Unchained Ep. 959: What Ethereum Will Look Like When It Implements Its New Privacy Focus

Host: Laura Shin
Guests:

• Andy Kuzman, PSC Lead at the Ethereum Foundation
• Oscar Torin, Technical Lead, Institutional Privacy Task Force (Ethereum Foundation)

Release Date: November 25, 2025

Episode Overview

This episode dives deep into Ethereum’s evolving push for privacy, covering the Ethereum Foundation’s formation of the new “Privacy Cluster,” what privacy means in the context of public blockchains, the technical landscape for privacy-enabling tools, and the rapidly growing institutional demand for privacy solutions. Laura Shin invites Andy Kuzman and Oscar Torin to discuss new architectures, challenges in privacy, compliance with regulations, and their vision for a more private future on Ethereum.

Key Discussion Points and Insights

1. Why Privacy Matters in Crypto (01:46, 11:55)

• Myth of Default Privacy:
  Andy Kuzman (01:46):

  "One of the misconceptions that many people have even just starting in the space is thinking that by default crypto is private, which is not or it's anonymous and it's not right. It's pseudonymous."

• Practical Risks:
  Every transaction on Ethereum or Bitcoin is recorded forever; this exposes users to legal, personal, or financial risks.
• Ethos of Privacy:
  Privacy is core to the cypherpunk origins of crypto and is considered a foundational value for user freedom and self-sovereignty.

2. The New Privacy Cluster at the Ethereum Foundation (03:20)

• Establishment:
  In October, a 47-person Privacy Cluster was established, coordinated by research and engineering experts across the ecosystem.
• Purpose:
  To make privacy a “first-class property” of Ethereum—bringing more coordination, resources, and focus to an already large privacy ecosystem.
• Structure:
  The Foundation now comprises clusters focused on the core protocol, ecosystem development, and privacy (including the Institutional Privacy Task Force, or IPTF).

Oscar Torin (04:36):

"We’re trying to get institutions to build on top of public blockchains like Ethereum, specifically with the focus on solving their privacy requirements."

3. Historical Context and Mission (06:38, 08:19)

• Long-Term Focus:
  Ethereum has supported privacy R&D since 2018-2019, with early efforts around zero-knowledge proofs, privacy on identities, and scaling solutions such as rollups.
• PSE (Privacy Stewards of Ethereum):
  Started as an externally-run, Ethereum Foundation-supported initiative with dozens of cryptographers, now fully integrated and focused on privacy for Ethereum.

4. Institutional Privacy Task Force (IPTF) (10:41)

• Role:
  Targeting privacy blockers for institutional adoption by mapping requirements, translating between business/legal and technical domains, and maintaining neutrality in vendor selection.
• Surging Demand:
  Large institutions want to move on-chain but cite privacy as the main blocker—especially as regulatory clarity emerges globally.

Oscar Torin (16:38):

"It's not a question of like oh maybe...it's like they need it. It's a table stakes requirement for institutions."

5. Technological Landscape and Approaches (27:23, 31:07)

Families of Privacy-Enabling Technologies:

• Mixers and Shielded Pools: Use zero-knowledge proofs for transaction anonymity. Strong privacy, usage-dependent.
• Proof of Burn: Experimental, alternative method for private transactions—less established.
• Stealth Addresses: New addresses on each receipt; privacy for the recipient.
• Fully Homomorphic Encryption (FHE): Confidentiality for sender/receiver and amount.
• Trusted Execution Environments (TEE): Hardware-based privacy, suitable for more permissioned or institution-oriented cases.
• Multiparty Computation (MPC): Privacy solutions among a smaller set of parties.
• Onion Routing/Mixnets: Solutions for metadata privacy (who is talking to whom and when).

Andy Kuzman (27:23):

"There are things about trust assumptions: how many people need to collude to take out your privacy, and privacy guarantees…You could categorize tradeoffs across cost, speed, user experience, and trust assumptions."

Key Takeaway:

The future is combinatory and use-case dependent—no single privacy solution fits all needs.

6. Module/Use-Case Mapping (33:21–41:59)

A. Private Reads, Writes, and Proving

• Private Reads: Querying the blockchain without revealing intent or browsing habits.
• Private Writes: Actions (e.g., voting or transfers) that are unlinkable to the user.
• Private Proving: Porting real-world credentials (bank accounts, IDs) into crypto verifications using zero-knowledge.

B. Private Identities

• Ability to prove specific qualities (age, nationality) without disclosing full identity.
• Examples: India’s Aadhaar integration, Kingdom of Bhutan’s fully Ethereum-based digital identity, Google’s and Microsoft’s recent privacy-preserving ID stacks.

C. Privacy Experience (UX/UI)

• Usability is as big a challenge as technology.
• Efforts underway to demystify privacy tradeoffs, terminology, and make privacy tools as user-friendly as standard wallets.

