Ethereum's Vitalik Buterin Proposes Privacy Enhancements Amidst Competition

Ethereum co-founder Vitalik Buterin has proposed a roadmap to enhance the network's privacy without altering its consensus mechanism. The plan focuses on several key areas, including privacy and on-chain payments, network-level anonymization, RPC calls, and partial anonymization of on-chain activity. This initiative comes as blockchain development continues to evolve, aiming to provide a seamless user experience amidst growing competition.

Buterin's roadmap outlines several proposed changes to improve privacy on the Ethereum network. These changes, while simple, can be integrated with long-term roadmap features such as specific rollups. The first step involves integrating privacy tools like Railgun Pools into wallets, allowing all wallets to have a shielded balance rather than creating a separate privacy address. This will make the “send from shielded balance” option available by default, enhancing the user experience.

The second step involves integrating a send-to-self privacy mechanism and transitioning the ecosystem to a “one address per application” approach. This change will remove public links in several applications, which may initially be inconvenient but is necessary for improved privacy. FOCIL and EIP-7701 are also crucial to the roadmap as they permit protocols like Tornado to function without relays, thereby improving censorship resistance and aiding privacy-preserving transactions. Additionally, TEEs will be replaced with PIR (Private Information Retrieval), which offers stronger cryptographic guarantees.

The network plans to make PIR suitable for large datasets using a hybrid approach. The ultimate goal is to create a world where a significant portion of transactions are private, and private sends are the default in many cases. Activity within each individual application will remain public, but the link between a user's activity in different applications will be private. This ensures that privacy guarantees hold not just against passive observers but also against adversaries operating RPC nodes.

Efforts to innovate and boost user experience come as the Ethereum network faces challenges from other layer 1 blockchains. High gas fees and previous congestions have paved the way for newer, more scalable blockchains. In the last 30 days, Ethereum’s Unique Active Wallet’s decentralized application usage plummeted. Although DeFi adoption hit a brick wall last month, other networks recorded a lesser decline in usage. Ethereum’s transaction volume also slipped following the wider crypto market correction.