By January 2026, after the full implementation of MiCA and the on-chain RWA asset scale surpassing one trillion dollars, the entire ecosystem faces an unavoidable reality: can privacy and compliance truly be satisfied at the same time?

The answer given over the past five years has almost been "no."

Let's look at the current situation. Public chains like Ethereum and Solana provide transparent ledgers, where every transaction and account balance is on the chain. When institutional funds see this fully open historical record, they tend to retreat. Conversely, Monero and Zcash achieve strong anonymity but cannot pass any regulatory audits, being regarded as "high-risk blacklists" by traditional finance. What about intermediate solutions? Aztec and Secret Network have tried adding privacy layers within EVM or Cosmos, but the results are either incompatible, underperforming, or lack audit interfaces, ultimately stuck in the "laboratory stage."

Dusk Network's Hedger is considered the first solution to bring "auditable privacy" into a production environment. This is not about stacking fancy algorithms in cryptography but a privacy engine genuinely refined based on regulatory needs.

The technical framework can be viewed in three layers.

The bottom layer uses homomorphic encryption—specifically an ElGamal variant based on ECC curves, supporting additive homomorphism. The key point is that smart contracts can perform addition, subtraction, and multiplication directly on ciphertexts. Account balances, transfer amounts, asset issuance, and position details all remain encrypted throughout. When the virtual machine executes calculations, the data remains invisible at all times.