Source: The Block
Original Title: From Aztec to Zcash: The year 'pragmatic privacy' took root
Compiled and Edited by: BitpushNews
Since Satoshi Nakamoto wrote the Bitcoin whitepaper, the privacy limitations of blockchain have been evident. The cryptocurrency pioneer pointed out at the time: despite using anonymous mechanisms, Bitcoin addresses could still be traced back to real-world identities.
For many years since, this "pseudo-anonymous" characteristic has been tacitly accepted as "acceptable enough," causing most blockchain privacy projects to remain on the margins for a long time.
However, this year has seen a renewed interest in blockchain privacy, with Zcash becoming one of the best-performing assets of the year, and the Ethereum Foundation launching multiple end-to-end encryption initiatives. The concept of "Pragmatic Privacy" has also begun to take root, aiming to balance individual privacy with compliance considerations.
Emerging Privacy Chains
2025 has witnessed the launch of several new privacy-focused blockchains at various stages of development.
Perhaps the most notable is the Aztec Network's Ignition chain going live on mainnet in November. This is not only because it is the "first fully decentralized L2 on Ethereum," with multiple innovations in consensus and ZK technology, but also because it has overcome numerous obstacles since the project's inception in 2017.
Earlier this month, Ignition also raised 19,476 ETH (approximately $61 million) from 16,741 participants using a new "Continuous Clearing Auction" mechanism co-developed with Uniswap Labs.
Nillion is another blockchain project that launched its mainnet in 2025. This so-called "blind computer" aims to perform computations on encrypted data and has already integrated with multiple networks, including Layer 1's Near and Layer 2's Arbitrum, to enhance privacy at the application layer.
Namada, built on Cosmos, also launched its Layer 1 mainnet in June, focusing on "composable privacy" and supporting multiple blockchain ecosystems—including Bitcoin L2s (like Lombard and Babylon), Ethereum, and Solana—via cross-chain bridges.
Miden, which has been in development since at least 2022, is preparing to launch its mainnet next year. Even so, the project took a huge step towards independence this year: spinning off from Polygon and raising $25 million to build the privacy-focused blockchain Edge.
Similarly, the privacy protocol Umbra, powered by Arcium, conducted its Initial Coin Offering (ICO) on MetaDAO in October, raising $154.9 million. Umbra plans to launch concurrently with Arcium's mainnet Alpha, becoming one of the first privacy protocols built on Solana utilizing its infrastructure.
Horizen, one of the oldest crypto privacy projects, also underwent a major transformation this year: it shut down its proprietary Layer 1 and L2 incubator and relaunched as a Layer 3 privacy solution on Base, the network incubated by Coinbase.
Grayscale, which manages the ZEN token fund, also filed a registration statement with the U.S. Securities and Exchange Commission (SEC) to convert its Grayscale Zcash Trust into the first ZEC ETF. Zcash, which launched the Zebra 3.1 upgrade, has been one of the best-performing tokens in the second half of the year.
Institutional Privacy Initiatives
Coinbase signaled multiple times this year that privacy is not optional for Base. Earlier this year, the company announced it had hired a development team from Iron Fish (a long-standing PoW privacy project) to provide "privacy-preserving primitives" for Base.
Circle, the largest U.S. stablecoin issuer, also made waves by announcing it was testing a privacy-preserving wrapped USDC called USDCx on the Aleo testnet.
USDCx appears to focus on "configurable compliance," aiming to support enterprise-level use cases such as payroll management and e-commerce.
Meanwhile, the Canton Network, backed by Goldman Sachs and BNY Mellon, and Nightfall, an Ethereum L2 incubated by EY, focus on enterprise blockchain solutions that require extreme confidentiality. Nightfall has already announced support for two blockchains: the real-world asset (RWA) network Plume and CELO.
The Ethereum Foundation initiated multiple privacy programs this year, signaling that the topic has moved from a niche research area to a core concern for Ethereum developers. In October, the Foundation formed the so-called "Privacy Cluster," a dedicated team of dozens of engineers aimed at consolidating its privacy efforts, including a roadmap for achieving native end-to-end encryption. The Foundation also launched the "Institutional Privacy Working Group" to guide institutions and enterprises into Ethereum.
Ethereum's Vitalik Buterin also introduced Kohaku, an open-source centralized wallet framework for privacy, aimed at fostering "default and compliant" privacy features.
Pragmatic Privacy
The concept of "pragmatic privacy" is perhaps most fully realized at the application layer. This year, 0xbow launched Privacy Pools, a tool for ordinary blockchain users to erase transaction records without running into legal trouble.
Privacy Pools are based on research published by Buterin and several other senior cryptographers on "association lists," designed to prevent bad actors from profiting from crypto mixers. The 0xbow team recently raised a $3.5 million seed round, expanded support for Sky's USDS stablecoin, and provided a method for Tornado Cash users to remain anonymous "without helping hackers." It is also part of the Ethereum Foundation's Kahaku software framework.
Similarly, Railgun is listed in Kahaku's GitHub repository as a means of shielding funds. Railgun achieves blockchain privacy through a "proof of innocence" system, where users generate ZK proofs showing their funds/transactions do not belong to a preset list of flagged/malicious addresses.
Finally, it's worth noting that as a standard-bearer for crypto privacy, Zcash's anonymous pool supply has grown to nearly 25%, marking a steady increase in network privacy adoption. Zcash provides users with functional privacy and the ability to achieve compliance through selective disclosure of information.
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