Ethereum's Privacy Revolution: Developers Push for Encrypted Mempool and Default Privacy Features

Key Takeaways

• Ethereum developers are advocating for built-in privacy at the protocol level, eliminating the need for third-party privacy solutions like Tornado Cash
• The 2022 sanctions on Tornado Cash, recently lifted by President Trump in March 2025, reignited debates about censorship and privacy in blockchain
• Security researcher Pascal Caversaccio published a detailed privacy roadmap, followed by Ethereum co-founder Vitalik Buterin releasing his own privacy recommendations
• Proposed privacy solutions include encrypting Ethereum's mempool, implementing zero-knowledge cryptography, and changing transaction models
• These privacy discussions are happening ahead of Ethereum's upcoming Pectra upgrade and the subsequent Fusaka hard fork

Historical Context: The Tornado Cash Controversy

• The U.S. government sanctioned Ethereum-based crypto mixing service Tornado Cash in 2022, claiming it facilitated money laundering
• The sanctions caused Ethereum validators and block builders to avoid Tornado-linked transactions, making the service slower and costlier to use
• Privacy advocates argued that complying with these sanctions undermined fundamental cypherpunk principles of censorship resistance
• President Donald Trump lifted the sanctions on Tornado Cash in March 2025
• The controversy highlighted a fundamental flaw: users should not need to depend on third-party applications to achieve transaction privacy

The Case for Default Privacy on Ethereum

• Current Ethereum architecture makes transaction graphs publicly accessible, allowing anyone to trace fund flows between accounts
• Balances are visible to all network participants, significantly undermining financial privacy
• While Ethereum's transparency fosters trustlessness, it also creates vulnerability to surveillance, targeting, and exploitation
• Pascal Caversaccio argues: "Privacy must not be an optional feature that users must consciously enable—it must be the default state of the network"
• Current privacy solutions require users to take deliberate steps to conceal financial activities, often sacrificing usability, accessibility, and effectiveness

Pascal Caversaccio's Privacy Roadmap

• Published a comprehensive blog post on Wednesday outlining his vision for privacy-oriented Ethereum
• Proposed encrypting Ethereum's public mempool—where transactions wait before being permanently recorded
• Recommended making Ethereum transactions confidential through:
  • Zero-knowledge cryptography implementation
  • New transaction formats
  • Other privacy-preserving methods
• Emphasized that privacy-preserving technologies should be deeply integrated at the protocol level
• Advocated for inherently confidential transactions, smart contracts, and network interactions

Vitalik Buterin's Privacy Recommendations

• Responded to Caversaccio's post with his own shorter privacy-oriented Ethereum roadmap
• Identified four key privacy focus areas:
  • Privacy for on-chain payments
  • Anonymizing on-chain activity within applications
  • Making network communication anonymous
  • Privatizing on-chain reads
• Suggested integrating certain third-party privacy features into the core network
• Proposed moving toward a "one address per application" model—a significant departure from the current system
• Acknowledged this approach would require "significant convenience sacrifices" but argued it's necessary to "remove public links between all of your activity across different applications"
• Believes implementing all his suggestions would make private transactions the default on Ethereum

Upcoming Ethereum Network Upgrades

• The privacy discussion is occurring a few weeks before Ethereum's next major upgrade, Pectra
• Pectra does not have a major focus on privacy features
• Developers are also planning the subsequent Fusaka upgrade
• Changes for the Fusaka hard fork are not yet finalized
• These discussions could potentially influence the feature set of future Ethereum upgrades