The Ethereum blockchain underwent a transformative upgrade with the Pectra hard fork, introducing Ethereum Improvement Proposal (EIP-7702). Fireblocks has shared key insights after this update.
This proposal, combined with Multi-Party Computation (MPC) technology, aims to enhance institutional wallet security and user experience.
Fireblocks highlights this development, describing it as a “mutualistic” relationship that enhances Ethereum’s ecosystem for institutional clients.
By pairing EIP-7702’s programmable account abstraction with MPC’s security, institutions can achieve flexibility, safety, and efficiency in managing digital assets.
EIP-7702, co-authored by Ethereum’s Vitalik Buterin, introduces a new transaction type that allows Externally Owned Accounts (EOAs) to temporarily adopt smart contract functionality during a transaction.
Unlike its predecessor, EIP-3074, which faced criticism for security risks and incompatibility with Ethereum’s Account Abstraction (AA) roadmap, EIP-7702 reportedly aligns with ERC-4337.
It enables EOAs to perform advanced operations—such as gasless transactions, transaction batching, and session key management—without requiring a full migration to smart contract wallets.
This temporary delegation of smart contract code to an EOA preserves the account’s simplicity while unlocking various features, making it a “Type-2” decision, as Fireblocks notes, citing Jeff Bezos’ framework for reversible choices.
Users can experiment with smart contract capabilities and revert to basic EOA functionality, reducing adoption risks.
For institutions, EIP-7702’s flexibility is potentially significant.
It allows wallet providers to offer web2-like experiences, such as social logins, passkey authentication, and gas sponsorship, without compromising Ethereum’s decentralized nature.
Fireblocks emphasizes that this gradual adoption model caters to institutional needs, enabling them to integrate advanced features at their own pace.
For example, session keys can streamline high-frequency transactions in gaming or DeFi applications, while gasless transactions lower barriers for new users, enhancing onboarding and retail adoption.
These features align with Ethereum’s user-centric evolution, as Fireblocks’ VP of Technology, Arik Galansky, notes:
“It’s a long while since Ethereum introduced changes that are user-oriented rather than scaling-oriented.”
However, EIP-7702’s power comes with risks.
Fireblocks warns that improper delegation to unaudited smart contracts could expose accounts to vulnerabilities, such as front-running attacks or storage collisions, particularly with pre-existing smart contract wallets not designed for EIP-7702.
A single malicious delegation could drain funds, as seen in incidents like the ByBit hack.
To mitigate these risks, Fireblocks advocates a security-first approach, recommending that only fully audited, EIP-7702-specific smart contracts be used for delegation.
This ensures that the account’s logic remains secure and compatible with Ethereum’s evolving standards.
With MPC, the cryptographic backbone that complements EIP-7702’s flexibility with security.
MPC distributes private key shares across multiple parties, eliminating single points of failure and enabling secure, distributed transaction signing.
Fireblocks’ MPC-CMP protocol, an open-source implementation, enhances this by offering instant wallet creation and high-speed transaction signing, critical for institutional-grade operations.
When paired with EIP-7702, MPC ensures that even as accounts adopt smart contract functionality, the underlying key management remains resilient against external attacks, insider threats, and human error.
Fireblocks’ infrastructure, certified at CCSS Level III, further bolsters trust, protecting billions in assets for exchanges and fintechs.
This relationship—EIP-7702’s programmable UX and MPC’s security—creates a framework for institutional wallets.
As Fireblocks notes in a blog post, EIP-7702 finally “brings programmable UX to EOAs, and when combined with MPC, it fills the security gap.”
The Pectra upgrade will likely cement EIP-7702 as a standard, with layer-2 solutions like Ithaca’s Odyssey testnet already offering early testing grounds.
For institutions, this hopefully means secure, scalable wallets that can adapt to diverse use cases, from DeFi to tokenized assets, without sacrificing user experience or safety.