Will pension funds and social security funds invest in on-chain assets in the future? Behind this hypothetical question lies a real technological dilemma.

What do these institutions care about most when managing these funds? Two words: security. On top of that, compliance — every operation must withstand regulatory scrutiny and be transparent enough to be examined in the sunlight. But here’s the challenge.

Revealing detailed investment strategies can cause market impact; exposing buy and sell prices and trading volumes can actually introduce risks. What to do? This leads to the classic contradiction in blockchain: either be completely transparent like Bitcoin, where anyone can verify; or be fully anonymous like some privacy coins, where no one can verify. Neither extreme is suitable for institutions.

Many institutions are observing, waiting for something — “permissioned transparency” or “verifiable privacy.” Trading counterparties and ordinary users don’t need to know the specific buy and sell prices of the institution, but regulators and auditors must have access to an immutable, complete on-chain record. Only then can true risk monitoring be achieved.

Zero-knowledge proof technology is beginning to come into view. Its core idea is this: turn transaction details into encrypted data while opening a “compliance channel.” Only authorized parties holding specific keys — such as internal audit teams or securities regulators — can decrypt and review the relevant information for compliance checks. After verification, the data is re-encrypted.

This approach is called “selective disclosure.” Some projects are already working on this, such as Dusk Network, which focuses on solving this pain point. From a technical perspective, this not only addresses the balance between privacy and transparency but also, more fundamentally, paves the way for institutional funds to truly enter the blockchain ecosystem.