| title |
Pattern: Private L2s |
| status |
draft |
| maturity |
PoC |
| works-best-when |
| Strong privacy is required beyond value-hiding |
identity unlinkability, programmable access. |
|
Institutions want to embed compliance hooks (view keys, audit proofs). |
|
| avoid-when |
You need conservative, battle-tested infra on Ethereum L1 today. |
Overhead is unjustified if only minimal value privacy is needed. |
|
| dependencies |
L1 bridge contracts |
Viewing key infra / off-chain attestations |
|
Use a privacy-native rollup (ZK or FHE-based) to execute financial logic with private state, enabling both confidential value and unlinkable identity flows.
- Standards: ERC-20/3643 (bridged); ERC-7573 optional for settlement
- Infra:
- ZK rollups: Aztec, Aleo, Lita, Miden
- FHE rollups: Zama/fhEVM, Inco
- Off-chain: Key management, regulator view proofs
- Private transactions: Transaction details (amounts, senders, receivers) are shielded within the L2.
- Private state: Balances and contract state are stored as encrypted commitments/notes.
- Interoperability with L1 state: Rollup state roots anchor on L1, enabling bridging and settlement with L1 assets.
- Maturity risks: Most private L2s are early-stage, limited production deployments.
- Migration/bridging required: Assets and apps must move from L1 or other L2s; adds friction.
- New attack surfaces: Viewing key compromise, bridge exploits.
- Regulatory auditability uncertain: While selective disclosure is possible, no standardized frameworks exist yet for regulator access or compliance proofs.
- Bond issuance + settlement on Aztec notes.
- FHE L2 running private credit risk models with encrypted inputs.