1. Core Upgrade Projects and Technical Highlights
1. Flagship Privacy Framework: Kohaku
Led by Vitalik Buterin, co-founder of Ethereum, it is known as the 'last mile' of Ethereum's privacy evolution and is currently the most discussed privacy upgrade tool.
• Core Capability: Through the 'Stealth Address' mechanism, the sender generates a one-time anonymous address for each transaction, making it impossible for external parties to link it to the user's real account; at the same time, it supports users in selectively disclosing address-related information to meet auditing and regulatory requirements, achieving 'controllable anonymity'.
• Additional Advantage: Built-in Helios light client, allowing users to operate without relying on external RPC providers, reducing the risk of data leakage and making the experience of private and public transactions consistent.
2. Programmable Privacy Infrastructure: Aztec Network
Aiming for a 'private world computer', it achieves Turing-complete privacy smart contracts through the Ignition architecture, which is a key underlying support for Ethereum's privacy ecosystem.
• Core Technology: Using a hybrid state model, it simultaneously maintains encrypted private state (user assets stored in the form of 'tokens') and publicly verifiable state, allowing developers to mix private/public functions within the same contract; paired with the Noir dedicated development language, it lowers the development threshold for zero-knowledge proof applications.
• Ecological Value: Achieving cross-layer privacy communication with Ethereum L1 through the Portals mechanism, adapting to diverse privacy scenarios such as DeFi and decentralized voting.
3. Top-Level Design for Compliant Privacy
The Ethereum Foundation upgraded the privacy team to 'Privacy Steward (PSE)', releasing an end-to-end privacy roadmap, establishing a new paradigm of 'compliant privacy', consisting of three core modules:
• Privacy Writing: Based on stealth address technology, it enables encrypted transmission of transaction information, allowing users to proactively disclose transaction trails to authorized parties.
• Privacy Reading: Protecting users' on-chain data query intentions through privacy RPC services, avoiding being spied on by node service providers.
• Privacy Proof: Achieving 'selective disclosure' based on zero-knowledge proofs, for example, proving that an account balance meets standards or that the source of funds is compliant, without having to expose specific transaction details.
2. Core Impact of the Upgrade on Ethereum
1. Competitiveness Enhancement: Filling the traditional privacy gap, forming a differentiated advantage in competition with privacy coins like Monero and Zcash, while meeting institutional demands for auditability.
2. Ecological and Value Empowerment: Expected to promote the integration of wallet privacy features and DeFi privacy transformation, increasing on-chain Gas demand and network activity; analysts predict that under favorable macro conditions, ETH prices may rise by 15%-25% due to the upgrade in Q4 2025.
3. Accelerating Institutional Adoption: Compliance design reduces regulatory risks, and combined with the staking efficiency improvements brought by the previous Pectra upgrade, it is expected to attract more institutional capital, consolidating Ethereum's position as a tokenized asset settlement layer.
3. Current Challenges
• Technical Aspect: The ecological integration of the privacy system requires time, and complex encryption operations still need to be optimized to reduce the burden on clients.
• Regulatory Aspect: Some regions are cautious about privacy technology, and long-term promotion requires continuous adaptation to different global regulatory frameworks.
