The Ethereum ecosystem is reevaluating the role of privacy features in on-chain finance. As developers introduce new token standards, privacy is no longer confined to mixers or niche privacy coins—it is beginning to integrate into mainstream infrastructure design.
pERC-20 targets token privacy
CoinDesk reports that developers are researching a new scheme called pERC-20. Unlike the current default ERC-20, this design does not publicly expose user balances and transaction histories on-chain; instead, it represents tokens as encrypted "tickets," keeping transfer details private while still allowing the network to verify that transactions have not been tampered with.
This scheme does not completely hide all information. As designed, the total token supply will remain public, allowing external parties to verify whether any additional minting has occurred. The proposal also includes compliance mechanisms, enabling the issuer to cryptographically freeze specific tokens via a blacklist, without disclosing ordinary users' balances or transaction records.
Privacy and compliance are addressed simultaneously.
Over the past few years, the industry has focused more on scalability and performance, while privacy tools have continued to face regulatory pressure, with cases like Tornado Cash dampening related discussions. Today’s new solutions show that developers are now attempting to integrate privacy and compliance into a single design framework, rather than treating them as entirely opposing goals.
This shift also means that privacy is moving from niche tools to broader token and payment infrastructure. The focus of discussion is no longer just on “whether to hide transactions,” but on how to provide on-chain experiences closer to everyday financial use without fully sacrificing verifiability.
Starknet Expands into DeFi
In addition to Ethereum proposals, Starknet launched the privacy token framework STRK20 this week. This framework aims to extend confidentiality capabilities beyond simple transfers to DeFi scenarios such as lending, staking, and token swaps.
Eli Ben-Sasson, co-founder of StarkWare, stated that the main barrier facing current privacy technologies is not cryptography itself, but user experience. In the past, many privacy products suffered from slow wallet synchronization, complex transaction flows, and poor compatibility with mainstream ecosystems, resulting in limited actual usage—which, in turn, weakened the effectiveness of anonymity.
He believes that if there are too few participants, privacy networks become more susceptible to identifying individual behavior; thus, usability determines whether privacy tools can truly form an anonymity set. According to him, pERC-20 leans toward private transfers, and the next phase of infrastructure needs to support more comprehensive financial activities.
Two privacy pathways running in parallel
From current approaches, the industry is converging on two directions. One prioritizes privacy for payments and token transfers while maintaining transparency in other areas; the other treats privacy as a unified底层, enabling users to maintain confidentiality across multiple assets and types of applications.
Ben-Sasson also noted that STRK20 employs cryptographic designs oriented toward post-quantum security. He believes that as blockchain developers begin preparing for the long-term risks posed by quantum computing, the importance of such capabilities will continue to rise.
It remains to be seen whether pERC-20 will ultimately become an official Ethereum standard. Under the Ethereum Improvement Proposal process, such proposals typically require extensive review before gaining widespread adoption. However, the simultaneous emergence of pERC-20 and STRK20 indicates that privacy is once again becoming a key focus for blockchain developers.