Free 30-min Web3 Consultation
Book Consultation
Smart Contract Security Audits
View Audit Services
Custom DeFi Protocol Development
Explore DeFi
Full-Stack Web3 dApp Development
View App Services
Free 30-min Web3 Consultation
Book Consultation
Smart Contract Security Audits
View Audit Services
Custom DeFi Protocol Development
Explore DeFi
Full-Stack Web3 dApp Development
View App Services
Free 30-min Web3 Consultation
Book Consultation
Smart Contract Security Audits
View Audit Services
Custom DeFi Protocol Development
Explore DeFi
Full-Stack Web3 dApp Development
View App Services
Free 30-min Web3 Consultation
Book Consultation
Smart Contract Security Audits
View Audit Services
Custom DeFi Protocol Development
Explore DeFi
Full-Stack Web3 dApp Development
View App Services
wallet-wars-smart-accounts-vs-embedded-wallets
Blog

Why ERC-7579 and Modular Accounts Redefine Audit Boundaries

The composable module model fractures traditional security guarantees. We analyze the new supply chain attack surface and how ERC-7579 establishes the critical audit perimeter for CTOs.

introduction
THE AUDIT BOUNDARY

The Modular Wallet Security Paradox

ERC-7579 and modular accounts shift the security perimeter from a single contract to a dynamic, composable system, creating a new audit paradigm.

The perimeter is now dynamic. Traditional wallet audits target a single, immutable contract. A modular account like those from Safe{Core} or ZeroDev is a minimal proxy that delegates logic to pluggable modules, making the security surface a moving target.

ERC-7579 standardizes the attack surface. Without a standard, each account implementation defines unique module interfaces, fracturing audit scope. This standard provides a canonical interface for module integration, enabling auditors to focus on a consistent, well-defined boundary between the account core and its extensions.

Audit scope shifts to module composition. The primary risk is no longer the core account but the interaction logic between independently audited modules. A Safe account with a Session Key module from Biconomy and a Paymaster from Pimlico creates novel state dependencies a single-module audit misses.

Evidence: The Safe{Wallet} audit scope expanded from one core contract to over 20 official modules and countless third-party plugins, necessitating formalized frameworks like ERC-7579 to manage composable security.

thesis-statement
THE AUDIT BOUNDARY

ERC-7579 is the New Security Perimeter

ERC-7579 modular accounts shift the security perimeter from the entire wallet to its individual, auditable modules.

Audit the module, not the monolith. Traditional smart contract wallets like Safe require a full-protocol audit for every upgrade. ERC-7579's standard interface isolates logic into discrete modules, allowing security teams to scope reviews to new or changed components only.

Composability creates attack surface. A wallet with a dozen integrated services like Gelato for automation and Biconomy for gas sponsorship presents a monolithic attack surface. ERC-7579 enforces module isolation, preventing a bug in one integrator from compromising the entire account state.

The perimeter is now the hook. Security validation moves to the entry and exit points—the validation and execution hooks defined by the standard. Firms like Cantina and Spearbit audit these permission boundaries, not the infinite permutations of user transactions.

Evidence: The Safe{Core} Account Abstraction Stack adoption of ERC-7579 demonstrates this shift; teams now audit standalone modules for session keys or social recovery instead of the entire Safe contract suite.

market-context
THE AUDIT BOUNDARY PROBLEM

The Fragmented Module Landscape

ERC-7579 and modular accounts shift the security perimeter from the entire wallet to individual, composable modules.

Modular accounts decouple logic from storage. Traditional smart contract wallets like Safe are monolithic; a single audit covers all functionality. ERC-7579 standardizes interfaces, allowing developers to plug in specialized modules for staking, bridging, or social recovery from different vendors like Biconomy or ZeroDev.

Audit scope shrinks to the module level. Security analysis no longer requires reviewing the entire account codebase. A team only audits the specific execution or validation module they install, such as a session key manager or a transaction bundler from Stackup or Alchemy.

This creates a new attack surface: module interoperability. The primary risk shifts from the core account to the handoff between modules. A malicious or buggy module from an untrusted registry can inherit the account's full permissions, making module curation critical.

Evidence: The Safe{Core} Account Abstraction Kit already demonstrates this pattern, where over 100,000 Safes use modular plugins, but each new add-on requires a separate security assessment of its integration points.

