Privacy track competition has never been simple. At first glance, privacy solutions are everywhere, but truly effective ones are few and far between — most projects stick to zero-knowledge proofs, resulting in either highly private systems that are difficult to regulate or leaving audit loopholes that render privacy meaningless.

Dusk's Hedger takes an interesting approach. It combines homomorphic encryption with zero-knowledge proofs, excelling at both. In simple terms: it allows you to perform calculations directly on encrypted data using homomorphic encryption, just like knowing the amount inside an envelope without opening it; then, it uses zero-knowledge proofs to ensure these computations are honest.

What’s the brilliance of this combination? Regulatory compliance and auditing. After obtaining authorization, regulators can inspect transaction details, but everyday user assets and transfers remain in a black box. The balance between privacy and regulation is finally achieved. For assets like RWA that truly go on-chain, this solves a major problem — without the regulatory hurdle, the potential for large-scale application can truly be unlocked.