Wallet compatibility depends on how much control the wallet exposes over the EOA.
Embedded wallets (e.g. Privy, Dynamic, Magic) allow developers to install smart account logic directly on the user’s EOA address using EIP-7702.
External wallets (e.g. MetaMask, Rabby, Trust) block apps from changing code on user EOAs for security reasons. These require Fusion mode.
Choosing Between EIP-7702 and Fusion: Use EIP-7702 if your embedded wallet supports smart account installation on EOAs. Use Fusion Mode for external wallets where smart account delegation isn’t possible.