ERC-7579 & ACCOUNT ABSTRACTION

Audit Model Evolution: Monolithic vs. Modular

How smart account standards redefine security boundaries, audit scope, and liability for CTOs and auditors.

Audit DimensionMonolithic Smart ContractModular Smart Account (ERC-7579)Implication

Audit Surface Area

Entire contract (10k+ LoC)

Core (~1k LoC) + Validated Modules

Attack surface shrinks by ~90% for core logic

Upgrade Risk Post-Audit

High (Full re-audit required)

Low (Module-specific audit only)

Security debt is contained; core remains immutable

Module Liability

N/A (Single entity)

Module Developer

Shifts liability from account core to module publisher (e.g., Safe{Core})

Audit Cost Model

$50k-$200k (one-time, large)

< $10k per module (recurring, granular)

Enables competitive audit market for niche functionality

Time to Integrate New Feature

Weeks (fork & redeploy)

Minutes (plugin install)

Dev velocity shifts from deployment to curation

Formal Verification Feasibility

Low (Complex, stateful monolith)

High (Small, composable units)

Enables practical use of tools like Certora for critical modules

Third-Party Module Trust

N/A

Requires Registry or Staking (e.g., EigenLayer AVS)

Security becomes a function of economic stake, not just code review

deep-dive
THE AUDIT BOUNDARY

How ERC-7579 Draws the Line in the Sand

ERC-7579 defines a clean interface that separates account logic from execution environments, fundamentally altering security and upgradeability models.

Separates Logic from Execution: ERC-7579 mandates a standard interface between a smart account's core logic and its execution modules. This creates a formal audit boundary where the account's security is verifiable independently of its attached functionality, like a Safe with a Biconomy session key module.

Shifts the Security Model: Auditors now verify the account manager's validation logic and the module's isolated behavior, not a monolithic contract. This is the modular security principle that underpins systems like Arbitrum's Stylus, applied at the account level.

Enables Permissionless Module Markets: A standardized interface allows developers to deploy composable modules without the account owner's explicit integration. This mirrors how UniswapX aggregates solvers, but for wallet features like social recovery or batched transactions.

Evidence: The ERC-6900 standard for modular account architecture relies on this separation. Projects like Rhinestone and ZeroDev are building on this premise, treating the account manager as a verified kernel and modules as installable, untrusted extensions.

risk-analysis
AUDIT BOUNDARIES

The Bear Case: Where ERC-7579 Isn't Enough

ERC-7579 standardizes modular smart accounts, but its composability creates new, non-standard attack surfaces that traditional audits can't cover.

01

The Infinite Module Attack Surface

ERC-7579 enables unbounded module composition, creating a dynamic attack surface that grows with each integration. A single audit is a snapshot of a moving target.\n- Unpredictable State: Modules from different teams can interact in ways not covered by individual audits.\n- Composability Risk: A vulnerability in a Session Key module can compromise a Yield Aggregator module, even if both were audited in isolation.

100+
Potential Modules
∞
Interaction Paths
02

The Oracle & Cross-Chain Dependency

Modular accounts rely on external data and liquidity, shifting critical security assumptions off-chain. A Pyth price feed or LayerZero message becomes a single point of failure.\n- Trust Transference: Security is now a function of the weakest oracle or bridge in the module stack.\n- Liveness Risk: A cross-chain intent execution via Across Protocol can fail or be front-run, breaking the atomicity the account logic assumes.

~3s
Oracle Latency
$2B+
Bridge TVL Risk
03

The Upgradability Governance Hole

Module upgrades are a core feature, but they introduce a silent governance layer. Who can upgrade the Safe{Core} Manager or a critical ERC-7579 Validator?\n- Admin Key Risk: A multi-sig compromise can push a malicious update to thousands of accounts simultaneously.\n- Time-Lock Bypass: Emergency upgrade functions intended for security can become the attack vector, as seen in proxy contract exploits.

24-48h
Standard Time-Lock
0s
Emergency Bypass
04

The Intent-Based Execution Ambiguity

ERC-7579 facilitates intent-based architectures (like UniswapX), where the what is declared, not the how. This abstracts execution to solver networks like CowSwap.\n- Solver Trust: Users must trust the solver's execution path and fee extraction, which is outside the account's verification scope.\n- MEV Redirection: Bad solvers can turn user intents into MEV opportunities, creating a new form of extractive rent.

