Ethereum Privacy Conference: A Key Turning Point from Defensive Tools to Default Infrastructure

This year’s Devconnect Buenos Aires’s most significant event was the Ethereum Privacy Stack Conference. This summit, co-hosted by Privacy & Scaling Explorations (PSE), Web3Privacy Now, and the Ethereum Foundation, brought together Vitalik Buterin, Tor project founder Roger Dingledine, creators of various privacy protocols (Railgun, 0xbow, Aztec, etc.), and top legal experts.

The core mission of the conference was clear: in the face of increasingly strict regulations and mature technology, it is necessary to redraw the full landscape of Ethereum privacy ecosystems, connect technical silos, and develop a clear privacy roadmap for the next 3-5 years.

The Arrival of the “Complete Privacy” Era

The most notable consensus at the conference was: Privacy is no longer just a simple stacking of zero-knowledge proofs (ZK) or on-chain mixers, but an end-to-end complete closed loop.

From the network transport layer Tor, to RPC read layer, data storage layer, and finally the user interaction frontend—each layer requires privacy protection. Vitalik and Tor founder Roger emphasized a harsh reality: if the underlying network exposes user IPs, application-layer anonymity is virtually meaningless. This has driven Ethereum to adopt the “barrel theory”—the strength of a privacy system depends on its weakest link.

Another key consensus was that Ethereum should move toward the goal of a “world ledger,” so that even under state-level firewalls, users and validators can access the network via pluggable transports like Snowflake in Tor. This is both a privacy issue and a fundamental network resilience concern.

From “Elite Technology” to “Everyone’s Use”

Several participants compared the current state of Web3 privacy to the early days of Web2’s transition from HTTP to HTTPS. Back then, HTTPS was seen as a tool exclusive to geeks and cypherpunks, with high performance costs and unclear regulatory risks.

Today, the consensus in the Ethereum community is: privacy should no longer be stigmatized as “the accomplice of crime,” but normalized as a basic need for everyday financial protection—just as you wouldn’t post your bank statements on the street.

By the end of 2026, the community aims to reduce the cost of private transfers to about twice that of regular transactions, enabling seamless one-click experiences. This concerns not only retail users but also the participation of traditional financial institutions—many of which cannot put transaction data, positions, or customer info on public chains due to lack of privacy protections.

Divergence of Privacy Protocols: Compliance Privacy vs. Permissionless Privacy

A sharp opposition emerged at the conference: should we adopt “compliance privacy” or stick to “permissionless privacy”?

One side, represented by Privacy Pools, proposed actively isolating illegal funds through “dissociation proofs” to gain regulatory tolerance and institutional adoption. The other side, adhering to pure cypherpunk principles, argued that any compliance compromise is a first step toward censorship.

A deeper question is: should privacy features be embedded into Ethereum’s L1 core protocol or kept at the application layer? The former can bring liquidity unification and default privacy, but also entails significant regulatory risks and protocol complexity. This decision will profoundly influence Ethereum’s political nature.

PSE’s Andy Guzman publicly warned that this could trigger a “civil war” within the community.

The Final Defense: Hardware and Physical Layer Privacy

Little known is that the conference emphasized the importance of hardware and physical network layer privacy. Attendees recognized a harsh truth: if chips have backdoors, all encryption is moot.

The Trustless TEE initiative aims to develop fully open-source, transparent chips from design to manufacturing to counter escalating geopolitical threats. Meanwhile, Dappnode stressed the necessity of “public node operation”—not just a decentralization issue, but a form of “digital disobedience.” When governments attempt comprehensive surveillance through regulation (such as the EU’s Chat Control proposal), running your own relay node becomes a powerful tool of resistance.

Sebastian from HOPR offered an interesting perspective: “Geek protection networks.” While we want ordinary users involved, the real defense line is guarded by tech enthusiasts willing to study hardware and run nodes. Therefore, respecting and empowering “geek culture” is essential.

Practical Challenges of Privacy Protocols

On a practical level, developers building privacy applications face huge engineering and business challenges. Lefteris from Rotki, for example, develops locally prioritized, user-data-free applications, which cost much more than cloud-based models—requiring packaging binaries for different OSes, handling local database migrations, and paying expensive code signing certificates.

