EIP-7702 Unveiled: How Ethereum Redefines Account Abstraction

What Are Ethereum Improvement Proposals (EIPs)?

You may be new to this concept, so I’ll be doing an introduction that will help you understand the basics of EIPs. Ethereum Improvement Proposals (EIPs) are design documents that propose changes or improvements to the Ethereum blockchain and its ecosystem. They serve as the primary mechanism for suggesting new features, gathering community input, and documenting design decisions. EIPs ensure:

• Transparent and documented changes to Ethereum

• Standards for compatibility and interoperability

• Historical records of blockchain development

• Community involvement in governance

Types of EIPs

EIPs are categorized into three main types:

1. Standards Track EIPs: Impact most Ethereum implementations, including protocol changes, application standards, and conventions.

2. Meta EIPs: Propose improvements to Ethereum’s processes and guidelines, requiring community consensus but not directly affecting the protocol.

3. Informational EIPs: Provide guidelines or general information without mandating community consensus.

EIP Process

The EIP process progresses through five stages:

1. Idea: Initial concept submission, requiring community support and proper formatting.

2. Draft: Formally tracked in the EIP repository with a unique EIP number.

3. Review: A minimum 45-day period for peer feedback, updates, and community consensus-building.

4. Last Call: A 14-day final review window for last-minute changes.

5. Final: The EIP is locked and has become a candidate for Ethereum upgrades based on community discussion.

Introducing EIP-7702

Now that we understand what EIPs are, let’s dive into why there’s excitement about EIP-7702 and what it is here to achieve. EIP-7702 is an Ethereum upgrade that allows Externally Owned Accounts (EOAs) to temporarily function as smart contract wallets during a transaction, reverting to their original state afterward. This enables EOAs to adopt smart contract features.

Motivation for EIP-7702

EIP-7702 addresses key limitations in Ethereum’s account model by enabling:

• Transaction Batching: Combining multiple operations (e.g., token approval and swap) into a single atomic transaction, reducing gas costs and improving user experience.

• Gas Sponsorship: Allowing a third party (e.g., a paymaster) to cover gas fees, enabling gasless transactions for users without ETH.

• Privilege De-escalation: Supporting sub-keys with limited permissions, enhancing security by restricting access compared to global account control.

• Custom Authentication: Enabling alternative signing methods (e.g., passkeys, WebAuthn) for improved security.

• Spending Controls: Allowing limits on token spending or daily outflows.

How EIP-7702 Builds on Previous EIPs

There have been previous proposals that have attempted to achieve this functionality, EIP-7702 improves those existing standards.

1. EIP-3074 (AUTH and AUTHCALL Opcodes):

   • EIP-3074 introduced opcodes to delegate EOA transaction execution to smart contracts. EIP-7702 achieves similar functionality without new opcodes, reducing complexity and security risks (e.g., malicious invoker contracts draining funds).

2. ERC-4337 (Account Abstraction via Entry Point Contract):

   • ERC-4337 enabled account abstraction at the application layer through an entry point contract. This requires deploying smart contract wallets and migrating assets, which fragments on-chain identity. EIP-7702 integrates these features into the protocol, making them gas-efficient and accessible to EOAs without new addresses.

How EIP-7702 Works

EIP-7702 introduces a new “set code” transaction type under EIP-2718’s Typed Transaction Envelope. It allows an EOA to temporarily adopt the code of an existing smart contract during a transaction. Before we dive into the technicalities of how this standard is implemented, here is a real-world use case:

Imagine Zarcc, a new Ethereum user, wants to trade 100 USDC for DAI on a decentralized exchange like Uniswap. He lacks ETH for gas fees and prefers a single transaction for simplicity, as he’s new to the system. This is how EIP-7702 helps:-

• Zarcc delegates his EOA to a trusted Uniswap smart contract via a signed authorization from his wallet (e.g, Metamask)

• The smart contract batches token approval and swap into one transaction.

• A paymaster covers the gas fees, enabling a gasless experience.

• Zarcc retains his EOA address, preserving his on-chain identity.

• The delegation is temporary and revocable and can be done from his wallet, so he maintains full control.

Technical Steps of how EIP_7702 works:

1. Create Authorization:

   • The EOA owner signs an authorization message containing:

     • address: The smart contract address to delegate to.

     • nonce: The EOA’s current nonce.

     • signature: The EOA’s signature authorizing the delegation.

   • This effectively runs the smart contract code in the EOA’s execution context, where:

     • msg.sender is the EOA’s address.

     • The code accesses the EOA’s balance and tokens.

     • The logic comes from the external contract.

2. Transaction Submission:

   • A transaction is sent with:

     • authorizationList: The signed authorization.

     • Regular transaction data (to, value, data).

     • Delegation Designator: The EVM writes a delegation indicator (0xef0100 || address) to the EOA’s code field, enabling the EOA to execute the delegated contract’s code in its context (similar to DELEGATECALL).

3. EVM Processing:

   • Validates the authorization signature.

   • Temporarily sets the EOA’s code to the delegated contract.

   • Executes the transaction using the EOA’s storage and balance.

   • Clears the code after completion, unless overwritten by another EIP-7702 transaction (e.g., setting delegation to address(0)).

Execution Mechanics

• The EVM checks the EOA’s code field during execution. If a delegation indicator exists, the delegated contract’s code is executed.

• No new opcodes are introduced, maintaining EVM stability and reducing implementation complexity.

Conclusion

EIP-7702 bridges the gap between EOAs and smart contract wallets, offering a seamless, gas-efficient, and secure way to adopt advanced features. By building on EIP-2718 and ERC-4337 while addressing EIP-3074’s limitations, it aligns with Ethereum’s long-term account abstraction goals. For developers and users, EIP-7702 unlocks new possibilities for DeFi, wallet design, and user experience without requiring complex migrations or EVM changes.