~90%
Solver Market Share
5-50bps
Hidden Slippage
future-outlook
THE MODULAR SHIFT

The 2024 Audit Stack: Registries, Scoring, and Insurance

ERC-7579 and modular accounts are fragmenting the smart contract wallet audit surface, forcing a new security model.

Modular accounts break monolithic audits. Auditing a full-featured Safe wallet is a single target. Auditing a modular account means auditing its core, its modules, and their interactions. The attack surface is now the weakest link in a dynamic, user-curated supply chain.

ERC-7579 standardizes the attack surface. This standard defines how modules plug into accounts. It creates a registry-based security model where auditors like Spearbit and Cyfrin can score individual modules, not just whole wallets. Users assemble accounts from pre-vetted components.

Security becomes a composable score. A user's account security is the aggregate of its module scores from a public registry. This enables on-chain insurance protocols like Nexus Mutual to underwrite specific module risks, not just blanket contract coverage.

Evidence: The Safe{Core} Account Abstraction Stack already separates the core account from modules like session keys or social recovery. ERC-7579 codifies this pattern, making module registries like Alchemy's Modular Account reference implementation inevitable.

takeaways
AUDIT PARADIGM SHIFT

TL;DR for Protocol Architects

ERC-7579 and Modular Accounts decouple validation logic from core wallet security, fundamentally changing how you scope and secure smart accounts.

01

The Problem: The Monolithic Audit Blob

Auditing a traditional smart account like an ERC-4337 Bundler or Safe{Wallet} requires reviewing the entire, fixed contract. A single bug in a non-core feature (e.g., a social recovery module) can compromise the entire wallet's ~$100B+ in managed assets. This creates massive audit surface area and stifles innovation.

100%
Surface Area
1 Bug
Total Failure
02

The Solution: ERC-7579's Module Registry

ERC-7579 standardizes a registry and validation interface for plug-in modules. The core account becomes a simple, audited execution hub. Security is now modular:\n- Isolate Risk: A faulty Session Key module doesn't drain the wallet.\n- Reusable Audits: A once-audited module (e.g., a Biconomy Paymaster integration) is safe for any 7579-compliant account.

-90%
Core Audit Scope
Plug & Play
Security
03

The New Boundary: Validator vs. Executor

The critical audit surface shrinks to the Validator—the logic that approves a module's call. The Executor (the module) is now a peripheral. This mirrors the security model of Cosmos SDK or EVM itself, where the consensus engine (validator) is distinct from the state machine (executor). You audit the gatekeeper, not every passerby.

10x
Focus
L1-Like
Security Model
04

ZeroDay for Account Abstraction Wallets

Frameworks like ZeroDay, Rhinestone, and Biconomy are building on this. Their core account audit is a one-time event. New features—a UniswapX order module or a LayerZero cross-chain hook—are added as pre-audited, sandboxed modules. This enables ~weekly feature deployment versus quarterly monolithic upgrades.

Weekly
Deploy Speed
Zero Trust
Add-Ons
05

The Bundler Bottleneck Unlocked

Today, ERC-4337 Bundlers (like Stackup, Alchemy) must handle infinite user operation formats. With 7579, they validate a standard interface, not custom logic. This reduces bundler complexity, increases reliability, and could lower fees by ~30% by streamlining the validation pipeline, similar to how Rollups optimize execution.

-30%
Fee Potential
Standardized
Ops
06

VC Takeaway: Portfolio-Wide Security

For a VC backing multiple Account Abstraction projects, 7579 creates a security multiplier. Funding one audit for a core modular account (e.g., ZeroDay's implementation) secures the base for dozens of portfolio companies. Each startup then only audits its unique module, slashing ~70% of typical security spend and de-risking the entire investment thesis.

-70%
Security Spend
Portfolio Leverage
Audit
ENQUIRY

Get In Touch
today.

Our experts will offer a free quote and a 30min call to discuss your project.

NDA Protected
24h Response
Directly to Engineering Team
10+
Protocols Shipped
$20M+
TVL Overall
NDA Protected Directly to Engineering Team
ERC-7579 Redefines Smart Account Security Auditing | ChainScore Blog