EIP-7702 Exploits and WLFI’s Viability Amid Alt5 Sigma’s $1.5B Bet: Navigating Security Risks and Speculative Demand in Politically Driven Crypto Projects

The Ethereum Improvement Proposal (EIP)-7702, introduced in May 2025 as part of the Pectra upgrade, aimed to enhance account abstraction by allowing Externally Owned Accounts (EOAs) to temporarily delegate execution rights to smart contracts. While this innovation enabled features like batch transactions and gas sponsorship, it inadvertently created a critical security flaw. Attackers weaponized the delegation mechanism through phishing campaigns and malicious "sweeper contracts," which exploit the DELEGATECALL function to execute code in the victim’s wallet context, granting full control over assets [1]. Over 97% of observed EIP-7702 delegations have been linked to these sweeper contracts, with victims losing up to 80% of their holdings in seconds [2].

The World Liberty Financial (WLFI) token, a politically driven crypto project backed by the Trump family and institutional investors, has become a prime target. A $1.5 billion investment by Alt5 Sigma—a Nasdaq-listed fintech firm—into WLFI’s treasury strategy has amplified speculative demand, with the Trump family receiving 75% of the proceeds [3]. This investment, however, coincided with a surge in EIP-7702-related attacks on WLFI tokenholders. Phishing scams tricked users into authorizing malicious delegate contracts, which then drained ETH, BTC, and staked tokens from compromised wallets [4]. One victim lost $1.54 million in a single incident, underscoring the vulnerability of politically connected projects to technical exploits [5].

The intersection of speculative demand and security risks raises critical questions about WLFI’s viability. Alt5 Sigma’s investment, modeled after MicroStrategy’s treasury strategy, positions WLFI as a high-profile asset in a market increasingly dominated by token-based balance sheets [6]. However, the project’s reliance on EIP-7702’s flawed delegation mechanism has eroded investor confidence. The Trump family’s 22.5 billion token stake—valued at $9.45 billion—further complicates governance, as centralized control clashes with the token’s decentralized structure [7].

WLFI’s tokenomics, including a controlled unlock schedule and listings on major exchanges, were designed to mitigate volatility. Yet, the EIP-7702 exploits have exposed systemic weaknesses in Ethereum’s account abstraction model. Security experts warn that even cautious users may unknowingly authorize malicious contracts if wallet providers default to insecure delegation models [8]. For WLFI, this means the political and institutional allure of the project may not offset the reputational damage from repeated security breaches.

Investors must weigh the speculative appeal of politically driven crypto projects against the technical risks inherent in their infrastructure. While Alt5 Sigma’s $1.5B bet signals institutional confidence, the EIP-7702 vulnerabilities highlight a broader challenge: balancing usability with security in a rapidly evolving ecosystem. For WLFI and similar projects, the path forward requires not only technical fixes but also transparent governance and robust user education to rebuild trust.

Source:
[1] EIP-7702 and the Growing Risks to Ethereum-Based Tokens [https://www.ainvest.com/news/eip-7702-growing-risks-ethereum-based-tokens-2509/]
[2] EIP-7702: Innovation or Open Door for Sophisticated Scams? [https://medium.com/@m13_digital/eip-7702-innovation-or-open-door-for-sophisticated-scams-74488e20234e]
[3] ALT5 Sigma to raise $1.5 billion for WLFI token treasury strategy [https://www.theblock.co/post/366348/alt5-sigma-wlfi-token-treasury-strategy-eric-trump]
[4] Trump's Crypto Project WLFI Under Attack as Ethereum ... [https://finance.yahoo.com/news/trump-crypto-project-wlfi-under-081337737.html]
[5] User Loses $1.54 Million to EIP-7702 Phishing [https://www.mexc.com/en-GB/news/user-loses-1-54-million-to-eip-7702-phishing/72016]
[6] Trump-Backed WLFI Token Unlock and Its Implications [https://www.ainvest.com/news/trump-backed-wlfi-token-unlock-implications-40b-crypto-power-play-2508/]
[7] EIP-7702 Vulnerabilities and the Risks to WLFI Token ... [https://www.ainvest.com/news/eip-7702-vulnerabilities-risks-wlfi-token-security-2509/]
[8] EIP-7702 and the Growing Risks to Ethereum-Based Tokens [https://www.ainvest.com/news/eip-7702-growing-risks-ethereum-based-tokens-2509/]