Recently browsing discussions on major platforms, I see a bunch of projects shouting RWA, DeFi 2.0, and institutional-grade applications at the forefront. The problem is, there are very few that actually implement privacy and compliance—two seemingly contradictory requirements—at the protocol layer. Most are still at the stage of just talking about it.

I’ve been observing the Dusk Network project recently, and it handles this contradiction quite differently.

The core point is this: it doesn’t simply and crudely impose ZK technology outside the EVM framework, nor does it just create a privacy Layer2. Instead, from the genesis block, it has built confidential smart contracts as a native capability. The project uses the XSC virtual machine, which supports native confidential computing. Its transaction model adopts a hybrid design—some transactions are in plaintext, others are confidential. This way, it can run standard DeFi products while also handling scenarios with extremely high privacy requirements: security tokens, supply chain finance, carbon credit trading, and more.

More importantly, it retains two interfaces at the protocol layer—selective disclosure and verifiable computation. This means regulators or authorized third-party auditors can verify whether transaction amounts are within limits, whether KYC/AML has been passed, and whether issuers have violated regulations, all without viewing all the details. For traditional financial institutions, this is a real necessity because they cannot put business secrets and all transaction data on the chain publicly.

Imagine this scenario: a European private equity fund wants to put fund shares on the chain and sell them to qualified investors. Using a traditional public chain? Either all data is public (which is absolutely unacceptable), or they use mixers or privacy Layer2 (but then they can’t prove to regulators that they are compliant). It’s a deadlock. Dusk’s mechanism truly unlocks this deadlock.