Ethereum co-founder Vitalik Buterin on Wednesday outlined near-term steps the network is taking to bring privacy to the chain, a feature that institutions highlighted at the Hong Kong Consensus as necessary for widespread institutional adoption of blockchain technology.
Buterin’s X post was technically dense, but he pointed out a simple fact: the world’s largest smart contract blockchain is moving to make private transactions a feature of the network, not a workaround provided by third-party tools.
The post comes as the Ethereum Foundation, the nonprofit organization that supports the blockchain network and ecosystem, faces a wave of high-profile departures amid an internal transition linked to a new organizational mandate to redefine its role within Ethereum.
The three new near-term initiatives are: Account Abstraction (AA) and FOCIL, Keyed Nonces, and Access Layer work. Each of the three adds a different layer of privacy to Ethereum.
This is what each one actually does:
Private transactions without censorship
From now on, if a user sends a private transaction on Ethereum through crypto mixers like Tornado Cash, it first enters the public memory pool (mempool), a kind of waiting area visible to everyone on the network. Imagine leaving a letter at a post office where each worker can read the address before deciding which one to move for delivery.
Similarly, Ethereum entities that decide which transactions go into each block can see those transactions and exclude them, which is equivalent to censorship.
FOCIL, or Forced Fork Choice Inclusion Lists, makes censorship difficult by allowing a committee of validators to propose a list of transactions that block builders are expected to include. Ignoring these transactions can cause the block to be rejected by the network. This makes it difficult to censor transactions.
Meanwhile, account abstraction improves the functioning of Ethereum accounts. Today, most Ethereum users rely on externally owned accounts (EOAs) through apps like basic MetaMask, Trust Wallet, or Coinbase Wallet, each controlled by a single private key. If a user loses that key, they lose access to their funds.
Account abstraction allows all accounts to behave like programmable smart contracts, providing features such as multi-signature approvals and social recovery. It also allows apps or friends to pay a user’s transaction fees.
‘nonces’ with key
Each Ethereum account has a nonce, a number that is used once. It acts as a running count of all proposed transactions, incrementing by 1 with each new transaction submitted. This configuration helps prevent the same transaction from being repeated on the network.
It’s like receiving a sequentially numbered ticket at a lunch counter. But it comes with a problem. Even if an order is private, anyone watching can see that ticket #5 and ticket #6 came from the same person. In 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 solution for this is the nonces key. 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 activities. This makes it more difficult to trace transactions and correlate them on-chain.
“This replaces the single sender nonce with (nonce_key, nonce_seq), giving frame transactions independent playback domains,” said pseudonymous researcher soispoke.eth.
Access Layer Work: Private Reads and Kohaku
The third proposed measure addresses the issue that even if transactions are private, users’ online browsing behavior is not. Imagine making a private phone call. No one heard the conversation, but the telecommunications company knows who made the call and to whom.
Similarly, 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, exposing their IP address, physical location, and full wallet identity to corporate servers that log this data.
Central to this effort is Kohaku, an open source privacy toolset introduced in 2025. Rather than completely removing reliance on RPC node providers, Kohaku gives wallet developers tools to query blockchain data privately, using techniques such as private information retrieval, so that nodes can answer queries without knowing what specific data the user requested.
‘ETH Utility Value’
Ethereum has long had privacy as a goal, but it has not been a native feature. The new initiatives, if launched, could serve as a positive catalyst for ether (ETH), Ethereum’s native token.
The plan for new privacy initiatives is not just a narrative; the market is also validating it.
Valuations of established privacy-focused projects have increased, reflecting genuine demand. For example, Zcash (ZEC) is up more than 800% since the beginning of last year, raising its market capitalization to approximately $9.85 billion. Meanwhile, Monero (XMR), despite frequent criticism for its use by bad actors in darknet markets and terrorist financing, has also recovered more than 100% in the same period.
bitcoin the market leader, has declined more than 5% over the same period.
An
None of these changes are available yet, but Tuesday’s release is a significant sign about where things are headed next.
