your chain and rule the recreation. Stay vigilant, stay informed, and stay safe.

Staying Ahead of the Curve

The Pectra upgrade, with EIP-7702, presents both exciting opportunities and potential risks. By understanding the vulnerabilities and taking proactive steps to protect ourselves, we can navigate the evolving landscape of Ethereum security. Remember, at KnowingCoin.com, we give you the tools to own your chain and conquer the game. Stay vigilant, stay informed, and stay safe.

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