More critically, business models are problematic. Donations and grants are dead ends; privacy apps must establish clear monetization strategies and dare to charge users directly. This is necessary not only for sustainability but also to make users understand that privacy has real costs, not just free services.

The ease of integrating protocols like Railgun and 0xbow also becomes a bottleneck—thousands of lines of SDK code are too costly and risky for mainstream DeFi protocols like Aave. This creates a reverse situation: privacy protocols need to adapt to mainstream protocols, not vice versa.

Key Breakthroughs in User Experience Design

Encouragingly, the Ethereum Foundation’s Kohaku wallet aims to solve user experience issues. It is a suite of privacy and security primitives integrating Railgun and Privacy Pools, allowing users to switch directly within the wallet UI and send assets to privacy pools with a single click—no complex manual configuration needed.

More importantly, Kohaku implements a “one account per application” connection system, preventing user addresses from being linked across different apps and reducing metadata leaks. Its collaboration with ZKnox is groundbreaking, enabling users to sign Railgun ZK transactions directly on hardware wallets, satisfying advanced users’ needs for “cold storage + privacy.”

The Revolution of Private Voting in DAO Governance

The conference highlighted the necessity of private voting in DAOs. For a long time, transparent voting led to 99% of proposals receiving 99% approval—because no one wanted to be the “spoiler” or face retaliation. Private voting not only protects voters but also captures genuine opinions, breaking toxic “false consensus.”

In high-risk environments (such as under authoritarian regimes), anonymity is a matter of life and death. The technical challenge is how to integrate real identity verification (passports, biometrics) with on-chain privacy, preventing double voting and ensuring vote records are untraceable. MACI (Minimum Anti-Collusion Infrastructure) aims to solve this, and recent private round voting on Gitcoin successfully demonstrated the feasibility of such tech.

Participants generally believe that 2026 will be a pivotal year for mature privacy voting protocols and their integration into mainstream DAO tools (Snapshot, Tally, etc.).

Legal Self-Defense and Industry Solidarity

The fate of Tornado Cash developers cast a shadow over the conference. As anti-terrorism financing laws become more broadly defined, any act interpreted as “disrupting political or economic structures” could be deemed terrorism. This puts privacy and DeFi developers under threat of preemptive surveillance.

Legal teams warned: we cannot rely solely on bureaucratic fairness; proactive defense mechanisms are necessary. The EU’s GDPR amendments show positive signals—regulators are beginning to recognize privacy-enhancing tech as compliant with GDPR, not an obstacle. This is encouraging.

But the strongest message was: The crypto industry has billions of dollars in capital but spends it on parties rather than legal defense. Developer legal defense funds and policy lobbying organizations must be established, or the next developer to be jailed could be anyone present here. This is not just about compliance but a fight for freedom and survival.

The Three Layers of Infrastructure Resilience

Discussions on infrastructure resilience delved into physical and hardware layers. Sebastian (HOPR) emphasized that each layer—from “autonomous node operation” to “trustless TEE”—can be a bottleneck.

An interesting analogy: resistance to censorship is like a “fire exit” or “seatbelt”—not needed in peacetime but a vital lifeline in crises. Technologies like decentralized VPNs (Nym, HOPR) and ZK-TLS aim to build systems that can survive severe geopolitical conflicts.

Expectations for Privacy Breakthroughs in 2026

The conference’s climax was a forecast by PSE host Andy Guzman: by November 2026 (at the next Devcon), Ethereum’s private transfer issues will be fully resolved.

Over 35 teams are exploring 13 different technical approaches (from stealth addresses to privacy pools), making the ecosystem’s diversity almost guarantee the emergence of successful solutions. Future solutions will feature three characteristics: low cost (about twice that of regular transactions), extremely low latency, and one-click experience.

Guzman also raised a potentially controversial question: Should privacy be maintained at the application layer or migrated to the L1 core protocol? The former is fragmented; the latter involves risks and opportunities. This choice will define Ethereum’s future political stance.

On compliance, Guzman outlined a spectrum from “permissionless privacy (cypherpunk)” to “compliant privacy (practical).” He believes that while pure cypherpunk spirit is essential, responsible solutions like Privacy Pools are necessary to gain institutional and governmental trust.

The future of Ethereum privacy should not be monolithic but inclusive of different solutions tailored to various needs. PSE will continue to fill technical gaps, ensuring Ethereum remains a privacy-first network.