Recent data highlights a concerning trend in the cryptocurrency space. In the first half of 2024 alone, over 260,000 users fell victim to phishing attacks on EVM chains, resulting in combined losses exceeding $314 million. These incidents often involve sophisticated methods targeting user approvals and signatures.
This article explores common Web3 security threats and how modern wallet solutions help users navigate these risks. We will break down the mechanisms behind these attacks and the protective measures designed to safeguard digital assets.
Common Phishing Attack Vectors
Phishing remains the dominant threat in the Web3 ecosystem. Attackers frequently use fake websites and compromised social media accounts to trick users into signing malicious transactions. The most common techniques exploit standard token approval methods like Permit, IncreaseAllowance, and Uniswap Permit2.
Large-scale thefts often target assets involved in staking, restaking, lending protocols, and specific yield-bearing tokens. Users are typically directed to these phishing sites through counterfeit comments on popular social media platforms.
Four Critical Risk Scenarios and Protective Measures
1. Malicious Authorization to EOA Accounts
A significant number of recent high-value exploits have originated from users inadvertently authorizing External Owned Accounts (EOAs). Unlike smart contract accounts, EOA accounts are controlled by private keys, making any authorization to them inherently risky.
- Approve: The standard ERC-20 method that allows a smart contract to spend a specific amount of your tokens. Malicious contracts can drain the approved funds immediately.
- Permit: Allows a third party to spend tokens via a signature, without an on-chain transaction from the user's account. This is a common method for phishing attacks.
- Permit2: A Uniswap innovation that allows for token approvals to be shared across different applications. While convenient, an existing unlimited approval can make users a target for phishing.
Both Permit and Permit2 are off-line signatures, meaning the phishing attacker pays the gas fee to broadcast the approval, leaving no direct trace in the victim's transaction history.
How the blocking feature works: The wallet proactively analyzes transactions before signing. If it detects an authorization attempt directed towards an EOA address, it triggers an immediate warning to the user, alerting them to the potential phishing risk.
2. Malicious Change of Account Ownership
This high-risk scenario primarily affects blockchains like TRON and Solana, which have explicit account ownership structures. A malicious signature can result in a user completely losing control of their account.
In TRON, for example, the ownership permission (Owner) holds the highest authority. If an attacker gains a user's private key or tricks them into signing a specific transaction, they can reassign the Owner or Active permissions to their own address.
The result is a loss of control, where the user may still hold their private key but can no longer execute transactions without the attacker's co-signature, or they may lose access entirely.
How the blocking feature works: Due to the extreme severity of this threat, the wallet employs a strict blocking mechanism. It parses transactions and will automatically intercept and prevent the user from signing any transaction that contains a request to change critical account permissions.
3. Malicious alteration of transfer addresses
This sophisticated attack vector exploits flaws in certain smart contract designs. A prominent example targeted users of the EigenLayer protocol. Attackers created phishing sites that tricked users into signing a queueWithdrawal transaction.
However, the approved transaction was maliciously crafted to redirect the user's staking rewards to an address chosen by the attacker. To evade detection, advanced techniques like the CREATE2 opcode were used to make the malicious approval appear benign to many security tools.
How the blocking feature works: The wallet's security system is designed to recognize known dangerous function calls like these. When a user attempts such a transaction on an unofficial website, and the parsing reveals that funds are being withdrawn to an address not belonging to the user, the wallet will force a strong, explicit confirmation, clearly warning the user of the suspected phishing attempt.
4. Transfers to Similar Addresses
This attack preys on user habit and interface design. Attackers generate a massive number of wallet addresses, specifically looking for those that share the first and last few characters with a victim's common transaction counterparties.
The scam unfolds in two steps:
- After a user makes a genuine transaction, the attacker immediately sends a tiny, $0-worth transaction from their deceptive similar address to the user.
- This action places the fake address at the top of the user's transaction history. Later, when the user wants to send funds again, they might carelessly copy the most recent address from their history—which is now the attacker's address—leading to catastrophic loss.
How the blocking feature works: The wallet continuously monitors on-chain activity. If it detects a large transfer followed swiftly by a tiny, unsolicited transaction from a similar-looking address, it flags that address. Any future interaction with this flagged, similar address will trigger a warning. Furthermore, the wallet will clearly mark transactions involving such addresses within the transaction history list. 👉 Explore more strategies for securing your digital assets
Frequently Asked Questions
What is the most common type of Web3 phishing attack?
Currently, signature phishing is the most prevalent. Attacks using Permit, IncreaseAllowance, and Permit2 signatures are particularly common. These methods trick users into signing messages that grant attackers permission to withdraw their tokens, often without the user having to pay gas fees, making the attack seem invisible.
How can I tell if a website is a phishing site?
Always double-check the URL to ensure it is the official project domain. Be wary of websites linked from social media comments, direct messages, or emails. Use bookmark links for important sites. A good Web3 wallet will often provide warnings when interacting with known malicious or unverified websites.
What should I do if my wallet has approved a malicious smart contract?
You should immediately revoke the approval. Use a trusted token approval revoking tool to find and remove any permissions you no longer need or that look suspicious. This helps minimize the risk of future funds being drained from your wallet.
Why would a wallet block a transaction instead of just warning me?
For ultra-high-risk actions—like changing the core owner of your account—the potential for immediate and total loss is so severe that the most responsible action is to block the transaction completely. This prevents catastrophic user error or sophisticated social engineering attacks from succeeding.
Are hardware wallets effective against these attacks?
Hardware wallets significantly improve security by keeping your private keys offline. However, they are not foolproof. You can still sign a malicious transaction with a hardware wallet if you are tricked into approving it on the device. Always verify the transaction details on your screen before confirming on your hardware wallet.
How does similar address detection work?
Wallets monitor transaction patterns. If a small, unsolicited transaction from a new address occurs immediately after a large transaction you made, and the new address has a very similar beginning and end, the system will flag it as potentially deceptive and warn you upon any interaction.