Privacy Gets a New Boost With pERC-20 and STRK20 on Ethereum

Ethereum is getting new privacy standards that shield transactions while still supporting compliance. Read how pERC-20 and STRK20 are bringing privacy back to DeFi.

Key Takeaways

• pERC-20 lets tokens be owned and transferred privately, while the total supply stays public and transactions remain cryptographically verifiable.
• STRK20 extends privacy to DeFi use cases like lending, staking, and swaps, with support for multiple assets and post-quantum cryptography.
• Both proposals combine privacy with compliance, which is especially relevant for European users and regulators.

Privacy was long one of the crypto world's biggest promises, but it got pushed to the background as the focus shifted to scalability and tighter regulation. Now the topic is getting fresh attention in the Ethereum ecosystem, with new proposals like pERC-20 and STRK20 that combine privacy and compliance.

New Token Standards for Privacy

The pERC-20 standard lets users own and transfer tokens without their balance, transactions, or counterparties being publicly visible. Unlike traditional ERC-20 tokens, which are transparent and open for anyone to inspect, pERC-20 tokens exist as encrypted cryptographic "notes." That keeps things private while still letting the network verify that transactions have not been tampered with. The total token supply stays public, so no hidden token creation can happen. The proposal also includes a compliance mechanism that lets issuers block specific notes through a cryptographic blacklist without violating the privacy of regular users.

Privacy Beyond Token Transfers

Along with pERC-20, Starknet recently introduced STRK20, a framework that extends privacy to decentralized finance applications like lending, staking, and token swaps. According to Eli Ben-Sasson, co-founder of StarkWare, the biggest challenge is not cryptography, but usability. Privacy tools have historically dealt with slow wallets and limited compatibility, which gets in the way of use and, in turn, anonymity. STRK20 offers a unified privacy layer for multiple assets and supports interactions with decentralized applications without losing privacy. It also uses post-quantum cryptography, which matters for future protection against quantum computers.

Why This Matters for European Users

Ethereum's renewed focus on privacy could also matter for European users, especially with regulators paying more attention to compliance and data protection. The mix of transparency around total token supply and cryptographic privacy with built-in compliance mechanisms fits the need for secure and legally compliant digital transactions. That could help drive adoption of privacy-friendly applications across the broader crypto market, as long as usability keeps improving.