Ethereum Drops 1.193% Amid AI Security Concerns, Foundation Strengthens Treasury Policy

Ethereum's latest price was $4606.93, down 1.193% in the last 24 hours. Vitalik Buterin, the co-founder of Ethereum, has issued a warning about the potential risks associated with AI tools like ChatGPT’s Model Context Protocol (MCP). He highlighted that these tools can be exploited to extract private data and misallocate crypto funds. Buterin emphasized the need for human jury oversight and an “info finance” governance layer to protect treasuries and decentralized decision-making. Security researcher Eito Miyamura demonstrated how MCP can be manipulated through crafted calendar invites to access private data, posing significant risks to user privacy and crypto governance. Buterin’s warning underscores the importance of implementing robust security measures to prevent automated fund-grabs and ensure the integrity of decentralized systems.

Buterin’s concerns are rooted in the potential for automated systems to be gamed, leading to misallocation of funds or erosion of trust. He advocates for a governance model that includes a trusted ground-truth signal, ideally human jurors, who can apply judgment and spot low-grade “goodharting” and jailbreak attempts. This approach aims to balance the efficiency of AI with the reliability of human oversight. The “info finance” model proposed by Buterin places governance outputs in an open marketplace for contributions, while final funding and spot checks are performed by human jurors. This hybrid approach leverages AI to scale evaluation but preserves human judgment to prevent automated exploitation and fraudulent funding requests.

The Ethereum Foundation has responded to these risks by strengthening fiscal transparency through a new Treasury Policy. This policy shifts from passive ETH holdings toward active, yield-driven management while emphasizing decentralization and clear accountability. Additionally, Buterin publicly endorsed Codex, a stablecoin-focused Layer 2 optimized for payments, highlighting the sector’s significant value proposition. These moves aim to enhance financial resilience and safeguard treasury resources against emerging systemic risks. The foundation’s actions reflect a proactive approach to addressing potential vulnerabilities and ensuring the long-term sustainability of the Ethereum ecosystem.

Ethereum developers are committed to ensuring that the second-largest blockchain upholds one of the foundational tenets of the crypto community: end-to-end privacy. The Ethereum Foundation’s ‘Privacy & Scaling Explorations’ team has rebranded to ‘Privacy Stewards of Ethereum’ (PSE) and laid out a roadmap to make privacy on Ethereum the norm rather than the exception. The team aims to embed comprehensive end-to-end privacy across Ethereum’s technical stack, from protocols and infrastructure to applications and wallets. Privacy will become a part of Ethereum’s major use cases, such as finance, identity, and governance, while remaining compliant with global regulations.

The PSE team emphasizes that ensuring privacy on Ethereum is crucial for protecting users who rely on the blockchain. Without strong privacy measures, Ethereum risks becoming a tool for global surveillance rather than global freedom. The team will focus on three core areas: private reads, private writes, and private proving. Private reads will enable users to interact with Ethereum without revealing their identities or intents, ensuring network-level privacy and preventing surveillance or metadata leakage. The team is working on privacy-preserving Remote Procedure Call (RPC) services to address data leaks, such as IP addresses or account interests. For private writes, the team will continue developing PlasmaFold, an experimental Layer 2 chain that adds private transfer features. Lastly, the team will work towards ensuring that proving any data on Ethereum is private and accessible, improving data portability and private identity for private proving.

The PSE team’s roadmap includes specific priorities and initiatives within these focus areas, which will evolve with the ecosystem. The team expects these general focus areas to persist for the next few years, reflecting their commitment to enhancing privacy on Ethereum. By prioritizing privacy, the Ethereum Foundation aims to protect users, foster trust, and ensure the blockchain’s relevance in a rapidly evolving digital landscape. The foundation’s proactive approach to privacy underscores its dedication to creating a secure and user-friendly environment for all participants in the Ethereum ecosystem.