Ethereum co-founder Vitalik Buterin urged crypto exchanges and custodial platforms to strengthen security and protect users’ assets during an interview at the Devcon 8 conference in India. He said the next two years will be about survival rather than beating competitors as attacks increasingly target centralized components and could prompt stricter custody requirements.

Buterin told Moneycontrol that the nature of attacks on the crypto industry is changing. Smart contract hacks have declined significantly, he said, while the largest incidents over the past year and a half have mostly involved user interfaces and centralized infrastructure.

“Everyone is trying to figure out what bunker mode means for them right now. I expect Binance to do it. I expect all major exchanges, custodians, and institutions to do the same,” he said.

Buterin said moving more operations onchain could improve security. He cited Binance Smart Chain as an example, saying the use of smart contracts can provide a high level of protection.

Regulators may tighten exchange requirements

Buterin said a further increase in attacks could lead to regulatory intervention, with supervisory bodies placing more responsibility on companies to adopt conservative security practices.

He specifically pointed to the risk of stolen funds reaching North Korea and said such incidents should encourage companies to take asset protection more seriously. As practical measures, he recommended holding funds in multisig wallets and paying greater attention to infrastructure risk assessments.

Buterin also said the range of operations that can be performed safely is expanding. The industry’s task, in his view, is not only to respond to attacks but also to build systems that can withstand them.

Ethereum’s roadmap and Layer 2 development

Discussing Ethereum’s development, Buterin said the Lean Ethereum roadmap envisages upgrades over the coming years that use zero-knowledge proofs, artificial intelligence and formal verification. The goal is to increase network performance while preserving decentralization and security.

According to Buterin, AI and new code-auditing methods allow the team to complete a volume of work that would have taken about 20 years using the technological capabilities available five years ago.

On Layer 2 development, Buterin said simply replicating Ethereum with higher throughput is no longer a sufficient strategy. Such projects should provide additional capabilities, he said, pointing to high-performance decentralized-finance protocols including Lighter and privacy-focused projects such as Aztec and INVAX.

Buterin also identified enterprise blockchain use as a potential area of growth. Companies could move supply-chain, medical and manufacturing-process data onchain while using hashes and cryptographic proofs to maintain confidentiality, he said.

He noted growth in tokenized real-world assets on Ethereum but acknowledged that these products do not always provide full decentralization because they may use allowlists and know-your-customer procedures. Even so, he said they can reduce the number of intermediaries able to restrict access to funds or compromise privacy.

Risk-based regulation

Buterin opposed creating a single global regulatory system for the crypto industry. He said such a model could give a small group of people excessive influence over worldwide decisions and restrict the diversity of regulatory approaches.

Instead, he said regulatory requirements should be proportional to risk. Activities capable of harming others should face stricter rules, while operations that do not create such risks should be subject to fewer restrictions.

Buterin and Drake had previously called on the crypto industry to prepare for the possibility that AI could compromise private keys.

Source: Incrypted