Last year at a blockchain summit in Amsterdam, I witnessed a classic scene: developers of privacy protocols and representatives of regulatory technology clashed. The former said regulation is just a disguised form of surveillance, while the latter argued that without transparency, crime cannot be prevented. The two looked like children arguing, unable to come to a logical conclusion.

However, the sitting co-founder of Dusk in the corner didn't rush to interrupt. He simply smiled and showed me the testnet transaction panel — at that moment, I realized they weren't choosing sides, but solving a math problem.

The traditional approach usually goes like this: either make the system perfectly anonymous first and then forcibly add regulatory interfaces, resulting in mutual constraints; or satisfy regulatory requirements first and then add privacy features on top, which often leads to vulnerabilities. Dusk's approach is different.

They designed a clever circuit in zero-knowledge proofs. Each private transaction generates two outputs: one privacy proof sent to the verification node (proving the transaction is valid without revealing details), and another compliance label sent to the regulatory node (a verifiable risk rating). It's like writing with two inks — under normal light, it looks like regular writing; under UV light, the anti-counterfeiting code needed by banks appears.

How does this logic work in real scenarios? A solar energy project in the Netherlands gave me the answer. When investors purchase digital shares of photovoltaic panels, the system uses zero-knowledge proofs to hide the investor's identity and specific holdings, while simultaneously submitting compliance credentials to regulators in real-time. The benefit of this approach is that privacy and compliance are no longer mutually exclusive but can coexist within the same transaction.