With on-chain physical assets becoming a new trend in the crypto space, a seemingly simple demand hides an almost unsolvable contradiction—transactions need to be confidential, but regulation also requires auditing. Most projects either give up privacy to comply or choose privacy and face regulatory rejection, caught in a difficult position.

Since 2018, the Dusk project has been focusing on this pain point, constantly exploring how to enable privacy and compliance to coexist on the blockchain. Their approach is to use zero-knowledge proofs, a set of mathematical tools, to break the deadlock. In simple terms, it can prove that a transaction is legitimate without revealing specific details—this sounds magical, but technically it has already been achievable for a while.

How is this implemented? At the core, they combine zero-knowledge proofs with Stealth addresses and RingCT signature schemes to hide transaction addresses and amounts, fundamentally preventing information leakage or tracking. There’s also a quick advantage—they developed confidential smart contracts that support selective disclosure. What does this mean? It allows you to provide key information required by regulators without exposing the full transaction data. Privacy transactions remain private, while compliance audits are handled separately—two lines that do not interfere with each other.

This solution is truly needed for the RWA ecosystem. Real estate tokenization, on-chain intellectual property, private settlements between institutions—all these scenarios require preventing information leaks while meeting regulatory requirements. Dusk’s technical architecture is modular and flexible to use. No wonder the $DUSK token’s ecosystem value has been steadily rising, with more institutional investors viewing this project as a benchmark.