D. Institutional Focus and Compliance

• Regulation seen not as opposition, but as a different design constraint.
• Ethereum’s flexibility allows both cypherpunk and compliant solutions to be built on the same backbone, as privacy tools become more expressive.

7. Real-World and Institutional Use Cases (22:35, 25:12)

• Privacy is necessary not only for individuals (to avoid real-world targeting or hacks) but also for enterprises (to avoid business risk or regulatory failure).
• Governments, NGOs, and firms are showing interest in privacy for stablecoins, bond issuance, and real estate—each with specific business and legal needs.

Oscar Torin (25:12):

"We can accommodate both...you have more affordances now than a few years ago. You can actually design the systems to accommodate these more complex workflows."

8. The Kohaku Project (49:47)

• SDK for Wallet Privacy:
  Kohaku is a toolkit/reference SDK for wallet developers, aiming to accelerate integration of advanced privacy features and set standards for private wallet experiences.
• Goal:
  Help the ecosystem quickly adopt usable, safe, production-grade privacy without requiring every new team to reinvent the wheel.

9. Interaction With Broader Crypto Privacy Efforts (52:40, 54:39)

• Not a Zero-Sum Game:
  Ethereum isn’t competing with Zcash/Monero or privacy-focused L2s—rather, there is collaboration, shared values, and cross-pollination of technical strategies.
• Institutional Demand for Credible Neutrality:
  Ethereum’s 10-year uptime and developer mindshare offer credibility that many large organizations find appealing.

10. Regulatory Caution and Design (60:06, 63:16)

• Lessons from Tornado Cash:
  The legal crackdown on Tornado Cash had a chilling effect but also provoked more meaningful discourse between developers, the EF, and regulators.
• Design Trade-Offs:
  Features like “viewing keys” or allow/deny lists for certain addresses are being considered to enable post-hoc auditing or real-time compliance as needed.

11. Adoption Timeline and Vision (65:30, 68:13)

Predictions:

• Private Transactions on Layer 1:
  Andy predicts production-ready private L1 transactions within 6-12 months (65:43).

  "In 6 to 12 months we're going to say Ethereum has solved the private transactions in the ecosystem." — Andy Kuzman (65:43)

• Gradual, Coexistent Adoption:
  Both public and private transactions will co-exist; not all on-chain activity will “go dark” overnight, since some contexts (governmental transparency, auditing, etc.) will always call for public ledgers.

Notable Quotes & Memorable Moments

• On Privacy Core Values:
  "Privacy and having the freedom and the power to control who sees what from your information and your assets…goes back to the core values." — Andy Kuzman (13:44)
• On Unifying Progress:
  "What is new this year is that it sort of focuses missing that mission a little bit and focusing on privacy on Ethereum specifically…" — Oscar Torin (06:38)
• On Timing and Roadmap:
  "The implementation, the production is already—it's only on the adoption phase." — Andy Kuzman (66:06)
• On Practical Impacts:
  "When you have a disruptive technology, there's always going to be power struggles and figuring out: how does this work?" — Oscar Torin (60:58)
• On Ethereum’s Approach:
  "We’re trying to work on things that are overlooked…we can sort of act more as a coordinator and push targeted R&D." — Oscar Torin (58:42)

Timestamps for Key Segments

• 01:46 — Myth: Crypto is private by default
• 03:20 — Launch of the Privacy Cluster
• 08:19 — History of PSE and privacy R&D
• 10:41 — Creation of the Institutional Privacy Task Force (IPTF)
• 16:38 — Surge in institutional demand for privacy
• 20:57 — Vision: What a privacy-first Ethereum looks like
• 27:23 — Families of privacy technologies: trade-offs and options
• 33:21 — Private reads/writes/proving, use-case mapping
• 41:59 — Private identities and real-world integrations
• 45:20 — UX/UI, privacy experience
• 49:47 — Kohaku wallet integration SDK
• 52:40 — Ethereum and the broader privacy blockchain ecosystem
• 60:06 — Regulatory perspective: Tornado Cash, building with compliance in mind
• 65:30 — Adoption timeline, predictions
• 68:13 — Public vs. private future: vision for everyday Ethereum
• 70:22 — Final thoughts and bullish outlook

The Big Picture

The Ethereum Foundation’s renewed privacy push is both a technical and cultural movement, rooted in the blockchain’s origins, thoughtfully balancing ideals of self-sovereignty with regulatory realities. The coming wave of privacy tools will not only empower cypherpunks, but open the gates for institutional, governmental, and mainstream adoption—all while preserving Ethereum’s signature flexibility and composability.
As privacy matures from a niche to a necessity, Ethereum's privacy future looks both ambitious and inevitable.