In the blockchain world, we often hear two extreme voices. One side shouts, "Privacy is a fundamental human right," while the other believes, "Transparency is the only way to eliminate crime." As financial assets begin to go on-chain, these two seemingly contradictory demands have emerged simultaneously.
Background: Why Finance Needs Privacy
In the traditional financial world, privacy is the norm. When you buy a stock, other investors do not know your holdings, cost price, or trading time. This privacy protects the strategies of market participants and prevents targeted attacks.
However, on current public chains, all transactions are public. Imagine if you purchase tokenized real estate shares on Ethereum, the whole world can track your wallet address, holdings, and timing of trades. For institutional investors, this is like laying their cards on the table.
On the other hand, regulators remain vigilant about 'completely anonymous' financial activities. The EU's MiCA regulations and the US securities regulations require that financial activities must be auditable and at least disclosed to regulators when necessary.
The core contradiction that Dusk Network aims to solve is: how to protect privacy while meeting compliance requirements.
Dusk's solution: privacy by default, compliance optional
Dusk is a Layer1 designed specifically for regulated financial assets. Its core philosophy is: privacy should be the default state, but compliance tools must be built into the protocol layer.
Through zero-knowledge proof technology, Dusk makes every transaction default to privacy, but asset issuers can hold a 'reveal key' to show specific account details to regulators when necessary. This design makes Dusk the only RWA-specific Layer1 that combines 'strong privacy + native compliance.'
The division of labor between the two trading models
Dusk provides two trading models corresponding to different use cases:
Phoenix (privacy UTXO): sender, receiver, and amount are all hidden, suitable for peer-to-peer transactions.
Moonlight (compliance account): the sender's address is public, used for connecting to centralized exchanges and traditional financial institutions. When you withdraw from Binance to a Dusk wallet, the exchange needs to know that the money has indeed reached your address.
Users can switch freely between the two, and this flexibility allows Dusk to meet privacy needs without being excluded from the mainstream financial system.
Use cases: securities, real estate, intellectual property
Dusk's positioning is 'a native issuance platform for regulated financial assets.' The global securities market is approximately $136 trillion, and the real estate market is about $378 trillion. When these assets go on-chain, Dusk's selective disclosure function allows issuers to demonstrate compliance to regulators without disclosing transaction details to the market.
Other application scenarios include intellectual property transactions (patent licensing requires confidentiality), supply chain financing (reducing financing costs by 3-5%), private equity funds (tokenization of LP shares), etc.
Risks and limitations
Dusk's success depends on whether institutions are willing to issue assets on it. The mainnet has just launched, and no large institution has publicly announced its adoption yet. Additionally, the MiCA regulatory details are still being formulated, and the United States' attitude towards privacy coins is also filled with variables. On the technical side, the computational cost of zero-knowledge proofs is relatively high, and the current TPS is between 150-300.
Conclusion
Dusk attempts to find a balance between 'privacy' and 'compliance.' This path is not easy, but the direction it represents is worth noting: when real assets start to go on-chain, what we need is not a more transparent ledger, but smarter privacy tools.
This article is for research reference only and does not constitute investment advice.
