Why Smart Accounts Make Re-Entrancy Attacks More Dangerous

Smart accounts consolidate logic into a single, upgradeable entry point contract. A single re-entrancy bug here is catastrophic, unlike isolated EOAs or simple contracts.

• Universal Impact: Compromise affects all accounts using the vulnerable entry point.
• Upgrade Risk: Admin keys or governance for upgrades become a single point of failure.
• Complexity Vector: Bundled UserOperations create unpredictable state interactions.

ERC-4337 Paymasters hold funds to sponsor user gas, creating large, persistent on-chain balances that are prime re-entrancy targets.

• Attractive Target: A single paymaster can hold $10M+ in ETH or stablecoins for gas abstraction.
• Novel Attack Path: Re-entrancy can drain the sponsor wallet, not just individual user balances.
• Protocol Dependency: Integrations with Uniswap, AAVE, and Compound for gas token swaps add complexity.

Bundlers decide transaction ordering and inclusion, making them a trusted oracle for off-chain simulations. Re-entrancy can manipulate their view of state.

• MEV Incentive: Bundlers (like EigenLayer, Pimlico) are profit-driven, creating attack incentives.
• Simulation Gaps: Current eth_simulate calls may not catch all re-entrancy paths in a UserOperation bundle.
• Systemic Failure: A corrupted bundler can propagate invalid bundles across the network.

A single UserOperation can trigger multiple contract calls atomically. This power enables complex DeFi interactions but also creates nested re-entrancy labyrinths.

• State Entanglement: Calls to Uniswap, Lido, and a lending protocol in one op create unpredictable dependencies.
• Amplified Damage: One compromised signature can drain multiple positions across protocols simultaneously.
• Audit Blindspot: Traditional tools audit contracts in isolation, not cross-protocol atomic bundles.

The fix must be at the system level, not the contract level. Bundlers and EntryPoints need invariant checks that reject any op altering pre-declared state.

• Declarative Intent: UserOperations must declare accessed storage slots (like Arbitrum's access lists).
• Bundler Enforcement: Bundlers must simulate and reject ops with storage collisions.
• Standardization Required: Needs adoption across clients like Ethereum, Polygon, and Optimism.

Mitigate the honey pot risk by architecting paymasters with delayed withdrawals and circuit breakers, inspired by MakerDAO's security model.

• Rate Limiting: Implement daily withdrawal caps from the sponsor vault.
• Multi-Sig Escrow: Critical funds held in timelock-controlled smart contracts.
• Real-Time Monitoring: Tools like Chainscore and Forta must monitor for anomalous drain patterns.

Bundlers are the new miners/validators. They decide which UserOperations to include and can front-run, censor, or re-order them for profit. A malicious bundler can execute a re-entrancy attack by sandwiching a victim's transaction with its own.

• Centralization Risk: Top 3 bundlers control ~70%+ of ERC-4337 traffic.
• Atomic MEV: A single entity controls the entire bundle, enabling in-protocol sandwich attacks impossible with EOAs.

Paymasters that sponsor gas for user ops are prime targets. A malicious smart account can call back into the paymaster's validatePaymasterUserOp function during execution, potentially draining its deposit.

• Unbounded Sponsored Gas: Attack can loop, sponsoring millions of gas in a single bundle.
• Systemic Risk: A compromised popular paymaster (e.g., Biconomy, Stackup) could see $10M+ deposits drained, breaking the sponsorship model.

Signature aggregators (e.g., BLS, ERC-1271 multi-sig) are new, complex cryptographic modules. A flaw in their verification logic could allow a single malicious signature to validate infinite invalid UserOperations.

• Single Point of Failure: Compromise one aggregator, compromise all accounts using it.
• Amplified Scale: Unlike EOA key theft, this is a protocol-level exploit affecting potentially 100k+ accounts simultaneously.

The singleton EntryPoint contract is upgradeable. A governance attack on its upgrade mechanism (e.g., via Safe{Wallet} multisig) could inject malicious code that re-enters or bypasses all security checks.

• Total System Control: Attacker gains the ability to arbitrarily execute any UserOp.
• TVL at Risk: The entire $1B+ ecosystem TVL in smart accounts becomes vulnerable, a systemic risk order of magnitude greater than a single protocol hack.

Every ERC-4337 user operation flows through a single, shared EntryPoint contract. A re-entrancy bug here is catastrophic, potentially locking or draining millions of accounts across all bundlers. This centralizes risk in a way EOA-based systems never did.

• Attack Vector: Re-enter during handleOps to manipulate global validation or execution state.
• Scope: A single exploit impacts the entire ERC-4337 ecosystem, not a single app.
• Mitigation: Audit the EntryPoint's state isolation like a Layer 1 consensus client.

Paymasters sponsor gas and can execute arbitrary logic during user operation validation. This creates a callback-rich environment where re-entrancy into the account or other contracts is trivial.

• Attack Vector: Malicious paymaster re-enters the Smart Account during validatePaymasterUserOp.
• Consequence: Bypass signature checks, drain funds, or mint unlimited sponsored gas.
• Audit Focus: Treat paymaster interactions as untrusted external calls. Enforce strict checks-effects-interactions.

Smart accounts enable batched transactions and signature aggregation (e.g., Schnorr, BLS). A re-entrancy attack during a batch can corrupt the entire atomic bundle, not just one call.

• Attack Vector: Re-enter mid-batch to alter the state read by subsequent operations in the same bundle.
• Complexity: Debugging is harder as the failure is non-local and interdependencies are opaque.
• Check: Audit for cross-call state contamination within executeBatch or aggregated validation.

Many smart account implementations use a fallback/delegatecall handler for extensibility (e.g., Safe). An attacker who re-enters into this handler gains full proxy admin rights to the account's storage.

• Attack Vector: Re-entrancy into the handler's delegatecall logic to self-destruct or upgrade the account.
• Legacy Risk: This pattern is inherited from Gnosis Safe and is now exposed to more automated flows.
• Requirement: Audit the handler's re-entrancy guards as critically as the core account logic.

Bundlers compete to include user operations from the public mempool. A malicious actor can frontrun a victim's op with a re-entrancy attack that changes the victim's account state, causing their original op to fail and waste gas.

• Attack Vector: Preemptive re-entrancy to invalidate a pending user operation.
• Economic Attack: Targets the paymaster's gas sponsorship, causing financial loss.
• Audit Test: Simulate adversarial bundler behavior and mempool race conditions.

Smart accounts are upgradeable by design. A re-entrancy bug in the upgrade logic or a malicious module can be exploited after deployment, turning a benign update into an account takeover.

• Attack Vector: Re-enter during upgradeTo or module installation to hijack the upgrade process.
• Persistence: The exploit can be embedded in a module and triggered later, evading initial audits.
• Mandatory Check: Treat all upgrade paths as critical re-entrancy surfaces with timelock analysis.