The Crucial Dilemma Encountered by Privacy Track? Reasons behind the Closure of Nocturne v1 with Vitalik’s Involvement
In the context of the mainstream society’s difficulty in accepting decentralized products such as public chains, wallets, and decentralized exchanges with rational understanding, adding a layer of “privacy” to decentralized nesting is likely to become a compliance and scrutiny hotspot. Privacy projects are often viewed as accomplices to illegal activities such as terrorist financing and money laundering and are subject to “special attention,” especially in countries with strong regulatory control, where they are easily seen as hostile entities. The probability of the team succumbing to pressure and giving up is high.
Currently, privacy projects construct an independent “black box” environment, where users can transfer assets into the black box and then use Stealth addresses, Commitment Tree, ZK, and other methods within the black box to obfuscate tokens. Typically, the larger the black box pool and the more users it has, the more mature the conditions for privacy construction. However, the usual way to address compliance issues in such solutions is through blacklist filtering and proof of innocence. This method easily solves the deposit problem, but if there is a connection with illicit funds after withdrawal, it will bring about significant trouble.
In order to achieve the transition to a foundational asset trading environment, commonly used privacy solutions involve constructing a privacy trading mechanism, where users must first deposit into the privacy environment before completing a series of subsequent operations. This places the platform at the challenge of technically screening all potential illegal transactions, while also facing the pressure of slow user development and difficulty in expanding the fund pool. The platform not only needs to ensure that it is not subject to any regulatory errors, but also needs to explain to its wide user base the platform’s fairness and resistance to censorship. The latter is likely to be more difficult at this stage.
