Author of the opinion: Loring Harkness, Business Director at brainbot GmbH and Shutter

Earlier this year, the Ethereum Foundation launched a $1 trillion security initiative, which is a development in its broader campaign tailored for new audiences such as non-cryptocurrency retail investors, Wall Street, and traditional financial institutions.

On the surface, this initiative seems entirely positive. Ethereum recognizes its shortcomings, which is refreshing. The proposed approach also provides a clear path to "far exceed" in terms of security—this direction will offer reassurance to the industries we hope to attract to the cryptocurrency space. However, excessive transparency regarding Ethereum's security issues is fundamentally problematic.

The Ethereum Foundation envisions success as a world where "billions of individuals can confidently store over $1,000 on-chain." If we assume a constant trajectory based on the current growth rate of unique Ethereum wallet holders, this milestone could be achieved in less than a decade. As Ethereum celebrates its 10th anniversary on July 30, we assume that the chain will achieve massive adoption at both institutional and retail levels.

In principle, this progress is entirely within Ethereum's capabilities. DeFi protocols on Ethereum now manage over $64 billion in total locked value (TVL). The Foundation's close engagement with Wall Street giants like BlackRock, Fidelity, JPMorgan, and Robinhood has led to traditional financial powerhouses publicly embracing Ethereum-based financial products, validating the maturity of the blockchain.

Despite Ethereum's reputation-enhancing activities, blockchain security researchers and innovators have raised increasingly urgent alarms about the extent of malicious maximum extractable value (MEV), particularly on Ethereum.

Since 2020, over $1.8 billion has been extracted through MEV on Ethereum, primarily harming the interests of ordinary users through malicious MEV. Some may argue that this is all part of the DeFi game. In reality, this is extremely unfair, especially when non-web3 natives come on-chain, as these individuals will constitute the billions of users Ethereum aims to persuade.

Ethereum's architecture exposes a fundamental flaw: its currently unencrypted public memory pool. Any transaction processed on Ethereum must go through its public memory pool, where transactions are broadcast to everyone—including malicious actors and bots—before confirmation. At this stage, bots attack, front-run, and reorder transactions for profit.

This transparent design was initially intended to enhance validation but has created a perfect environment for predatory actors to analyze pending transactions and manipulate transaction ordering for advantage.

Another reality is that sandwich attacks, front-running, and other malicious MEV exploits exist in a regulatory gray area. While the European Securities and Markets Authority (ESMA) is developing some measures to address this issue, there is no formal framework to regulate such activities, and there are almost no consequences for attackers.

This is not a new problem, and there are some claims of solutions to malicious MEV. However, mainstream alternatives prioritize giving users a more equal share of the pie rather than first providing a fair opportunity. The current private trading pools create centralized risks, often merely shifting MEV extraction to different actors rather than eliminating it.

MEV-Boost attempts to democratize MEV extraction but does not eliminate it. It redistributes MEV profits between builders and proposers, while users still suffer from front-running and sandwich attacks.

The only credible solution to Ethereum's malicious MEV crisis is to redesign how transactions flow within the network. The answer lies in encrypting Ethereum's memory pool, utilizing a distributed system where all parties in the distributed network temporarily encrypt all transactions until they are completed.

Encrypting transactions before they are permanently placed in a block allows us to achieve a fair competitive environment where malicious MEV becomes nearly impossible. An encrypted memory pool on Ethereum would transform the user experience by automatically providing protocol-level protection against malicious MEV for all users without requiring any action from them.

Most people will never switch their RPC or DEX, so the only real solution is to make fairness the default setting. This will also eliminate the need for today's patchwork of centralized MEV prevention tools, which help limit some attacks but do not fully stop malicious MEV.

This encrypted memory pool system may seem simple, but it would represent a significant architectural shift for Ethereum.

It requires changes to Ethereum's underlying protocol. The necessary code changes would involve Ethereum's most fundamental components—its transaction propagation mechanism, consensus protocol, and execution environment. The timeline for these changes will span multiple network upgrades and may take years to fully implement. If Ethereum continues to grow at its current pace, the demand for viable long-term solutions to such threats will only increase.

As institutional capital continues to flow into the Ethereum ecosystem, the risks of its malicious MEV vulnerabilities will continue to grow. The recent wave of institutional adoption provides a false sense of security that masks potential technical crises. However, it is only a matter of time before institutions and users inquire about vulnerability issues.

The $1 trillion security initiative deserves strong community support because it addresses the core issue of Ethereum's value proposition: can we trust the network to handle our transactions fairly?

The technical path to Ethereum's fairness is clear: an encrypted memory pool. It remains to be seen whether the Ethereum community is determined to implement these changes before institutional trust is compromised.

Today's price charts may look promising, but without addressing its malicious MEV crisis, Ethereum's long-term security and viability remain at risk.

Author of the opinion: Loring Harkness, Business Director at brainbot GmbH and Shutter.

Related: FBI warns: "Fake law firms" are targeting cryptocurrency scam victims

This article is for general informational purposes only and is not intended and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Original article: Opinion: Ethereum Should Limit Transparency for a Fairer Blockchain

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