Application of EIP-7702 (Linking Code to EOAs) in Crypto Payment Services

Ethereum continues to evolve, introducing improvements that make the network more flexible, secure, and user-friendly. One such enhancement is EIP-7702, which allows Externally Owned Accounts (EOAs) to temporarily or permanently link smart contract code to themselves, extending their functionality. In the context of crypto payment services, this innovation offers significant opportunities to simplify transactions, enhance security, and improve user experience. Below is an analysis of how EIP-7702 can be applied in crypto payment services and the benefits it brings.

What is EIP-7702?

EIP-7702, co-authored by Vitalik Buterin and others, introduces a new transaction type that enables EOAs to temporarily or permanently adopt smart contract code for specific functions. Unlike EIP-3074, which added new opcodes for transaction delegation, EIP-7702 uses a simpler and more compatible model with existing infrastructure. After execution, the linked code can either be removed in a subsequent transaction or retained for permanent use, making this approach highly flexible for various use cases.

The primary goal of EIP-7702 is to combine the simplicity and compatibility of EOAs with the flexibility and programmability of smart contracts. This is particularly useful for crypto payment services where speed, security, and convenience are paramount.

Applications of EIP-7702 in Crypto Payment Services

1. Batch Transaction Processing

One of the key features of EIP-7702 is its ability to combine multiple operations into a single transaction. For example:

• A user can approve tokens and call a service's payment processing function in one step instead of two separate transactions.

• This reduces gas fees and simplifies the process for users.

Example: A user subscribes to a streaming service using ERC-20 tokens. Instead of two transactions (approval and payment), the service uses EIP-7702 to execute both operations in one step.

2. Gas Sponsorship

EIP-7702 allows third parties to pay gas fees on behalf of users. This feature is particularly useful for onboarding new users who may not have native tokens for gas payments.

• Services can cover gas fees while accepting payments in other tokens (e.g., stablecoins), making payments more intuitive and accessible.

Example: An online store accepts USDC payments while covering gas fees through EIP-7702's sponsorship mechanism.

3. Flexible Permissions and Session Keys

Permanent code linking enables features like session keys with restricted permissions:

• Temporary keys can allow payments within specific limits or services without exposing the user's private key.

• This enhances security by protecting the main private key.

Example: A user creates a session key for payments in a specific dApp with a daily limit of 10% of their balance. Even if compromised, the damage is limited.

4. Multi-Chain Payment Support

EIP-7702 supports code that works across multiple blockchain networks (by setting chainId to 0). This simplifies transactions for multi-chain Crypto Payment Services:

• Payment services can accept funds on different blockchains 

• Users only need to authenticate the code once for all supported networks.

Example: A payment gateway uses EIP-7702 to handle transactions on Ethereum and L2 networks like Arbitrum or Optimism from a single address.

5. Enhanced Security and Account Recovery

Permanent code linking opens possibilities for integrating recovery mechanisms directly into EOAs:

• Trusted parties can help recover access if private keys are lost.

• This feature is critical for crypto payment services where losing keys could mean losing funds.

Example: A user loses their private key but regains access through a pre-configured recovery mechanism involving trusted friends or family using EIP-7702.

Benefits for Crypto Payment Services

1. Cost Reduction: Batch processing and gas sponsorship lower transaction costs for both users and services.

2. Improved User Experience: Simplified payment processes eliminate the need for users to hold ETH for gas fees, making crypto payments more akin to traditional systems.

3. Enhanced Security: Session keys and recovery mechanisms reduce risks associated with key compromise.

4. Flexibility: Compatibility with ERC-4337 and customizable code linking allow services to adapt to diverse use cases.

   
   

Challenges and Limitations

Despite its advantages, EIP-7702 has some limitations:

1. Trust in Smart Contracts: Permanent code linking requires trust in the smart contract being used; vulnerabilities could lead to funds loss.

2. Infrastructure Updates: Wallets and payment systems need updates to support EIP-7702, which may take time.

3. Revocation Complexity: The current specification lacks an easy way to revoke linked code, complicating changes in settings.

4. Storage Conflicts: Linked contracts share the same storage space as the EOA, potentially causing field overwrites or unexpected values.

5. Residual Data: Even after unlinking code, storage fields remain in the account state, potentially leading to unintended behavior.

   
   

Conclusion

EIP-7702 is a powerful tool for crypto payment services, enabling them to overcome traditional EOA limitations while offering users a more seamless and secure experience. With features like batch processing, gas sponsorship, flexible permissions, cross-chain compatibility, and enhanced security mechanisms, this proposal could drive significant growth in crypto payments.

As Ethereum integrates EIP-7702 through its upcoming Pectra upgrade (expected in 2025), developers and services will gain new opportunities to create innovative solutions that bring cryptocurrencies closer to mainstream adoption.