Ethereum Foundation Reveals Major Security Gaps in New Trillion-Dollar Report

The Ethereum Foundation released a comprehensive security assessment on June 10, identifying critical vulnerabilities that could prevent the blockchain from safely handling institutional-scale adoption.

The report, part of the newly launched Trillion Dollar Security (1TS) project, warns that significant improvements are needed before Ethereum can support trillions of dollars in enterprise value.

0. Last month we announced the Trillion Dollar Security (1TS) initiative: an ecosystem-wide effort to upgrade Ethereum’s security.

Today we’re releasing the first 1TS report: an overview of the existing security challenges in the Ethereum ecosystem. pic.twitter.com/R1dhY34pDT

— Ethereum Foundation (@ethereumfndn) June 10, 2025

The foundation gathered feedback from hundreds of industry participants over the past month, including developers, security experts, and institutional users. Their findings reveal six major categories of security weaknesses that pose risks to both individual users and large organizations considering Ethereum adoption.

User Interface Vulnerabilities Top Concern List of Ethereum Foundation

The report highlights user experience failures as the most pressing security threat facing Ethereum today. Researchers found that most software wallets force users to store seed phrases insecurely, often leading to compromised accounts through theft or loss of written backup codes.

Hardware wallets, while more secure, present their own risks. The foundation noted that many devices lack open-source verification and may have compromised supply chains. Physical theft or damage can result in permanent asset loss for users who fail to maintain proper backups.

The assessment reveals that users routinely approve transactions without understanding their consequences. Wallets frequently display raw hexadecimal data or truncated contract addresses that provide insufficient information for informed decision-making.

This blind signing behavior leaves users vulnerable to malicious contracts and phishing attacks.

Smart Contract Risks Persist Despite Industry Improvements

While security auditing has become standard practice across the Ethereum ecosystem, the report identifies ongoing vulnerabilities in deployed contracts.

Upgrade mechanisms remain a significant risk factor, as malicious changes could result in total loss of user funds stored in affected applications.

Re-entrancy attacks continue plaguing smart contracts, particularly those that call external code before updating internal state. The foundation also flagged unsafe library usage and insufficient access controls as common sources of exploitable vulnerabilities.

Bridge protocols connecting Ethereum to other blockchain networks face heightened scrutiny. The report warns that cross-chain message validation weaknesses have enabled some of the largest cryptocurrency thefts in recent years.

Infrastructure Dependencies Create Systemic Risks

The assessment reveals concerning centralization in critical infrastructure supporting Ethereum applications. A small number of RPC providers handle the majority of network access requests, creating potential censorship points that could prevent users from accessing their funds.

Layer 2 scaling solutions introduce additional complexity through their proving systems and security councils. The report warns that bugs in these mechanisms could stall transaction processing or enable attackers to steal bridged assets.

Domain Name System (DNS) vulnerabilities pose another threat vector. DNS hijacking attacks can redirect users to malicious frontends that steal private keys or trick users into signing harmful transactions.

Ethereum Consensus Protocol Faces Long-Term Challenges

Despite maintaining perfect uptime since 2015, Ethereum’s consensus mechanism shows signs of centralization pressure. The foundation reported that liquid staking protocols now control significant portions of network validation, potentially enabling governance capture by large institutional players.

Client software diversity, while superior to most blockchain networks, requires further improvement. The report warns that bugs in dominant client implementations could still cause network-wide disruptions.

Quantum computing represents a future existential threat to Ethereum’s cryptographic foundations.

The foundation acknowledged that current signature schemes could become vulnerable once quantum computers achieve sufficient capability, potentially compromising all existing wallets simultaneously.

Enterprise Adoption Barriers Identified

Large organizations face unique challenges when evaluating Ethereum for business use. The report found that traditional risk assessment frameworks don’t translate well to decentralized systems, making it difficult for enterprises to meet compliance requirements.

Institutional users often require custom security workflows and audit trails that current wallet software cannot provide. Many turn to third-party custodians, introducing additional security risks that could affect their customers.

Ethereum Foundation Seeks Industry Collaboration

The Ethereum Foundation emphasized that securing the network requires collaboration from independent organizations worldwide. The decentralized nature of Ethereum’s technology stack means no single entity can address these challenges alone.

The foundation is accepting feedback and solution proposals as it prepares to prioritize the most critical issues identified in the assessment.

This marks the first comprehensive security review of Ethereum’s entire ecosystem, setting the stage for coordinated improvements across wallet providers, infrastructure companies, and application developers.