Why Aren't Trillion-Dollar Institutions Embracing Blockchain? EthSystems Founder: Privacy is the Fatal Constraint of 'Transparent' Ethereum

Author: Bankless

Compiled by: Blockchain Simplified

The "complete transparency" of public chains was once Ethereum's proud banner, but it has now become a fatal constraint preventing trillion-dollar traditional capital from entering the market. On-chain, a massive transfer could lead to the entire institution's trading strategy being targeted by the whole network in an instant.

How can Wall Street giants embrace Ethereum without exposing their business secrets while also meeting stringent compliance requirements?

EthSystems, which officially split from the Ethereum Foundation, is providing the ultimate solution for the decentralized world. In this article, the two founders, who span top investment banks and the forefront of cryptography, will deeply reveal how they break the paradox of "privacy and transparency cannot coexist" through modern zero-knowledge proofs, outlining a future blueprint for trillion-dollar institutional assets to comply with on-chain regulations.

Origin and Mission: Why Ethereum Needs Institutional-Level Privacy

David: Welcome to Bankless. Today, I am joined by Mo Jalil and Oscar Thorne. They are the co-founders of EthSystems, a new team that officially split from the Ethereum Foundation, focusing on three things: Ethereum, institutions, and privacy. I believe this is extremely urgent for the entire crypto industry, and Ethereum is no exception, as it is a key piece that truly elevates the Ethereum ecosystem to the next level. Oscar, Mo, welcome to Bankless.

Oscar: Thank you for the invitation, David.

Mo: Thank you, David.

David: Let's get straight to the point: Why does Ethereum urgently need privacy? Oscar, I'll throw this question to you first.

Oscar: Ethereum is an excellent underlying technology and operates extremely stably as a trusted, neutral decentralized base layer. However, it does not have built-in privacy protection mechanisms at the protocol level. Therefore, many people are trying to fill this gap, whether exploring at the base layer or developing various solutions at the application layer. It can be said that privacy is the most critical missing piece in the Ethereum ecosystem and the entire public chain landscape. This is where we come in.

For us, the core focus of the team is on institutions. Large institutions typically care about two things: the continuity and security of their core business, and strict compliance requirements. Because of these constraints, traditional institutions have tended to choose private networks or consortium chains that they can fully control for a long time.

At the same time, the public chain Ethereum possesses deep global liquidity, new business collaboration opportunities, and great potential to optimize its existing business models. Without modern cryptography as a bridge, institutions cannot enjoy the liquidity of public chains while meeting compliance and protecting business secrets. They must have these privacy computing capabilities to truly embrace the enormous dividends brought by the public chain Ethereum.

David: Can you talk about your professional backgrounds? For you, EthSystems may be a new entity that has just been established for a month, but it is clearly a natural extension of your long-term deep engagement in technology. We need to understand what experiences you have accumulated in Ethereum, cryptographic privacy, and traditional financial institutions, and how these experiences have converged into EthSystems. Mo, please start.

Mo: I initially started in traditional finance, building quantitative algorithmic trading systems at top investment banks like Goldman Sachs for about five years. That experience gave me a deep understanding of the real needs and pain points of large investment banks in system architecture, matching and clearing, and risk control compliance. After that, I worked in the hedge fund industry for a few years. That cross-industry experience was very interesting for me.

I was always tracking cutting-edge technologies, and I remember being shocked when I first read the Bitcoin white paper, but at that time, it was clearly too early to use public chains in core financial businesses. A few years later, I joined the Ethereum Foundation, responsible for a lot of business development at the application layer. At that time, Tomas was the co-executive director. During that work, one thing became very clear: any large traditional organization that wants to truly use the public chain Ethereum must have privacy protection and modern cryptographic solutions as rigid prerequisites. I had known Oscar for many years, and at that time I called him directly: Oscar, there is something that is extremely suitable for your background and concerns the future of the entire ecosystem; we must sit down and discuss it in depth.

Oscar: I have been deeply involved in the crypto field for about ten years. I started focusing on privacy technology long ago when privacy was far from a hot topic in the community. I worked at Status in my early years and later created a research and development lab. During this time, we led the development of various peer-to-peer communication protocols, focusing on censorship resistance, data availability, and communication privacy, among other underlying facilities. Therefore, I have accumulated a long period of engineering experience in protocol design, cryptographic privacy, and censorship-resistant network architecture.

