The explosion of decentralized finance (DeFi) and the digital ownership economy has made e-wallets the most important gateway to the Web3 world. In this context, WalletConnect has established its position as an open source communication protocol, allowing users to securely connect personal wallets to tens of thousands of decentralized applications (DApps) without revealing private keys. However, the widespread popularity of this protocol also creates a huge attack surface for malicious actors. Analysis of data from personal wallet intrusions in 2025 and early 2026 compiled by Tan Phat Digital shows that, although the WalletConnect protocol itself possesses solid encryption layers, users' lack of vigilance and vulnerabilities in the transaction signing interface have led to asset losses amounting to billions of dollars. Understanding how WalletConnect operates as well as potential risks such as excessive DApp permissions and wallet drainers is an urgent requirement for any entity participating in today's cryptocurrency market.
Technical architecture and security mechanisms of the WalletConnect protocol
WalletConnect operates not as a single application but as an infrastructure layer Neutral messaging layer, allowing encrypted sessions to be established between a wallet and a decentralized application. The key to WalletConnect's security design is the complete separation between the application's right to store private keys and its right to initiate transactions. The user's private keys are always kept securely inside the wallet's secure enclave, while WalletConnect only acts as a "carrier" of end-to-end encrypted (E2EE) transaction signing requests.
The connection mechanism begins when the decentralized application generates a URI according to the WalletConnect standard, typically displayed as a QR code on desktop or a deep link on mobile. When the user scans this code, a connection session is established through the relay server system (Relay Service). An important feature of WalletConnect V2 and V3 versions is the multi-chain session management capability, allowing a single session to simultaneously support multiple blockchains such as Ethereum, Polygon, BNB Chain.
Main system components and security roles:
Relay Server: The main function is to relay encrypted JSON-RPC messages between the wallet and the DApp. In terms of security, it helps prevent Man-in-the-Middle (MITM) attacks because the relay cannot read the message content.
URI/QR Code: Contains information about the session and symmetric encryption key. This component ensures that only the entity scanning the code can participate in the communication session.
WalletKit/AppKit: A development kit (SDK) that provides signing and authentication APIs. It standardizes secure processes like the Verify API to check domains before connecting.
Smart Sessions: New feature allows approval of programmable transaction rules instead of approval of individual orders. This helps minimize "transaction fatigue" - a scenario that attackers often exploit to trick users into signing randomly.
See more: Phishing crypto wallets is What?
Unlimited Token Approval Vulnerability Analysis
In the Web3 ecosystem, the biggest risk does not come from leaking private keys through the connection protocol, but from the Approval mechanism of token standards such as ERC-20 and ERC-721. When a user wants to swap assets on a decentralized exchange, the application asks the user to sign an approval transaction that gives the smart contract the right to take a certain amount of tokens from the wallet.
The problem arises when most applications require "unlimited approval" to save on gas fees. Technically, this command allows the smart contract to empty the wallet of the target asset at any time. If a DApp's smart contract is hacked or if the DApp is a phishing site, an attacker can siphon off all approved assets without requiring any additional confirmation from the user.
Difference between Session Connect and Permission Approval:
Data Storage Location: Session Connect is stored in the application/wallet cache (Off-chain), while Token Approval is recorded directly on the blockchain ledger (On-chain).
Permissions granted to DApp: Session Connect only allows viewing the wallet address and proposal for delivery translate. Approval Token grants authority to spend assets on behalf of the user.
How to Terminate: The session connection can be terminated simply by pressing "Disconnect". Token approval requires an on-chain Revoke transaction and costs gas.
Drainer Impact: Session connections are exploited to repeatedly send fake signing requests. Token approval allows attackers to automatically withdraw funds without requiring additional signatures.
Wallet Drainers and Phishing DApps in 2026
The evolution of wallet drainers in 2025-2026 has reached an extremely high level of automation. According to Tan Phat Digital's observations, cybercriminal groups today use toolkits like MS Drainer to scan and clean victims' wallets within seconds.
When a user scans a QR code on a phishing website, a malicious script will perform the following steps:
Asset Valuation: Automatically determine the value of all tokens and NFTs in the wallet via API blockchain.
