A Transfer Hook is a Token-2022 extension that executes custom logic (via a program specified by the mint) on every transfer of that mint. It enables use cases such as transfer allowlists, fees, and compliance checks. Hooks receive additional accounts through an ExtraAccountMetaList; failure to strictly validate PDA derivation and seeds can allow attackers to inject malicious accounts (e.g., a spoofed whitelist) and bypass transfer logic.

If a Transfer Hook triggers a CPI that initiates another transfer of the same mint, it can create a recursion loop—potentially leading to griefing or asset freeze. Auditors must verify hook acyclicity, enforce read-only access on external state where possible, and respect Solana's CPI depth limit (4) for DeFi composability.