In the last five to six years, I have fully immersed myself in the field of zero-knowledge proofs, developing various development tools and infrastructure, including deep collaboration with early members of the Ethereum Foundation's PSC (Privacy & Scaling Explorations). I also wrote a small book on proof systems, conducted research on polynomial commitment schemes, and led the development of tools to reduce client proof complexity. In recent years, I served as a privacy strategy advisor at the Ethereum Foundation, mainly responsible for new access layer architecture. As Mo mentioned, we initiated the institutional privacy working group during our time at the foundation.

For me personally, my focus has primarily been on personal sovereignty and user-level privacy, which remains a principle in my heart. However, in recent years, I have clearly observed that the demand for privacy from institutions not only exists but is often more urgent than that of individual users in many business scenarios. This is directly related to the gradual clarity of global regulatory frameworks in recent years. Many leading institutions are very concerned about the commercial backlash caused by on-chain data exposure. For the past year, we have been publicly building this solution within the foundation, and about a month ago, we officially split it into an independent entity.

Mo: One point to add. When we split off to establish EthSystems, we were not starting from scratch; we brought in a whole year of solid research and delivery results: including multiple closed-door workshops, practical cooperation cases with numerous financial entities, and public products released (such as mapping various real financial use cases to Ethereum privacy solutions in a market panorama), as well as in-depth technical architecture analysis on private distribution, public chain ledgers compared to private execution tracks, etc. Although the EthSystems brand is very young, it embodies years or even decades of cryptography and financial engineering accumulation.

Strategy and Current Status: From Theoretical Research to Engineering Implementation

David: Oscar just mentioned two very critical points: first, the foundation's privacy strategy, and second, the essential differences between institutional privacy and personal privacy. Let's start with the privacy strategy. What exactly is a privacy strategy? How do you define it in practice?

Oscar: This relates to the research and development environment that the PSC team was in at the Ethereum Foundation at that time. We were trying to bring cutting-edge cryptographic work deeper into the macro vision of the foundation, systematically thinking about which privacy research directions the foundation should prioritize. Of course, there are already many teams in the ecosystem pushing this forward, and I don't want to speak too much on behalf of the foundation.

As the head of the institutional privacy working group at that time, our core mission was to connect two long-divided worlds: one side being traditional large institutions, and the other side being the native Ethereum ecosystem. When we communicated with financial institutions early on, they often had a huge information gap regarding Ethereum, generally believing that "this is just a completely transparent public chain with no commercial privacy whatsoever." But in reality, the Ethereum ecosystem has already accumulated extremely rich solutions in underlying cryptographic primitives, specialized security vendors, and various layered privacy protocols.

Our work involved systematically breaking down the entire Ethereum privacy technology stack for institutions; on the other hand, we clearly translated to the crypto teams and protocol engineers within the ecosystem: what these real trillion-dollar commercial users are actually looking for. Therefore, we drew a segmented privacy market map, systematically sorting out the specific needs of traditional institutions in specific business processes, legal compliance constraints, and trading scenarios, and then accurately mapping them to existing technologies such as zero-knowledge proofs, secure multi-party computation, or homomorphic encryption, indicating the missing components to the industry through concept validation and architectural white papers, as well as how to assemble these cryptographic building blocks together.

Mo: I will quickly add a point. Oscar just mentioned PSC, and some listeners may not be familiar with this organization. The Ethereum ecosystem has actually been deeply engaged in privacy and scaling technologies for many years. Although privacy protocols have re-emerged as a hotspot for capital and technology in recent years, the Ethereum Foundation had already established a lab focused on cryptographic research, which is PSC. They can be seen as the privacy steward of Ethereum, gathering a group of core builders who have long focused on cryptographic theory and the implementation of privacy protocols.

David: According to your observations, does the industry already have ready-made code solutions that institutions can directly use if they know they exist, or is there still a significant underlying gap in building enterprise-level confidential systems on Ethereum? At what stage are we currently in this technological evolution arc: still needing to break through underlying cryptographic theories, or is the infrastructure basically in place, mainly lacking standardization and module assembly?

