There is a longstanding problem in the financial industry: trading institutions want to hide transaction details to protect trade secrets, while regulators need to monitor the flow of funds throughout the process to prevent illegal activities. Traditional finance can keep things under wraps within their own systems, but blockchain changes the game—every transaction is open and transparent, like live streaming on the NASDAQ big screen, and no financial institution is willing to play that way.

The core innovation of the Dusk project lies in solving this contradiction. It has designed a set of "privacy protection mechanisms" for blockchain transactions—it's not completely anonymous, more like the VIP rooms of traditional banks. Internal transaction details are kept confidential, but all regulatory rules must be fully adhered to.

Its key technology is called "Confidential Smart Contracts." Users can conduct tokenized trading of stocks, bonds, and other assets on-chain, with counterparties and observers unable to see sensitive information such as trader identities, transaction volumes, or prices. However, when regulators perform audits, the system can instantly generate mathematical proofs: confirming the legitimacy of identities, the cleanliness of fund sources, and that transactions fully comply with regulations.

What’s interesting is that Dusk does not treat regulation as an adversary. On the contrary, it reserves a transparent channel for regulators during system design—this is not a backdoor vulnerability, but a legitimate auditing entry point. This "selective transparency" approach, to some extent, transplant the existing information management experience of the banking industry into a decentralized ecosystem.