Recently, a technical solution has sparked quite a bit of discussion in the EVM ecosystem—it's called Hedger, which will launch alongside the DuskEVM mainnet this year. To be honest, privacy has always been a pain point in blockchain, but this approach is indeed somewhat different.

First, let's talk about the dilemma of traditional privacy solutions: either sacrificing performance to protect privacy or anonymizing all transactions, which often results in regulatory warnings. Hedger attempts to break this binary choice.

What is its core? It leverages two cryptographic tools—zero-knowledge proofs and homomorphic encryption—to encrypt transaction data during execution. Ultimately, at L1 settlement, what you see is an encrypted form; others cannot discern the specific transaction details. But this isn't a complete black box—regulators can review logs with permission keys if auditing is needed.

This is what is called "auditable privacy," essentially protecting everyday users' privacy while still allowing compliance checks. What does this mean for institutions? It means you can confidently move sensitive financial contracts on-chain without worrying about competitors or malicious actors extracting your positions or trading volumes from block explorers.

Performance-wise, it's not as bad as one might imagine. Practical tests show that Hedger's additional overhead is minimal, with speeds approaching native EVM. Most importantly—developers don't need to modify their code. Your existing Solidity contracts just need a privacy layer, significantly lowering the barrier to entry.

In terms of real-world applications, the scenarios are quite diverse. Privacy lending platforms can hide loan amounts, preventing others from guessing your financial situation through on-chain data; tokenized securities trading can protect investors' holdings; inter-company settlements can prevent business secrets from being exposed to competitors. There is a platform called DuskTrade that will use this solution to handle over €300 million in asset circulation.

Ultimately, Hedger is not just a technical tool but a redefinition of the relationship between privacy and compliance. In the past, people saw these as opposites—you had to choose either privacy or compliance. Now, this solution proves that both can coexist. As more institutions recognize this, auditable privacy solutions are likely to become standard features in on-chain finance.

In recent years, Web3 has explored compliance extensively, but solutions like this that protect privacy while meeting regulatory requirements truly fill a missing piece in the EVM ecosystem.