Oscar: This is a very profound question. I believe the current reality is a mix of both. Over the past decade, the Ethereum Foundation, the Zcash ecosystem, and many independent cryptographic teams have successfully engineered a large number of cutting-edge cryptographic primitives, transforming them from pure theory into highly usable code. Around these underlying breakthroughs, a number of technology service providers dedicated to lowering integration barriers have also emerged in the market. In many standard scenarios, we indeed already know how the technical path should be taken.

However, when facing the complex constraints of specific institutions, there still exists a significant engineering gap. Many traditional institutions have extremely strict and counterintuitive business constraints, and general standardized solutions often cannot be directly adapted. The outside world may simply think that "deploying a privacy Layer 2 for institutions can solve everything," but once you delve into the real trading processes, general Rollups often come with trade-offs that institutions cannot accept in terms of latency, liquidity fragmentation, or compliance permissions.

When we connect with these institutions, we find that there is a significant divergence in digital maturity among the parties: leading institutions may have built R&D labs with dozens of people, equipped with top cryptographic PhDs, and have been tracking zero-knowledge proofs for years; while on the other end, traditional institutions may have no Web3 R&D capabilities at all, only hoping to procure off-the-shelf compliant infrastructure. Different clients have vastly different demands in terms of performance throughput, deterministic settlement times, and security assurance levels, which determines that we cannot adopt a one-size-fits-all approach.

Mo: From the institutional cases we have closely followed, the current bottleneck is essentially no longer purely a cryptographic theoretical research issue, but an extremely complex system engineering implementation and architectural adaptation problem. The Ethereum ecosystem has already run ahead in terms of research, and the remaining most challenging task is to securely assemble these building blocks into the infrastructure of modern finance.

David: Since the core challenge lies in engineering, can you break down a typical real case you encountered? What are the most common privacy demands when large institutions connect to Ethereum? Is it the confidentiality of enterprise stablecoin account balances, the prevention of penetration during the issuance of real-world assets (RWA), or private settlements in B2B supply chain scenarios? Which type of demand do you handle most frequently in practice?

Mo: The institutional use cases we encounter are extremely diverse. Frankly, our team usually focuses on those tough problems that existing market solutions have yet to tackle. Use cases like basic private transfers and tokenized deposits already have some preliminary solutions in the market and have been partially addressed in some compliance-friendly countries and organizations. We are more concerned with systemic pain points that have a huge volume in the traditional financial world but have not been seriously addressed in the public chain space.

A representative real case: We once had an in-depth discussion with a top-tier global investment bank about the "inter-dealer compression" business. In the traditional derivatives and foreign exchange markets, large banks generate massive bilateral exposures every day. At the end of each trading day, to reduce capital usage and default risk, all participating banks send their vast trading data to a trusted centralized clearing service provider. As a result, these top financial institutions need to pay tens of millions or even hundreds of millions of dollars in expensive service fees to third parties each year.

This centralized third party reviews the sensitive transaction details and real-time positions of each bank, completing multi-party position netting and compression in the background. Although no major bank is willing to fully expose its underlying trading cards to a third party, the need for position compression to significantly reduce capital adequacy ratio usage and the number of transactions that need to be settled forces the entire industry to compromise.

An executive from this investment bank approached us with a request: Is it possible to completely eliminate this centralized intermediary using cryptographic technology? The immutable, globally shared decentralized network built on Ethereum is the ideal foundation for solving this problem. However, the core obstacle is: if this sensitive data is submitted directly to the public Ethereum mainnet, competitors around the world will have a clear view of each bank's real positions. This is a typical real scenario with potential value in the hundreds of billions of dollars that has rarely been addressed by native crypto teams before.

In the field of private payments and settlement, we have also conducted multiple rounds of architectural validation with large institutions in various sovereign jurisdictions. As Oscar mentioned, while the concept of private payments sounds standardized, the specific regulations in different countries regarding financial supervision, anti-money laundering penetration, and foreign exchange controls impose multi-dimensional complex constraints on what would otherwise be a simple cryptographic model.

