Second layer: the layer that makes instant crypto transactions possible

Today, anyone with an Internet connection can see which Ethereum address has sent exactly how much money to another address, and at what second it occurred. That total transparency, which in the early days of the ecosystem was sold as a great virtue, has become the biggest point of friction for bringing the network to everyday and real-world uses.

To address this challenge, the Ethereum Foundation has taken matters into its own hands with the formation of the Privacy Cluster: a specialized team of 47 professionals with a clear mandate. Its mission is to make privacy a natively integrated feature within the network itself, and not a patch or add-on that each user has to configure on their own.

What is visible today in an Ethereum transaction and what is not

On the Ethereum network, transparency is total by design. Every time you make a move, a public block explorer openly displays the essential data of the operation:

• Origin and destination address: The alphanumeric identities of the wallets involved.
• Amount: The precise quantity of ETH or tokens transferred.
• Date and time: The exact record of when the transaction was executed.
• Cryptographic signature: The mathematical proof that validates the move.

What is NOT shown: Your real name, your ID number, or your direct personal data.

However, this creates an illusion of anonymity. Although the blockchain only uses pseudonyms (the public addresses), the historical traceability of the data is indelible and remains within anyone’s reach. Over time and with pattern analysis, it becomes easy to associate that address with your real identity.

In fact, it is as if your bank published all your purchases and transfers on a bulletin board using a nickname. At first no one knows who you are, but if you use the same nickname to receive your paycheck, pay your rent, and order coffee every morning, they will soon connect the dots and know exactly who is behind that account.

The Privacy Cluster: what it is and who comprises it

With the current scenario clear, it is time to see how Ethereum plans to solve it from its own foundation. This is where the Privacy Cluster and the true integration of Zero-Knowledge (ZK) technology come into play.

Announced by the Ethereum Foundation in October 2025, the Privacy Cluster is a specialized working group designed to bring privacy directly to Layer 1 (L1) of the network.

• It is composed of 47 top-tier professionals, including researchers, engineers, and cryptographers.
• It is headed by Igor Barinov, renowned founder of the Blockscout block explorer.
• It works hand-in-hand with the Privacy and Scaling Explorations (PSE)initiative.
• Main objective: Develop the necessary technology so that transactions and queries on the network are private by default, without the need for third-party applications or patch solutions.

The ZK roadmap

ZK technology has been in the making on Ethereum for years to improve scalability and confidentiality. The advances have been significant, but with certain limits:

• Turning points: The arrival of EIP-4844 (proto-danksharding) drastically reduced rollup fees. At the same time, solutions like zkSync, Scroll, and Polygon zkEVM created vital bridges to the main chain.
• The current problem: ZK technology today works as an “add-on” rather than as the starting point. Each zk-rollup operates semi-independently, creating a fragmented infrastructure where privacy is still not native at the protocol level.

To turn theoretical ideas into practical tools, the Ethereum upgrade focuses on two fundamental technical transformations:

1. Execution layer optimization: The system is being prepared to support the mass generation of zk-proofs, starting with improvements such as EIP-2537 in the Pectra upgrade.
2. Stateless verification for validators: The logic of validators will change radically. Instead of processing and executing each transaction manually within a block, validators will simply verify a single lightweight ZK proof.

This approach provides concrete solutions both technically and functionally:

• It will enable private payments, confidential identity management, and integration with DAO governance, protecting individuals and companies against mass surveillance.
• Specialized virtual machines (zkVMs) will take on the heavy lifting of proof generation, drastically reducing the computational requirements for operating a validator node.

Zero knowledge proof: the mathematical piece on which everything rests

The central mechanism underpinning this entire plan is the Zero-Knowledge Proof (ZKP). It is a cryptographic method that allows one person to prove to another that a statement is 100% true, without revealing the private information that proves it.

Applied to Ethereum, this changes the rules of the game:

• You can prove that the transaction is valid.
• You prove that the wallet has sufficient funds and that you possess the correct signature.
• Without revealing who you are, how much money you have in your account, or which specific address you are sending the funds to.

Imagine you are about to enter an establishment that requires you to be of legal age. Instead of showing your ID —exposing your full name, photo, address, and exact date of birth— you use a tool that only issues a validated message saying: “This person is over 18 years old.” The manager confirms that the requirement is met with complete certainty, without having seen a single piece of your personal data.

That is exactly the role of a ZKP in the blockchain: to verify the mathematical validity of an operation without exposing your data to the rest of the world.

Three fronts on which work is already underway

To bring these abstract solutions into the operational realm, the development team is already working concretely on three key areas to address current privacy gaps.

What it means for privacy to be included rather than added on

The paradigm shift is clear: moving from optional privacy to native protection from the outset. Today, if an Ethereum user seeks privacy, they must resort to specific external tools, which are often complex to configure and, at times, entail regulatory or technical friction.

Making privacy an integrated part of the base protocol means that the average user does not have to do anything special: protection comes included by default with the network itself, without requiring additional applications or extra steps.

Achieving this level of protection opens up a key debate on how to reconcile individual privacy with the need to audit operations when necessary.

To resolve this balance, development is focused on selective disclosure tools and private proofs such as zkID. This approach allows a user or company to prove that they comply with a specific legal or financial requirement to the relevant party, without having to publicly expose their entire history or personal data to the rest of the network.

Background perspective

Ethereum was born with a radically transparent model, and that openness has sustained much of its technical credibility over the years. However, as the network evolves from an experiment to a global infrastructure used for finance, identity, and governance, the complete lack of privacy has become a practical limitation.

The creation of the Privacy Cluster poses this change in a structural way, with a dedicated team and a public roadmap. Although it is too early to know exactly which proposals will be activated on the mainnet, the direction is no longer up for debate: privacy becomes an incorporated right within the blockchain.

FAQ

• What data is public today in an Ethereum transaction? Origin, destination, amount, date/time, and cryptographic signature.
• Is using Ethereum currently anonymous? No. It uses pseudonyms, but the public history allows your address to be linked to your real identity.
• What is the Ethereum Foundation’s Privacy Cluster? A team of 47 specialists dedicated to integrating native privacy by default in Layer 1.
• What is a zero-knowledge proof (ZKP)? A cryptographic method that validates an operation or requirement without revealing the private data behind it.
• What change does EIP-8182 propose? It allows transferring ETH and ERC-20 tokens without exposing addresses or amounts.
• How is regulation complied with under native privacy? Through selective disclosure (such as zkID), demonstrating legal compliance only to the relevant party.