Ethereum, home to the largest decentralized finance (DeFi) ecosystem in terms of total value locked (TVL), is experiencing a new change that will reshape privacy in the smart contracts space. Ethereum co-founder Vitalik Buterin has introduced a new privacy toolkit to enhance wallet privacy for Ethereum users and developers.
Ethereum’s Kohaku framework is a strategic initiative
Kohaku framework is not a change to the core consensus mechanism or protocol; instead, it is a privacy-focused ecosystem for Ethereum wallets and clients. The new modular framework shows how privacy balances with compliance.
The architecture of Kohaku is built on privacy protocols like Railgun and Privacy Pools that allow users to hide transaction metadata, and at the same time, it proves that users are not doing any illegal activities. These tools allow developers to create privacy-first wallets, which are auditable when required. This enhances privacy with regulatory transparency.
Imagine person A has a normal Ethereum wallet and also a special stealth key linked to the main wallet. This stealth key is used to conduct private transactions. Person B can use that stealth key, generate a one-time address, and send money to person A. Here, no outsiders can see that the money was sent to A. In this way, Kohaku helps to boost privacy over transactions, but can reveal the address for audits.
What’s the importance of the Kohaku framework?
As mentioned, the core motivation behind launching Kohaku is to enhance privacy. Traditional wallets and decentralized applications (dApps) typically depend on centralized infrastructure that can reveal user behavior, addresses, and transaction links. With the new framework, Ethereum aims to reduce this exposure and boost privacy.
Moreover, Kohaku gives users more control over their transaction addresses, improves self-custody security, makes wallets into secure identities, and standardizes privacy practices across wallets.
Is Kohaku a threat to blockchain’s transparency feature?
Kohaku focuses on wallet-level privacy rather than the Ethereum blockchain network. Most blockchain wallets are typically transparent, including those for Ethereum, since transparency is a core feature of blockchain technology. Kohaku offers more privacy for transactions; therefore, its arrival can not be seen as a framework that is against ‘transparency’, one of the core blockchain features.
As crypto enthusiasts claim, privacy is something that needs to be executed for crypto wallets, and Ethereum has made this significant move through Kohaku.
With Kohaku, wallets on Ethereum can reduce potential data leakages, including IP address, device data, and behavioral patterns, by giving more privacy to wallets, keeping the blockchain transparent as usual.