Oscar: Building enterprise-level confidential systems is not just about introducing a zero-knowledge proof. Besides data privacy, institutions are also extremely concerned about system high availability, deterministic security boundaries, censorship resistance, and compatibility with existing settlement systems. Many times, our work is about enhancing the rigor of engineering specifications and system delivery across the entire Web3 industry.

These traditional giants have already validated the product-market fit (PMF) in their existing businesses, with their internal systems handling billions of dollars in fund flows daily. When they consider migrating their business to the Ethereum ecosystem, their primary demand is to achieve 100% system determinism. This is fundamentally different from the early industry logic of intuitive, rapid iteration experimental development. Privacy is the most technically challenging aspect, but it is just one core attribute of an overall highly available distributed system. We must provide rigorously formally verified technical specifications that comprehensively cover various boundary conditions.

David: Is there a case that has completed the entire process from demand communication, technical validation to actual implementation? Can you share a complete journey of an institution successfully linking to Ethereum using your privacy solution?

Mo: Under strict confidentiality agreements, I can share a real case of a national financial infrastructure. In many mature economies, the logic of peer-to-peer payments is straightforward, but in certain specific jurisdictions, the regulatory logic is entirely different. A large financial institution in that country wanted to promote a blockchain-based underlying payment network nationwide. They fully recognized the efficiency of public chains in inter-institutional settlements, but the system must support high-concurrency transactions for a population of tens of millions while meeting the country's unique compliance audit framework.

In standard cryptographic privacy payment models, it usually suffices to meet the bilateral confidentiality and verification between the sender and receiver. However, the financial regulatory laws of that country clearly stipulate that each transaction must inherently support the collaborative interaction of four entities at the cryptographic level: the fund sender, the fund receiver, the licensed compliance auditing agency, and the national regulatory authority.

This institution has tried almost all mainstream privacy protocols and scaling networks in the market over the past two to three years, but none could balance throughput, deterministic latency, and controllable on-chain computing costs while ensuring controlled disclosure for all four parties. They even wrote a detailed technical evaluation report dozens of pages long, arguing why this goal could not be achieved within the existing public chain system.

The turning point came when our team publicly released a series of research papers and proof-of-concept code on multi-party private state transitions during our time at the Ethereum Foundation. The technical director of that institution saw these open-source results and proactively reached out to us, stating that this breakthrough from the foundation made them see the technical feasibility of building a nationwide clearing network based on Ethereum again. They are currently advancing the deployment based on our open-source architectural blueprint. This case not only broke the prejudice that public chains cannot meet complex sovereign compliance but also avoided the country regressing to a completely closed and fragmented traditional private chain system.

Oscar: The business and technical validation cycles for such institutional collaborations are very long, often requiring extensive compliance reviews, legal assessments, and security audits. During my time at the foundation, many deeply cooperative institutions often expressed a willingness to obtain our deeper architectural support through commercial procurement, but the foundation, as a neutral non-profit organization, could not accept commercial contracts, leading to many projects that could have been implemented stalling at the last mile. This is precisely why we chose to split the team into an independent profit-making entity: to connect traditional institutions with mature commercial contract structures while continuing to give back to the public chain ecosystem through open source.

The Scaling Paradox: Balancing Deep Customization and Universal Standards

David: Hearing this, I have a core concern: If you must do a lot of highly customized development for each jurisdiction and each unique compliance requirement, how can the entire business achieve network effects and scale? It is often said in the industry that a glove that fits perfectly on one hand usually only fits that one hand.

Another evolutionary path is: What if we directly embed native privacy into the core infrastructure of Ethereum—such as making Uniswap, Aave, the basic EOA account system, and Ledger hardware wallets default to having high-fidelity, out-of-the-box privacy protection capabilities? Could institutions then directly adapt to this unified standard? If everyone operates under the same universal standard, the overall privacy liquidity of the Ethereum ecosystem could experience explosive growth. How do you balance this scalability contradiction between deep customization and universal standards?