Target Prioritization: Put the most valuable assets (ETH, stablecoins, NFT Blue-chips) on the withdrawal list first.
Create Malicious Transactions: Ask users to sign approval orders disguised as "Identity Verification" or "Bonus Registration".
Coin Withdrawals series: Transfer assets to attacker wallets and disperse through coin mixing services.
Data shows that in 2025, more than 158,000 incidents affected 80,000 victims with a total value of $713 million in losses. The criminal trend is shifting strongly to attacking individual targets through security errors in DApp interactions.
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Danger from Blind Signing and Lack of Interface Information
Blind signing is one of the most fatal weaknesses. When a DApp sends a transaction request via WalletConnect, the data is often transmitted as an unreadable Hex code. If the wallet interface only displays "Contract Interaction" with a long string of characters, the user is signing and approving an action that they do not really understand.
The technical reason is because the wallet lacks access to the ABI (application interface) of the contract. Attackers exploit this loophole by creating new smart contracts, which are not ABI registered, to execute malicious commands without the user being able to recognize them. Tan Phat Digital recommends that users switch to wallets with powerful decryption tools such as Rabby Wallet to limit this risk.
Application Counterfeit Attacks and Malicious Code Distribution via App Store
A new dangerous development is the appearance of fake WalletConnect applications right on Google Play. Applications such as "Mestox Calculator" or "Walletconnect | Web3Inbox" have tricked tens of thousands of downloads thanks to fake 5-star reviews.
The mechanism of these applications is extremely sophisticated: they initially act as a normal calculation tool to bypass censorship, then download the drainer script from an external server. Tan Phat Digital emphasizes an important fact: WalletConnect is a protocol, not an end-user application. Any app on the App Store claiming to be the "Official WalletConnect App" is a scam.
Next-generation security solution: Smart Sessions and Verify API
WalletConnect V3 introduced important enhancements to proactively protect users with the protocol:
Smart Sessions (Conditional Authority Control): Allows the definition of rules session switch. For example, only a maximum of 10 low-value transactions are allowed to be signed in 24 hours. This helps minimize "transaction fatigue" and limits the scope of damage if the DApp is compromised.
Verify API (Anti-scam domain): The system performs domain matching (Domain Match) and blacklist checking (Scam Check).
Verification statuses to note:
VALID: Application name with a green check mark. Action: The transaction may proceed with normal caution.
INVALID: Warning about a domain mismatch. Action: Most likely fake, disconnect immediately.
THREAT: Red alert for malicious website has been reported. Action: Exit the site and report to the community.
UNKNOWN: Notification of unverified entity. Action: Be extremely cautious, check the age of the domain name.
Comparison of security between MetaMask and Rabby Wallet in 2026
The security of WalletConnect depends greatly on the wallet's decryption ability. Through actual implementation, Tan Phat Digital evaluates that Rabby Wallet has outstanding security advantages compared to MetaMask:
Automatic network switching: Rabby automatically detects and switches networks according to DApp requests, while MetaMask requires manual confirmation for each transfer.
Contract risk warning: Rabby in-depth checks contract history and transparency; MetaMask is mainly based on third-party blacklists.
Hardware wallet integration: Rabby smoothly supports multiple accounts at the same time; MetaMask sometimes has errors connecting to devices such as Ledger/Trezor.
Decoding Instructions (ABI): Rabby uses data from DeBank to decode most DApps; MetaMask often displays the Hex code if the ABI has not been verified.
Trading Simulation: Rabby displays the exact balance sheet after the trade (e.g. "-100 USDC, +0.03 ETH") and extremely clear warnings if the wallet is at risk of being emptied.
Multi-layered defense strategy from Tan Phat Digital
To protect assets, Tan Phat Digital recommends that users apply the following safety rules:
Asset Separation Model: Use a hardware wallet (Vault) to store 95% of assets long-term and absolutely do not connect to strange websites. Use a hot wallet (Burner) with a minimum balance to interact daily with the DApp.
