CoinDesk
A new Ethereum token standard called pERC-20 is reigniting the industry's long-dormant privacy debate. Unlike standard ERC-20 tokens — where balances, transaction amounts and counterparties are visible to anyone on-chain — pERC-20 would store tokens as encrypted cryptographic notes, keeping sensitive details private while still allowing the network to verify transaction integrity.
The proposal preserves token supply transparency and includes a compliance mechanism allowing issuers to freeze specific notes via a cryptographic blacklist, without exposing ordinary users' data. That dual design reflects a broader industry shift: rather than treating privacy and compliance as opposites, developers are increasingly trying to engineer both simultaneously.
Why it matters
Privacy tools spent years in regulatory purgatory after the OFAC sanctioning of Tornado Cash in 2022 chilled developer activity across the sector. The emergence of pERC-20 as a formal Ethereum Improvement Proposal — alongside Starknet's newly launched STRK20 framework — signals that privacy is migrating from niche coin territory into mainstream infrastructure and institutional use cases.
StarkWare co-founder Eli Ben-Sasson, whose team shipped STRK20 this week, argues the real bottleneck is not cryptography but user experience. "If the UX is bad, very few users are going to be using it," he told CoinDesk. "If very few users are going to be using it, and only for a very small number of things, they don't really get a lot of anonymity." STRK20 extends privacy beyond simple transfers into DeFi applications — lending, staking and swaps — under a unified privacy layer with post-quantum secure cryptography.
Frequently asked questions
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How does pERC-20 differ from the standard ERC-20 token format on Ethereum?
Standard ERC-20 tokens expose balances and transaction histories publicly on-chain. pERC-20 stores tokens as encrypted cryptographic notes, hiding amounts and counterparties while keeping total token supply visible and including a compliance blacklist for issuers.
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What does Starknet's STRK20 add that pERC-20 does not cover?
STRK20 extends privacy beyond simple token transfers into DeFi applications such as lending, staking and swaps, managing multiple assets under a unified privacy layer with post-quantum secure cryptography — a broader scope than pERC-20's payment-focused design.
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What is the biggest obstacle to widespread adoption of these privacy standards?
According to StarkWare co-founder Eli Ben-Sasson, the primary barrier is user experience rather than cryptography. Poor UX limits the user base, and small privacy networks are easier to de-anonymise, undermining the privacy guarantees the systems are designed to provide.
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