Mo: This is a very profound industry question. First, the implementation of customization and the promotion of underlying universal standards are not mutually exclusive. The strength of the Ethereum ecosystem lies precisely in its flexibility for multi-layered collaborative evolution. Second, the "specific customization market" that people usually think of is often a huge independent industry with a volume reaching hundreds of billions of dollars in the traditional financial world.

We absolutely do not advocate endless pure outsourcing customization, as that is not a healthy business model. EthSystems' core strategy is: first, to root ourselves at the front line and thoroughly understand the most challenging vertical scenarios, because only by fully understanding the business details can we design truly usable cryptographic architectures; then, we immediately abstract highly universal underlying cryptographic building blocks and protocol standards from these high-barrier scenarios.

For example, the "inter-dealer compression" protocol mentioned earlier, once successfully implemented in a leading investment bank, can directly be reused across all major investment banks globally; the "multi-party controlled compliance disclosure protocol" developed for sovereign-level payments can also be abstracted as a standard module serving compliant stablecoins in various regions worldwide.

Our long-term path is very clear: all core algorithms and universal interfaces that have been validated in practice will be contributed to the Ethereum community under the most permissive open-source licenses, thereby completely dispelling institutions' concerns about proprietary technology lock-in; at the same time, we will package these audited components into high-performance, pluggable modular kits. This approach is similar to the "navigating the cognitive maze" methodology in Silicon Valley entrepreneurship: in the early stages, the team must personally engage in those seemingly impossible to scale tasks that can accumulate the highest cognitive barriers.

Faced with traditional financial giants that have been operating stably for over a hundred years, the public chain ecosystem cannot arrogantly demand that they completely start over to adapt to Web3, but must build a smooth transitional technical bridge based on their existing business interfaces and legal frameworks.

Oscar: I completely agree with Mo's viewpoint. The crypto industry has generally adhered to the idealistic logic of "as long as the underlying universal infrastructure is built well, applications and users will naturally come." But the reality has proven that this logic often fails when facing institution-level users with strict regulations and complex businesses.

First tackling extremely complex specific scenarios and then generalizing them into universal standards is a path of significant engineering value. We achieve this goal by releasing open-source code libraries, modular protocol blueprints, and highly scalable technical specifications. Of course, we are extremely eager to see the Ethereum base layer (L1) natively support more privacy primitives in the future, which would greatly expand the application boundaries of the entire decentralized world. But at this stage, our primary strategic focus remains: to clear all obstacles and safely and smoothly bring trillions of dollars of real institutional assets into the Ethereum ecosystem.

David: In terms of business model positioning, does EthSystems lean more towards being a consulting studio providing customized technical delivery for traditional financial institutions, or is it closer to product-oriented tech companies like Uniswap Labs or Aave Companies that gain scalable value by building standardized products on-chain?

Mo: Our self-positioning is very clear; we are always a purely product-oriented company. I served as CTO in my previous job and have spent my career building scalable software products; Oscar also has a long background in product architecture and protocol development. We understand that only standardized products can bring exponential network effects.

However, the road to excellent products exists on an evolutionary spectrum. At the intersection of Ethereum and traditional finance, you cannot sit in an ivory tower and imagine demands out of thin air. The team must act as frontline deployment engineers, deeply engaging with trading desks and compliance offices on Wall Street, observing the interaction details between traders and clearing systems firsthand. The ultimate goal of all customization explorations is to distill out standardized infrastructure products that can be distributed at scale.

Oscar: The procurement and decision-making cycles of traditional institutions are inherently very long. Through early deep technical collaboration, proof of concepts, and joint architectural reviews, we can gain unprecedented insights into the rigid demands of the real world, ensuring that we have a high competitive barrier when deciding to bet on core products. This deep feedback loop is something purely external teams cannot obtain.

Endgame Simulation and Future Ecosystem: Redefining the Boundaries of Transparency and Trust

David: Looking at the entire macro cycle, how has the willingness of traditional institutions to decentralize accounting on public chains changed? In your daily business communications, are you more often actively promoting Ethereum, or are institutions actively seeking compliant solutions to go on-chain?

