Ethereum co-founder Vitalik Buterin on Wednesday outlined short-term steps the network is taking to bring privacy to the chain, a feature institutions highlighted at Consensus Hong Kong as necessary for widespread institutional adoption of blockchain technology.
Buterin’s X post was technically dense, but pointed to a simple fact: The world’s largest smart contract blockchain is moving to make private transactions a function of the network, not a solution from third-party tools.
The position comes as the Ethereum Foundation, the non-profit organization that supports blockchain’s network and ecosystem, faces a wave of high-profile departures amid an internal transition tied to a new organizational mandate to redefine its role within Ethereum.
The three new short-term initiatives are: Account Abstraction (AA) and FOCIL, Keyed nonces and access layer work. Each of the three adds another layer of privacy to Ethereum.
Here’s what each one actually does:
Uncensorable private transactions
From now on, if a user sends a private transaction on Ethereum via crypto mixers such as Tornado Cash, it first goes into the public memory pool (mempool), a kind of waiting area visible to everyone on the network. Imagine dropping a letter into a post office where all workers can read the address before deciding which one to move for delivery.
Similarly, Ethereum entities that decide which transactions enter each block can see those transactions and exclude them, which is equivalent to censorship.
FOCIL, or fork-choice enforced inclusion lists, makes censorship more difficult by allowing a selection of validators to propose a list of transactions that block builders are expected to include. Ignoring these transactions may lead to the block being rejected by the network. In this way, it becomes difficult to censor transactions.
Meanwhile, account abstraction upgrades how Ethereum accounts work. Today, most Ethereum users rely on Externally Owned Accounts (EOAs) via apps like a basic MetaMask, Trust Wallet, or Coinbase Wallet, each controlled by a single private key. If a user loses this key, they lose access to their money.
Account abstraction enables all accounts to behave as programmable smart contracts, providing features such as multi-signature approvals and social recovery. It also lets apps or friends pay a user’s transaction fees.
Keyed ‘nonces’
Every Ethereum account has a nonce, a number used once. It acts as a running record of all proposed transactions, incrementing by 1 for each new transaction sent. This setup helps prevent the same transaction from being repeated on the network.
It’s like getting a sequentially numbered ticket at a food counter. But it comes with a problem. Although an order is private, anyone watching can see that ticket #5 and ticket #6 came from the same person. On Ethereum, this sequential nonce allows observers to link transactions to the same account, even if the transactions are private and their content is hidden.
The fix for that is typed nonces. This replaces the single counter with a structure comprising a nonce key and a nonce sequence, giving each account multiple separate ticket counters for different types of activity. This makes it more difficult to trace the transaction trail and correlate them on the chain.
“This replaces the single sender nonce with (nonce_key, nonce_seq), giving frame transactions independent replay domains,” said pseudonymous researcher soispoke.eth.
Access layer work: private readings and Kohaku
The third proposed measure addresses the problem that while transactions are private, users’ browsing behavior on the network is not. Imagine making a private phone call. No one heard the conversation, but the telephone company knows who called and to whom.
Likewise, every time a user queries the blockchain to check a balance or read a smart contract, their wallet relies on third-party RPC node providers, which expose their IP address, physical location, and complete wallet identity to the company’s servers that log that data.
Central to this effort is Kohaku, an open source privacy toolkit introduced in 2025. Instead of completely eliminating reliance on RPC node providers, Kohaku gives wallet developers tools to query blockchain data privately using techniques such as private information retrieval, allowing nodes to answer queries without learning what specific data the user requested.
‘Utility of ETH’
Ethereum has long had privacy as a goal, but it has not been a built-in feature. The new initiatives, if they go live, could serve as a positive catalyst for ether (ETH), the native token of Ethereum.
The plan for the new privacy initiatives is not just a story; the market also validates it.
Valuations of established privacy-focused projects have risen sharply, reflecting genuine demand. For example, Zcash (ZEC) has risen more than 800% since the beginning of last year, pushing its market cap to around $9.85 billion. Meanwhile, despite frequent criticism for its use by bad actors in darknet markets and for terrorist financing, Monero (XMR) is also up more than 100% in the same time frame.
Bitcoin the market leader, has fallen by more than 5% in the same period.
An X user explained Ethereum’s need for privacy best: “Ethereum’s missing component at this point is some form of built-in privacy. ETH’s utility value would literally jump overnight. Privacy is the type of feature that can give an asset true vault qualities. L1 privacy could also lead to an increase in mainnet fees.”
None of these changes are live yet, but Tuesday’s post is a meaningful signal of where things are headed.
