How $DUSK balances privacy and regulatory auditability 🫂
@Dusk Network achieves privacy and regulatory auditability through a privacy-by-design architecture built on zero-knowledge proofs (ZKPs), selective disclosure, and programmable compliance. The result is confidential transactions for users while still enabling verifiable oversight for regulators.
Core mechanism: Zero-Knowledge Compliance
At the heart of Dusk is Zero-Knowledge Compliance (ZKC). Participants can prove they meet requirements such as AML/KYC or sanctions checks without revealing identities, balances, or transaction details. Transaction data is encrypted with user keys and selectively shared through auditor-specific viewing keys, allowing only authorized entities to verify compliance when required. Public ledgers see proofs, not sensitive data.
Practical implementation
Dusk’s Phoenix transaction model and confidential smart contracts embed compliance logic directly on-chain. Rules like transfer restrictions, eligibility checks, or reporting obligations are enforced at the protocol level. For example, a tokenized security trade can prove “the sender is KYC-verified and not sanctioned” without exposing who the sender is or how much was transferred. This reduces reliance on off-chain intermediaries and supports regulated assets such as RWAs.
Consensus and scalability
Through Braiding consensus and Proof of Blind Bid, Dusk anonymizes staking while still producing cryptographic proofs of honest participation. This prevents sybil attacks without full transparency and maintains high throughput, making the network suitable for private settlements and institutional use cases.
Regulatory alignment
Designed with European regulations in mind, Dusk supports requirements like MiCA record-keeping through auditable encryption while respecting data-minimization principles under GDPR. For institutions, privacy becomes a compliance feature rather than an obstacle. While ZK proofs add computational overhead, ongoing optimizations keep the system practical for regulated DeFi.