Mo: In fact, the vast majority of demand comes from institutions reaching out. Firstly, mainstream financial institutions around the world have fully understood the tremendous value of decentralized shared ledgers in eliminating reconciliation costs and achieving real-time atomic settlement over the past few years. Secondly, we must objectively credit the entire native DeFi ecosystem: when traditional institutions see the remarkable resilience and capital efficiency demonstrated by decentralized lending and trading protocols like Aave, Uniswap, and MakerDAO during extreme market fluctuations over the years, they develop a strong willingness to participate, with the core demand being how to enter in a compliant manner that aligns with existing laws and regulations.

Especially after the relevant digital asset compliance legislation in Europe and the U.S. has gradually clarified, the internal driving force within traditional institutions has undergone a fundamental shift. In recent years, most institutions primarily conducted low-risk PoC (Proof of Concept) validations through marginal "innovation labs"; however, in the past year, we have frequently seen CEOs or business line leaders of large institutions directly issuing clear directives to their technical teams: stop merely developing laboratory toys and must start building real business closed loops on public chains.

David: Does this mean that the future evolution will first go through a transitional phase: on-chain, a batch of compliance sandbox networks protected by cryptography will be born, allowing financial institutions to operate their business logic in a controlled environment; as liquidity and infrastructure mature, will they then bridge into the deep waters of native DeFi protocols like Morpho and Uniswap through cross-chain and zero-knowledge proof technologies?

Oscar: This is precisely the path we clearly anticipate and are promoting. Many forward-looking large asset management institutions are already deeply planning how to achieve composable integration of tokenized funds with on-chain lending protocols.

However, there exists a "cognitive and legal translation period" lasting several years. Many multinational banks have histories of over a hundred years, and their internal risk control manuals and legal compliance systems are entirely based on traditional central counterparty settlement systems. Accurately mapping these compliance frameworks to the smart contract logic of Ethereum requires collaboration among technical experts, legal advisors, and policymakers. Those who understand more deeply and act more decisively are currently racing to seize this historic transition period.

David: Let’s turn our attention to the future seven years from now. Assuming that by 2033, EthSystems has achieved all its initially set strategic goals, and the on-chain migration of traditional institutions has fully exploded. In the most ambitious scenario you envision, what will the future on-chain financial system look like?

Mo: I believe that the top-tier technology in its final form should be completely "invisible." Ordinary users should be able to enjoy the underlying security and free flow capabilities it provides without even perceiving the existence of blockchain, cryptographic algorithms, or decentralized ledgers.

Through decentralized identity (DID) and zero-knowledge proof systems, an ordinary investor can comply with investments in high-quality global assets and achieve real-time settlement while fully controlling their sovereign data and without submitting sensitive privacy to centralized intermediaries. What we look forward to seeing is not only the minting of trillions of dollars worth of traditional assets on Ethereum but, more importantly, allowing global assets to retain the permissionless composability advantages of DeFi while eliminating the data exposure risks for innocent individuals and commercial entities. Within the next seven years, the migration of mainstream global financial infrastructure to decentralized public chains like Ethereum will become a certainty.

David: This raises a very classic and sharp philosophical divergence: the core pillar that the crypto community has long been proud of is "data is fully public, verifiable across the network, and auditable on-chain." If in the future, asset transfers, liquidity pool sizes (TVL), and institutional holdings are all hidden by zero-knowledge cryptography, how can the community ensure that the underlying system is not secretly over-issuing or generating bad debts? How do we balance privacy protection with public trust?

Mo: Many industry observers tend to narrowly equate privacy with complete unknowability of data hiding. The precise definition of privacy in the context of modern cryptography is: under strictly controlled conditions, clearly defining who, at what time, and by what mathematical proof method, can access which specific dimensions of information.

In real life, when you conduct a routine transfer at a bank, only you, the payee, and the account-holding bank know the transaction details; this level of data isolation at the business level is the foundational order that ensures the normal operation of commercial society. The public's demand for complete transparency is essentially to obtain certainty of trust that the system is not acting maliciously. However, if modern cryptography allows us to provide verifiable proof of solvency to the entire network without exposing individual transaction counterparties and business secrets, this is clearly a more advanced and elegant trust paradigm—selective verifiable disclosure.

