Ethereum’s pERC-20 proposal revives privacy debate as Starknet ships STRK20
PERC-20 targets private balances and transfers with public supply checks, while STRK20 pushes confidentiality into DeFi workflows.
Ethereum developers are debating a proposed privacy-oriented token standard, pERC-20, that would hide balances, transfer amounts, and counterparties while keeping total supply publicly verifiable. In parallel, Starknet has put STRK20 live as a DeFi-first privacy framework, sharpening the split between “private payments” and “private everything” design goals.
Key Takeaways
- A proposed Ethereum token standard, pERC-20, is designed to keep balances, transfer amounts, and counterparties confidential while still enabling token transfers.
- pERC-20 represents tokens as encrypted cryptographic “notes,” but keeps total token supply publicly visible to prevent hidden inflation.
- The design includes an issuer-controlled compliance lever that can freeze specific notes via a cryptographic blacklist without revealing typical users’ histories.
- Starknet’s newly-live STRK20 positions privacy as a layer for DeFi actions like swaps, borrowing, and staking, with StarkWare’s Eli Ben-Sasson arguing usability is the main adoption bottleneck.
Privacy Primitives Re-Enter the Ethereum Conversation
Privacy is back in the Ethereum discourse after years where scaling roadmaps dominated mindshare and regulators intensified scrutiny of privacy tooling, including Tornado Cash. The immediate catalyst is a new proposal for pERC-20, framed as a response to the default ERC-20 model where balances and transaction histories are visible on-chain.
For traders, the significance is less about a near-term standard flip and more about market structure. If privacy primitives move from niche tools into token standards, they start to touch everything downstream: on-chain transparency, counterparty discovery, and how liquidity providers and MEV actors infer flow.
Inside pERC-20: Encrypted Notes, Public Supply, and a Freeze Lever
pERC-20 is described as a proposed Ethereum token standard that would let users hold and transfer tokens without publicly revealing balances, transaction amounts, or counterparties. Instead of account-style balances, tokens would exist as encrypted cryptographic “notes,” closer to a digital-cash representation than a public ledger entry.
The design is explicitly trying to thread the needle between confidentiality and auditability. Transactions remain private, while the network can still verify that no changes to the transactions occurred. Crucially, pERC-20 does not attempt to hide everything. Total token supply would remain publicly visible, allowing observers to verify that new tokens are not being secretly created.
The other tell is compliance. pERC-20 includes a mechanism allowing issuers to freeze specific notes through a cryptographic blacklist without exposing ordinary users’ balances or transaction histories. That feature reads like an attempt to make privacy palatable to issuers operating under constraints, not just a cypherpunk exercise. It also creates a clear segmentation risk: “private” tokens may not be fungible in practice if some notes can be selectively immobilized.
STRK20 Goes Live on Starknet With a DeFi-First Privacy Pitch
Earlier in the week, Starknet went live with STRK20, positioned as a privacy-focused token framework designed to extend confidentiality beyond transfers into DeFi applications such as lending, staking, and token swaps. The product scope is the point. Where pERC-20 is framed around private transfers with selective public verifiability, STRK20 is pitched as privacy that survives contact with DeFi workflows.
StarkWare co-founder Eli Ben-Sasson put the adoption constraint bluntly: “The big problem of dealing with privacy is UX,” and warned that low participation undermines anonymity. “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.” He also argued capability has expanded, saying, “Today we can do more,” in reference to privacy-preserving DeFi.
STRK20 also uses post-quantum secure cryptography, which Ben-Sasson argued will matter as developers prepare for future advances in quantum computing.
Signals Traders Should Track as Privacy Moves From Niche Tools to Token Standards
The first gating item is process. Whether pERC-20 advances into the formal Ethereum Improvement Proposal pipeline will determine if this stays a discussion artifact or becomes a credible standardization track. Until that happens, market impact is timeline-dependent by definition.
On Starknet, the early signal is usage composition, not headlines. Growth in privacy-enabled DeFi interactions like swaps, borrowing, and staking would validate STRK20’s “full-stack” pitch. If activity remains mostly transfer-like, the framework risks recreating the same narrow privacy island problem Ben-Sasson described.
For pERC-20, developer and issuer reactions to the cryptographic blacklist matter. Public endorsements or pilots from compliance-oriented issuers would indicate the freeze lever is doing its intended job of widening the tent.
Finally, watch UX shipping velocity. Wallet and app integrations that reduce friction are the difference between privacy as a feature and privacy as a liquid market, and Ben-Sasson’s argument implies anonymity only scales with participation.
Privacy’s Next Battle Is Product-Market Fit, Not Math
I see pERC-20 as an attempt to make privacy legible to Ethereum’s existing token economy by keeping the one metric markets care about verifiable: supply. The threshold that matters is whether that “private-by-default, auditable-in-aggregate” model can survive the politics of standardization and the realities of issuer control via freezes.
STRK20’s DeFi-first framing is the more aggressive bet. The real test is whether private swaps, borrowing, and staking can reach enough usage to create meaningful anonymity sets. If UX improvements land and activity broadens beyond transfers, the setup starts to look structural rather than narrative-driven, because it changes what on-chain data can and cannot reliably signal to liquidity and MEV players.
