Ethereum News Update: Efforts to Enhance Privacy on Ethereum Face Challenges from Institutional Adoption Requirements

Vitalik Buterin, one of Ethereum’s co-founders, has ramped up his efforts to promote privacy within the blockchain space, introducing Kohaku—a modular system designed to strengthen privacy and security on-chain—while also warning about the dangers of relying on centralized solutions in Web3 platforms. This new framework, revealed at the

Cypherpunk Congress and Devcon, highlights Buterin’s increasing focus on privacy as both a “basic right” and a “primary objective” for developers, signaling a strategic shift by the Ethereum Foundation to tackle persistent privacy shortcomings for users .

Kohaku, an open-source initiative spearheaded by the Ethereum Foundation and its partners, brings forward features such as Railgun integration and Privacy Pools, which help mask transaction details and support “proof of innocence” protocols. In a demonstration held on November 16, a participant illustrated how Kohaku could protect assets within MetaMask and Rainbow wallets, pointing to a move toward privacy settings that are enabled by default. Buterin

in meeting its privacy goals, and that achieving “practical privacy and security” will demand “dedicated collaboration.” To reinforce this direction, the Ethereum Foundation has by forming the Privacy Cluster, a group of 47 members focused on making privacy a “core feature” of the Ethereum network.

Buterin’s apprehensions go beyond technical improvements, touching on deeper philosophical issues, especially the use of centralized login systems in Web3. He

and similar Web2 authentication methods, arguing they conflict with the decentralized principles of blockchain by creating “centralized control points” and diminishing user autonomy . He cautioned that delegating identity checks to large corporations could bring back risks like account lockouts and data monitoring, which would compromise the trustless nature that is central to blockchain’s appeal . His comments have over whether apps that depend on centralized identity systems can truly be considered decentralized.

The relationship between privacy innovation and institutional involvement is shaping Ethereum’s changing character. While projects like Kohaku and the Privacy Cluster demonstrate a dedication to cryptographic independence, the emergence of staked ETFs and blended Web2-Web3 approaches shows a willingness to compromise to attract broader investment. Buterin’s simultaneous emphasis on privacy and decentralization highlights that Ethereum’s future may depend on carefully balancing these sometimes conflicting priorities while staying true to its original principles

and .