When it comes to the contradiction between privacy protection and regulatory compliance, this has been a longstanding challenge in the blockchain space—many projects either pursue privacy excessively, risking regulatory issues; or prioritize transparency, leaving user privacy unaddressed. However, a Layer 1 project that has been exploring this problem since 2018 is Dusk, and today I want to share its approach with you.

Dusk's core logic is quite straightforward: why must privacy and compliance be at odds? They can coexist perfectly. The project employs a modular architecture design that directly incorporates privacy protection and auditability into the protocol. What does this mean? Transaction data is kept confidential for ordinary users, business information is protected, but regulatory agencies can access transparent data when needed to meet KYC, anti-money laundering, and other legal requirements. It may sound like an impossible feat, but technically, it is indeed achievable.

An interesting application is its use in real-world asset tokenization (RWA). Traditional financial assets like stocks, bonds, and funds can be securely moved onto the blockchain, enabling faster issuance and trading. Moreover, because of its built-in compliance features, these assets, once on-chain, won't cause trouble due to privacy concerns nor be questioned because of transparency issues. For institutional-level financial applications, this is a pretty good solution.

In essence, Dusk is building a bridge connecting traditional finance and the digital economy. Under its technical framework, asset digitization becomes both efficient and compliant with existing regulatory frameworks—this is likely a significant advantage for organizations aiming to operate within legal boundaries.