Privacy returns to focus as Ethereum developers explore new token standards

ShareShare this articleCopy linkX iconX (Twitter)LinkedInFacebookEmailPrivacy returns to focus as Ethereum developers explore new token standards In this week's edition of The Protocol Newsletter, we're looking at where privacy is headed in the Ethereum ecosystem. By Margaux Nijkerk|Edited by Nikhilesh De Jun 10, 2026, 6:14 p.m. 4 min readMake preferred on (Unsplash)What to know: Welcome to The Protocol, CoinDesk’s tech newsletter covering the most important stories in blockchain. I’m Margaux Nijkerk, a reporter at CoinDesk. We’re revamping the newsletter to bring you a deeper look at the biggest trends, breakthroughs and debates shaping blockchain technology each week. This week, we’re diving into where privacy is headed in the Ethereum ecosystem. For years, privacy in transacting was one of crypto's most ambitious promises. Then it took a back seat as other trends took off. As developers focused on scaling blockchains and regulators scrutinized privacy tools such as Tornado Cash, much of the industry's attention shifted elsewhere. But a new Ethereum proposal and a growing number of privacy-focused products suggest the topic is making a comeback. The latest example is pERC-20, a proposed Ethereum token standard that would allow users to hold and transfer tokens without publicly revealing their balances, transaction amounts or counterparties. The proposal has sparked renewed discussion around whether public blockchains should expose every financial interaction by default. Unlike traditional ERC-20 tokens, which is the default token standard on Ethereum today that displays balances and transaction histories onchain for anyone to inspect, pERC-20 keeps sensitive details private. Today, most Ethereum tokens function like public bank accounts. Anyone can look up a wallet address and see how many tokens it owns, where they came from and where they were sent. Under pERC-20, tokens would instead exist as encrypted cryptographic "notes," similar to digital cash. The result is a system where transactions remain private while still allowing the network to verify that no changes to the transactions occurred. Importantly, the proposal does not hide everything. The total supply of a token would remain publicly visible, allowing anyone to verify that new tokens are not being secretly created. The proposal also includes a compliance mechanism that would allow issuers to freeze specific notes through a cryptographic blacklist without exposing ordinary users' balances or transaction histories. The design reflects a broader shift in how privacy is being discussed across crypto. Rather than treating privacy and compliance as mutually exclusive, many newer projects are attempting to build systems that offer both. But some developers argue that private payments are only part of the challenge. Earlier this week, Starknet went live with STRK20, a privacy-focused token framework designed to extend confidentiality beyond simple token transfers and into decentralized finance applications such as lending, staking and token swaps. According to Eli Ben-Sasson, the co-founder of StarkWare, the main developer firm behind Starknet, the biggest obstacle facing privacy technologies today is not cryptography. "The big problem of dealing with privacy is UX," Ben-Sasson told CoinDesk. Historically, privacy-focused cryptocurrencies have struggled with usability. Users often faced slow wallet synchronization, cumbersome transaction flows and limited compatibility with the broader crypto ecosystem. Those limitations made privacy tools difficult to use and, in some cases, undermined the privacy they were designed to provide. Privacy systems rely on large groups of users participating together. If only a small number of people use a privacy network, it becomes easier to identify individual participants. "If the UX is bad, very few users are going to be using it," Ben-Sasson said. "If very few users are going to be using it, and only for a very small number of things, they don't really get a lot of anonymity." Ben-Sasson said pERC-20 appears to be largely focused on private token transfers and draws on ideas pioneered by privacy-focused projects such as Zcash. While he described that as an important capability, he argued that the next stage of privacy infrastructure will need to support a much broader set of financial activities. "Today we can do more," he said, referring to privacy-preserving DeFi applications. The STRK20 framework was built with that goal in mind. Rather than shielding a single token, the framework allows users to manage multiple assets under a unified privacy layer and interact with decentralized applications while maintaining confidentiality. According to Ben-Sasson, users can access services such as swapping, borrowing and staking without sacrificing privacy. The framework also uses post-quantum secure cryptography, which Ben-Sasson argued will become increasingly important as blockchain developers begin p

Privacy returns to focus as Ethereum developers explore new token standards

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