David: This is exactly the ideal state I hope for. The on-chain auditability we wish to retain includes macro-level indicators such as total transaction volume, aggregated fund pool size, total locked value across the network, and the trigger lines for disorderly liquidation.

When institutions deposit large private assets into lending protocols like Morpho, the system can still output the total asset volume verified by zero-knowledge proofs to the entire network in real-time; when large orders are traded on decentralized trading platforms, the public can confirm that the transaction has genuinely occurred and has been settled, but without exposing the specific institution's holding details and real-time strategies to front-running arbitrage bots (MEV).

On traditional mainnets, once top whales conduct large token exchanges, the entire network can almost ruthlessly front-run and target them within seconds, which is not a serious operational mechanism for a modern financial system. Institutions cannot bear the burden of having their entire trading footprints monitored endlessly. As long as we can verify the authenticity and compliance of the ledger through mathematical proof, we can fully balance transparency with commercial privacy.

Oscar: Absolutely correct; there is no irreconcilable contradiction between the two from a cryptographic perspective. With modern zero-knowledge proofs and homomorphic commitment schemes, we can design an elegant layered system: keeping macro indicators related to public safety and system robustness globally transparent while ensuring that specific account subjects, transaction details, and business strategies receive unbreakable privacy protection at the micro level. The Turing-complete programmability of Ethereum provides the best soil for such a structure that balances optimal characteristics on both ends.

David: How should developers and core protocols within the ecosystem collaborate to accelerate this process? Whether it’s native DeFi blue chips like Morpho and Uniswap or researchers from the Ethereum Foundation, how can they better clear obstacles for institutional-level privacy?

Mo: For the broader DeFi ecosystem protocols, our call is very direct: if you are building innovative lending, trading, or asset management infrastructure, please feel free to reach out to EthSystems. We are very eager to discuss with native teams how to architecturally adapt battle-tested DeFi protocols to institutional-level compliance privacy use cases.

At the same time, our team systematically open-sources the latest technical specifications and codebases every three to four weeks. Many executives and architects from international financial institutions are closely tracking these technical outputs. If the native community builds innovative privacy or scalability tools, we welcome direct submissions to our open-source codebase for collaborative evolution.

Oscar: Participants in the Ethereum ecosystem need to adopt a more open mindset to examine our potential user base. We hope to encourage developers to not only focus on the experiences of native retail users but also to deeply consider what kind of technical interfaces large entities constrained by compliance need. Breaking down the cognitive barriers between the Ethereum ecosystem and traditional institutions is a systemic project that requires long-term collaboration across the entire ecosystem.

Mo: Ultimately, our core mission can be summarized in one sentence: to be the translators and bridge builders between top-tier boards and cyberpunk. These two groups have often misunderstood or even opposed each other in the past, but we firmly believe that only by embedding decentralized technologies that truly defend individual rights and commercial freedom into the foundational system specifications of the highest decision-making levels can we truly reshape the future of global financial infrastructure.

David: This reminds me of an insight shared by Ethereum core researcher Danny Ryan. As a staunch believer in decentralization, when he sits with architects from top Wall Street banks, although they use completely different professional vocabularies, their underlying demands are highly consistent: cyberpunks advocate for decentralization and anti-censorship, while traditional bank executives discuss how to eliminate single-point counterparty default risks. This is akin to the horseshoe theory, where the ultimate demands at both ends are fundamentally isomorphic at a deeper level.

Oscar: That is indeed the case. Whether individuals or institutions, what everyone truly cares about at the foundational level is always highly consistent: security, anti-censorship, rule transparency, and privacy sovereignty.

The most fascinating aspect of Ethereum lies in its immense inclusivity: it can support completely decentralized, identity-free native crypto experiments while also building the next-generation financial system with privacy and compliance for trillion-dollar entities under strict legal and commercial constraints. Understanding this deeply, we will realize that these two aspects have never been mutually exclusive.

David: Mo, Oscar, you are advancing a pioneering work that is crucial for the entire Web3 industry. Thank you for the profound insights you brought to Bankless, and I wish EthSystems all the best in its journey to promote institutional on-chain migration in the future.

Oscar: Thank you very much for the invitation, David.

Mo: Thank you, David. It’s a pleasure to be here.

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