StarkWare has announced the integration of Nightfall, the open-source zero-knowledge privacy solution developed by Big Four accounting giant Ernst & Young (EY), into its Layer 2 network Starknet.
The move is designed to enable institutions to execute private transactions on public blockchain infrastructure—without sacrificing compliance, auditability, or scalability.
Bridging Transparency and Institutional Privacy
Public blockchains have long been praised for their efficiency, global accessibility, deep liquidity, and composability. However, their radical transparency has remained a key barrier for large enterprises and financial institutions.
On most public chains, transaction details—including wallet balances, counterparties, and execution strategies—are visible on-chain. For institutions handling treasury operations, B2B payments, tokenized assets, or DeFi strategies, this level of openness can expose sensitive commercial data.
By integrating Nightfall into Starknet, StarkWare aims to resolve this tension between transparency and confidentiality.
The solution allows organizations to:
Conduct private B2B payments
Manage tokenized assets
Execute treasury operations
Participate in DeFi lending and swaps
Maintain regulatory compliance through selective disclosure mechanisms
How Nightfall Works
Nightfall leverages zero-knowledge (ZK) rollup technology to enable private transactions on Ethereum-compatible networks while preserving the security guarantees of public blockchains.
Instead of revealing all transaction details publicly, Nightfall:
Uses cryptographic proofs to validate transactions
Enables privacy by default
Allows selective disclosure for compliance (such as KYC requirements)
Links blockchain addresses to enterprise-grade digital credentials
This means institutions can transact privately while still providing verifiable audit trails when required by regulators or counterparties.
Importantly, Starknet’s architecture allows these private transactions to interact with the broader Ethereum ecosystem, preserving interoperability with decentralized applications.
A “Private Highway” for Stablecoins and Tokenized Deposits
Eli Ben-Sasson, Co-Founder and CEO of StarkWare, described blockchain infrastructure as potentially offering financial institutions “a private highway” for stablecoins and tokenized deposits.
According to Ben-Sasson, the integration demonstrates how institutional-grade privacy can operate at scale on a public Layer 2 network.
Meanwhile, Paul Brody, EY’s Global Blockchain Leader, emphasized that privacy has been the “missing piece” for large-scale enterprise payments on blockchain. He noted that the collaboration unlocks scalable confidentiality built on open standards—rather than proprietary systems.
Institutional Adoption Accelerates
The integration comes amid a surge in stablecoin settlements and tokenized asset activity. StarkWare cited adjusted settlement volumes exceeding $10 trillion in 2025, reflecting the accelerating role of blockchain in global financial infrastructure.
Notably, Ben-Sasson previously co-founded Zcash, a blockchain project focused on privacy-preserving transactions. His involvement underscores a broader trend: privacy technologies that were once considered experimental are now being scaled for institutional use.
This signals a maturation of the blockchain industry—from speculative trading infrastructure to enterprise-grade financial rails.
Why This Matters
If successful, the StarkWare–EY collaboration could:
Lower barriers for institutional blockchain adoption
Strengthen compliance-ready DeFi participation
Expand use cases for stablecoins in treasury and cross-border payments
Accelerate tokenization of real-world assets
The key question now:
Will privacy-enabled Layer 2 solutions become the standard for institutional blockchain adoption?
Or will regulators push for stricter transparency requirements that reshape this model?
What’s your take?
Is institutional privacy the next big catalyst for blockchain growth—or a double-edged sword for decentralization?
Drop your thoughts below 👇
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