Key Notes
- Analysts like SlowMist and Taylor Monahan emphasize improving private key security and wallet transparency.
- Some users reported significant losses, including a $150,000 scam linked to the Inferno Drainer malware.
- Ethereum led digital asset inflows with $321 million last week, marking its strongest six-week streak since December 2024.
Blockchain security firm Wintermute has highlighted a major abuse of Ethereum Improvement Proposal (EIP) 7702, introduced after the Ethereum Pectra upgrade last month. In principle, EIP-7702 allows wallets to mimic smart contracts temporarily, allowing actions like transaction batching, sponsoring gas fees, and adding spending controls.
However, Wintermute reported that more than 80% of EIP-7702 delegations are linked to automated “sweeper” contracts that drain wallets with compromised private keys. Dubbed “CrimeEnjoyor”, this malicious contract includes a copy-paste code that is responsible for draining most of these wallets. Later, these bots sweep funds from affected wallets, transferring ETH
ETH
$2 509
24h volatility:
0.3%
Market cap:
$302.77 B
Vol. 24h:
$12.81 B
directly to attackers.
Wintermute also reported that 97% of all EIP-7702 delegations involve nearly identical malicious bytecode. It noted that the convenience of EIP-7702 makes it vulnerable to exploitation, especially among users unaware of compromised private keys.
Security experts, including SlowMist and Taylor Monahan, caution that the issue lies in private key security rather than the upgrade itself. However, they stress that wallet providers should enhance visibility into delegation targets to mitigate phishing risks.
Ever since the launch of the Ethereum Pectra upgrade last month on May 7, the network has recorded over 12,000 EIP-7702-related transactions. As per the security firm Scam Sniffer, some users have faced significant losses. In a batched transaction linked to the Inferno Drainer malware, one user has reportedly lost close to $150,000.
Will Ethereum Pectra Upgrade Impact ETH Institutional Inflows?
According to the latest CoinShares report, Ethereum led the digital asset investment inflows last week at $286 million, thereby taking the total seven-week inflows to a massive $10.9 billion.
Ethereum dominated market inflows this week, attracting $321 million and extending its streak to six consecutive weeks. This brings total inflows to $1.19 billion, marking the strongest rally in sentiment since December 2024.
Ethereum ETFs have contributed a large part of last week’s inflows, recording net positive flows for ten consecutive trading sessions. On the other hand, ETH price has been under pressure for a while and has recently dropped under $2,500, following the developments on Pectra upgrade attack.
Ethereum co-founder Vitalik Buterin has unveiled plans to boost the scalability of Ethereum’s layer 1 by 10x within the next year, while speaking at a panel discussion at ETHGlobal Prague.
The initiative seeks to achieve this significant upgrade without compromising the network’s decentralization, while staying committed to Ethereum’s scalability and its core values.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