Periodic authorization control: Use tools such as Revoke.cash at least once a month to revoke spending authorization for unused DApps. Always adjust the amount of approval tokens to the actual number needed.
Domain Golden Rule: Always access your DApp from your personal bookmarks or a reputable source like CoinMarketCap. Never click on links from emails, direct messages (DMs), or Google ads.
Disconnect sessions: Make a habit of pressing "Disconnect All" in your wallet's WalletConnect settings after completing a transaction to prevent session hijacking risks.
15 Frequently Asked Questions (FAQs) about WalletConnect risks
1. Is WalletConnect a wallet app that I need to download? No. WalletConnect is a communication protocol, not an application. Apps on the App Store/Google Play claiming to be the "Official WalletConnect App" are often "drainer" malware designed to steal assets.
2. Why have I disconnected (Disconnect) but money is still withdrawn from my wallet? Pressing "Disconnect" only ends the communication session. Token approval authority (authorization) still exists on the blockchain. An attacker can use this permission to withdraw funds at any time until you perform a "Revoke" transaction.
3. How dangerous is "Unlimited Token Approval"? It allows a smart contract to spend an almost unlimited amount of tokens ($2^{256}-1$) from your wallet. If that contract is hacked or fraudulent, you will lose that token without needing to sign any more orders.
4. How to spot a WalletConnect scam DApp?
Watch for signs: URLs that are off by a few characters, unusual token approval requests (like USDT for a mint NFT site), or the use of rushed "Free Airdrop" offers.
5. What are Smart Sessions in WalletConnect V3? This is a feature that allows you to set up specific spending rules (like amount or time limits) for a DApp. The DApp can only perform transactions within the scope you have authorized, helping to minimize damage if the DApp is attacked.
6. Should I enter Seed Phrase into the website when using WalletConnect? Absolutely NO. Mainstream WalletConnect only requires scanning a QR code or signing a transaction on the wallet. Any request to enter 12/24 recovery words is a scam.
7. What is "Blind Signing" and why is it risky? Blind signing occurs when the wallet cannot decode the smart contract data and only displays a meaningless Hex code. You may accidentally sign a "drainer" order while thinking you are confirming a normal transaction.
8. How does Rabby Wallet help protect against WalletConnect risk?Rabby integrates a trade simulation tool, showing you exactly how your balance will change (e.g. -100 USDC, +0.1 ETH) before you sign. It also warns if you are interacting with a malicious contract.
9. What should I do if I accidentally connect my wallet to a suspected scam site? Take 3 steps now: 1. Visit Revoke.cash to revoke all token approvals; 2. Disconnect session in wallet settings; 3. Transfer assets to a new wallet address if you feel the risk is high.
10. How does the "Verify API" protect me?
It performs two layers of checks: Domain Match to make sure you're not on a fake site, and Scam Check to warn if the domain has been reported for fraud.
11. What are the risks of approving NFTs (setApprovalForAll)? This command grants a DApp permission to move the ENTIRE NFTs of your specific collection. Scammers often use the guise of "Free Mint NFT" to trick you into signing this order to steal valuable NFTs.
12. Why do hardware wallets still get withdrawn when using WalletConnect? Hardware wallets protect private keys from being exposed, but it does not prevent you from "manually" signing a token approval transaction for the bad guys. Once you have signed, the attacker has legal rights on the chain to take your funds.
13. What is "Mestox Calculator"?
This is a famous scam application on Google Play in 2025, impersonating WalletConnect to trick users into installing and activating MS Drainer malware to appropriate assets.
14. How do I check my list of active approvals?
You can use tools like Revoke.cash, Etherscan's checker, or Rabby Wallet's built-in approval management feature.
15. What is the role of WalletConnect's WCT token?
The WCT token is used for protocol governance, staking to secure the network, and as a reward for wallet/node partners that operate the system.
WalletConnect is not dangerous; It is the lack of understanding of the operating mechanism that creates fatal flaws. In the 2026 era, with support from experts like Tan Phat Digital, equipping yourself with knowledge about token approval, blind signing, and using advanced security tools is the strongest shield. Cybersecurity in Web3 is not a static state, but a continuous journey of vigilance and responsible action.
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