Privacy is returning to the Ethereum agenda. After several years when developers focused on scaling, rollups, and reducing fees, the ecosystem is once again discussing whether tokens should reveal every transaction by default.
The renewed interest is linked to the pERC-20 proposal and the launch of STRK20 on Starknet. Both directions are trying to solve an old blockchain problem: public networks are convenient for verification but reveal too much about users, their balances, and financial behavior.
Public Wallets Have Become a Problem
Today, most Ethereum tokens operate under the ERC-20 standard. This is convenient for exchanges, wallets, and DeFi applications, but this model has a weakness: the entire history is visible on the blockchain.
Any user can open an address and see how many tokens are there, where they came from, and where they went next. For retail investors, this is a privacy issue. For companies, funds, and large holders, it is also an operational risk.
In fact, a regular token works like a public bank account. In the crypto industry, this was long considered the norm, but as on-chain finance grows, such a level of transparency is becoming less convenient.
pERC-20 Proposes Hiding Balances and Amounts
The pERC-20 proposal aims to change this logic. The new standard will allow storing and transferring tokens without publicly disclosing the balance, transfer amount, or the counterparty.
Instead of ordinary records of token movements, encrypted cryptographic “notes” will be used. In essence, this is closer to digital cash: the network can verify the correctness of the transaction, but an outside observer cannot see all the details.
At the same time, the standard does not try to hide everything completely. The total token supply remains public. This is important because the market must be able to verify that new coins are not being secretly created.
Privacy Is to Be Combined With Compliance
Developers are trying not to pit privacy against regulatory requirements, but to combine them in a single model. In pERC-20, there is a mechanism for selectively blocking individual cryptographic “notes” for this purpose.
The idea is to restrict only problematic assets, not to disclose data of all users. Balances, transfer amounts, and the history of regular wallets remain closed.
This approach looks like a compromise after the Tornado Cash case. The industry increasingly understands: private tools without a clear compliance mechanism will be hard to integrate into mainstream infrastructure.
Starknet Looks Beyond Ordinary Transfers
In parallel, Starknet launched STRK20, its own private token framework. Its goal is broader than just hidden transfers between wallets.
Developers want to bring confidentiality to DeFi. This includes swaps, lending, staking, and other actions where the user interacts not only with the token but also with applications.
StarkWare co-founder Eli Ben-Sasson believes the main problem with private solutions today is not cryptography, but user experience. If a tool is inconvenient, only a few people use it. And if there are few users, the level of anonymity decreases.
Poor UX Breaks Privacy
The history of private cryptocurrencies illustrates this problem very well. Many solutions were technically strong but difficult for the average user. Slow wallet synchronization, inconvenient transactions, and weak compatibility with DeFi reduced interest in such products.
For privacy, mass adoption is critical. The more people use one system, the harder it is to single out a specific participant. If there are few transactions on the network, even strong cryptography does not always yield good practical results.
That is why new standards are trying to embed privacy into familiar on-chain scenarios. The user should not have to choose between confidentiality and access to DeFi. Ideally, hidden transactions should work as simply as regular ones.
pERC-20 and STRK20 Show Two Approaches
pERC-20 is more like an attempt to update Ethereum’s basic token standard. Its main scenario is private storage and transfer of tokens while maintaining a verifiable total supply.
STRK20 focuses on a broader confidential environment. There, a user can work with multiple assets and applications within a single private layer. This is closer to the idea where not only payments but also financial actions are hidden.
The difference is important. One approach solves the problem of public transfers. The other tries to build a private DeFi circuit where assets can be swapped, borrowed, staked, and used without fully disclosing actions.
Post-Quantum Cryptography Has Become a New Argument
Starknet also points to the use of post-quantum cryptography. This direction is intended to protect systems from future risks associated with the development of quantum computing.
For now, this is not the main practical risk for users. But for infrastructure that may operate for years, such groundwork becomes part of long-term architecture.
Blockchain developers are increasingly thinking not only about current threats but also about what systems will look like in the future. Especially when it comes to privacy, where a cryptographic error can have long-term consequences.
Privacy Is Coming Out of the Niche
A few years ago, privacy in the crypto industry was more often associated with individual coins and mixers. After increased regulatory scrutiny, this topic partially faded into the background.
Now it is returning in a different form. It is no longer just about hidden payments, but about token standards, DeFi applications, institutional scenarios, and the ability to protect user data without destroying network verifiability.
This is a more mature conversation. Developers are not just saying “everything should be hidden.” They are trying to understand which data should remain public, which can be closed, and where access is needed for compliance.
What's Next?
pERC-20 remains a proposal for now and must go through a long discussion process, like other Ethereum improvements. It is not certain that this standard will become mainstream. But the very fact of such a proposal shows that privacy has become important again.
STRK20 is already moving toward practical use in DeFi. If the framework can provide a normal user experience, it will become one of the tests for the new model of private on-chain finance.
The main conclusion is simple. Ethereum and related ecosystems are beginning to seek a balance between transparency, privacy, and compliance. Public blockchains can no longer simply disclose everything by default. If on-chain finance wants to go mainstream, users and companies will need more control over what data they show to the market.
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