Ethereum Should Limit Transparency For A Fairer Blockchain

Opinion by: Loring Harkness, Head of Commercial at brainbot GmbH and Shutter

Earlier this year, the Ethereum Foundation launched a $1 trillion security initiative, a development in its wider campaign to tailor the chain’s image for its new audience of non-crypto retail investors, Wall Street and traditional financial institutions. 

On paper, the initiative is nothing but a good thing. Ethereum, recognizing its shortcomings, is refreshing. The proposed approach also offers a clear path to being “far greater” regarding security — a direction that will provide the industry we hope to attract to crypto with peace of mind. For Ethereum’s security problem, however, too much transparency is fundamentally the problem.

The $1,000 dream

The Ethereum Foundation’s trillion-dollar initiative views success as a world where “billions of individuals are each comfortable storing more than $1,000 onchain.” If we were to assume a constant trajectory based on the current growth rate for unique wallet holders on Ethereum, that milestone is less than a decade away. As Ethereum celebrated its 10th anniversary on July 30, we’re assuming colossal mass adoption for the chain at an institutional and retail level. 

In principle, this progress is well within Ethereum’s reach. DeFi protocols on Ethereum now manage over $64 billion in total value locked (TVL). The Foundation’s heightened engagement with Wall Street giants like BlackRock, Fidelity, JPMorgan and Robinhood has seen traditional finance juggernauts publicly embracing Ethereum-based financial products, validating the blockchain’s maturity. 

Despite Ethereum’s reputation-boosting activity, blockchain security researchers and innovators are raising increasingly urgent alarms about the extent of malicious maximal extractable value (MEV), particularly on Ethereum.

Since 2020, more than $1.8 billion has been extracted through MEV on Ethereum, mainly at the expense of everyday users through malicious MEV. Some might say this is all part of the DeFi game. In reality, it’s incredibly unfair, particularly as non-web3 natives come onchain, the population that will make up the billions of users Ethereum wants to convince.

Ethereum’s transaction ordering

Ethereum’s architecture exposes a fundamental vulnerability: its currently unencrypted public mempool. Any transaction processed on Ethereum must pass through its public mempool, where the transactions are broadcast to everyone — including bad actors and…