Hegota Upgrade: Can FOCIL and Smart Wallets Improve Ethereum Security?

Ethereum is hiring a new security guard, and its name is FOCIL. In a major move to protect the network’s neutrality, developers have confirmed this new protocol upgrade for the upcoming Hegota hard fork, targeting late 2026.

FOCIL delivers a dual win: it stops powerful network operators from silencing your transactions, and it lays the foundation for “Smart Wallets” found in the vital updates Vitalik Buterin supports: wallets that are finally easy enough for everyone (hopefully) to use.

Security will always be a fundamental topic and a key area for research and improvement. As crypto grows, the risk of censorship grows with it. FOCIL is the shield that ensures Ethereum remains open to everyone, regardless of who is in charge of the block building.

Insight:@VitalikButerin says he’s building a “cypherpunk principled non-ugly Ethereum,” as devs schedule FOCIL (EIP-7805) for the Hegota upgrade in late 2026 to harden protocol-level censorship resistance. pic.twitter.com/9FxgkrmJT1

— BlockLayer Podcast (@BlockLayerPod) February 22, 2026

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Hegota Upgrade: How FOCIL Aims to Prevent Validator Censorship on Ethereum

Censorship on Ethereum is not just theoretical. In the past, large compliant validators have excluded transactions linked to sanctioned protocols like Tornado Cash. If that behavior expands, Ethereum risks becoming dependent on a handful of dominant staking pools and block builders. In that scenario, a few powerful actors could effectively freeze transactions by refusing to include them in blocks. If your transfer is ignored, you cannot move or sell your assets. That undermines Ethereum’s core promise of being permissionless.

The name FOCIL stands for “Fork-Choice-Enforced Inclusion Lists”. FOCIL is an automated checklist that forces the network to process valid transactions, no matter what. FOCIL aims to reduce that risk by distributing power. Instead of allowing a single builder to decide which transactions enter a block, it introduces a committee of 17 randomly selected validators for each block.

These validators review the mempool and create a list of transactions that must be included. If a builder ignores that list, the network rejects the block. To censor successfully, an attacker would need to control both the builder and the committee: an extremely difficult and costly task.

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Smart Wallets: The Beginner-Friendly Wallet That Doesn’t Need a Seed Phrase

While FOCIL works in the background, its partner upgrade “Account Abstraction” (often linked to the Pectra Upgrade agenda) changes what you see on your screen. This technology powers “Smart Wallets,” which solve the biggest headache in crypto: the fear of losing your seed phrase.

A Smart Wallet is more like a modern bank account with programmable rules. You can recover your account via email if you lose your phone. You can set up automatic monthly payments. You can even have an app pay the “gas” fees for you, so you don’t need to buy ETH just to move a stablecoin.

We are already seeing the beginnings of this with user-friendly tools. For example, the Binance Web3 Wallet and Robinhood’s Layer-2 initiatives are trying to make crypto invisible and easy. Smart Wallets make these features native to Ethereum itself.

FOCIL makes these wallets safer. Because Smart Wallets rely on complex smart contracts, they can be vulnerable to censorship or delays. FOCIL ensures the network processes these complex instructions just as reliably as a simple transfer.

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FOCIL Under Hegota Upgrade: Is Ethereum Creating Legal and Compliance Headaches?

This sounds like the perfect upgrade. However, things are rarely this perfect and easy. The biggest hurdle is complexity. FOCIL adds a new layer of rules for validators, and as we’ve seen with teams like OpenAI and Paradigm testing Ethereum security, more code often means more potential bugs.

Another overlooked issue is money laundering risk. By forcing validators to include all valid transactions, even those linked to sanctioned or high-risk wallets, FOCIL could unintentionally make Ethereum more attractive to illicit actors. If validators are no longer able to selectively exclude suspicious flows, compliance burdens may shift from infrastructure providers to regulators and exchanges.

This creates a difficult dynamic. On one hand, Ethereum strengthens censorship resistance. On the other hand, node operators in strict jurisdictions could face increased scrutiny from financial authorities concerned about AML (Anti-Money Laundering) obligations. Even if validators are not directly responsible for transaction intent, regulators may not see it that way.

That legal ambiguity alone could discourage institutional participation and push large operators to relocate or exit. Could it also affect the Ethereum price?