StarkWare, the developer behind the StarkNet layer-2 scaling solution, has announced a groundbreaking integration with EY’s Nightfall privacy protocol. This move is set to revolutionize how banks and corporations handle private transactions and decentralized finance (DeFi) activities on public Ethereum-aligned rails.
A New Era of Institutional Privacy on Ethereum
The integration of Nightfall, an open-source zero-knowledge (ZK) privacy layer developed by EY, marks a significant step forward in making public blockchains more accessible to institutional capital. This collaboration ensures that transactions can be verified without revealing sensitive data, enabling private B2B and cross-border payments, confidential treasury management, and 24/7 tokenized asset transfers on-chain.
Enhanced DeFi Access with Privacy
Institutions will now have access to Ethereum’s DeFi ecosystem, including activities such as lending, swaps, and yield strategies, with the added benefit of private transactions. This setup supports selective disclosure, auditability, and Know Your Customer (KYC) protocols, addressing the compliance and competitive risks that have historically deterred institutional participation.
StarkWare’s Vision for Institutional Adoption
Eli Ben-Sasson, co-founder and CEO of StarkWare, envisions this integration as a crucial step toward providing every institution with a private superhighway for stablecoins and tokenized deposits. Ben-Sasson emphasized the importance of maintaining the benefits of a shared, open layer-2 network while ensuring the necessary privacy and auditability for institutional use.
Institutional Credibility and Regulatory Fluency
Alex Gruell, StarkWare’s global head of business development, highlighted the complementary nature of the EY-built system, noting its addition of institutional credibility and regulatory fluency. This combination is crucial for onboarding enterprises that require ready-to-go KYC verification as part of their blockchain adoption process.
Interoperability and Beyond
Gruell also positioned StarkNet plus Nightfall as an interoperability layer between institutions, contrasting it with the siloed environments of rival networks. He stressed that Nightfall will remain permissionless and fully integrated into StarkNet, with a staged rollout focusing initially on private payments and transfers with compliance gating and secure sequencing in place.
StarkNet’s Growth and Challenges
StarkNet has emerged as one of the leading ZK rollups, currently holding a total value locked (TVL) of about $280 million. The network’s growth has been driven by DeFi protocols and native ecosystem applications. However, rapid scaling has also exposed reliability challenges, including major outages in 2025 due to sequencer and infrastructure issues. StarkWare has committed to hardening the network’s reliability to better support institutional flows.
Looking Forward
The integration of EY’s Nightfall with StarkNet represents a major milestone in the evolution of public blockchains. By addressing the privacy and compliance concerns of institutional investors, this collaboration could significantly accelerate the adoption of Ethereum and its DeFi ecosystem in the corporate and banking sectors. As the ecosystem continues to mature, the focus will remain on ensuring robust security, reliability, and regulatory compliance to foster long-term trust and growth.
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