Inside the Plan to Build Privacy Into the Protocol

Changelly
Blockonomics


Key Insights:

  • The Ethereum privacy upgrade builds infrastructure for private apps, but it doesn’t make ETH transfers private by default.
  • Only 1 of 66 Hegotá proposals is confirmed, but the privacy trio (EIP-8141, 8250, 8272) is still under review.

Ethereum’s next major network upgrade, Hegotá, is still being reviewed. Of the 66 proposals, only 1 has been officially scheduled. The rest, including three proposals aimed at providing better support for privacy applications on Ethereum, are also being reviewed.

Source: Ethereum Roadmap
Source: Ethereum Roadmap

That matters a lot because, on Ethereum, wallet addresses and transaction details are visible on its public ledger. Anyone can check a wallet’s balance or track its transaction history. This can be a serious issue for a business or corporation managing payroll or treasury funds.

Until now, developers were building privacy tools on top of Ethereum to overcome these issues. The privacy proposals that are considered for Hegotá would bring some of these features directly into Ethereum’s base protocol.

Ethereum Privacy Upgrade: What’s Actually on the Table

Ethereum Foundation researcher Toni Wahrstätter partly proposed Frame Transactions (EIP-8141). That would allow accounts to set their own rules for approving, executing, and paying for transactions, rather than relying on Ethereum’s current approach. This could allow a third party to pay a wallet’s gas fees, combine several actions into one transaction, or change the key used to approve transactions without creating a new account.

Tokenmetrics

Two other proposals highlighted by Wahrstätter would further build out the native privacy system for Ethereum. Keyed Nonces (EIP-8250) would allow a single account to use multiple separate transaction counters instead of relying on a single shared queue. This means that a delayed private transaction would not block other transactions from the same address.

Recent Roots (EIP-8272) would allow transaction verification against a recent cryptographic snapshot. It won’t be necessary to verify transactions against data that could change while the transaction is still pending.

Ethereum Hegotá Upgrade Update | Source: X
Ethereum Hegotá Upgrade Update | Source: X

Wahrstätter explained the case for all three proposals in an Aug. 16 post on X, saying they could “unlock native privacy” by allowing privacy-focused applications to operate on the Ethereum chain without outside relayers. However, Frame Transactions and the other proposals are still listed as “considered” and have not yet been approved.

Why Only One of 66 Proposals Has Been Approved So Far?

Having only one of 66 proposals confirmed is normal for Ethereum upgrades. Since each upgrade cycle begins with a long list of Ethereum Improvement Proposals, core developers spend months reviewing them to decide which ones can realistically be built, tested, and delivered on time.

The deadline for submitting new Hegotá proposals passed on Aug. 6, leaving 66 proposals on the list. The next step for developers is to assess those proposals during upcoming core developer meetings and decide which one to move forward with.

FOCIL, short for fork-choice enforced inclusion lists, was approved because it addressed a more immediate issue. Block builders currently have significant control over which pending transactions are included, creating a potential risk of censorship.

FOCIL would allow a separate group of validators to require specific transactions to be included in a block, reducing the control of any single builder. It is a more focused change with a clear purpose, which may explain why it has moved ahead of the privacy proposals.

Privacy proposals are also more complex when compared to FOCIL. Due to the large scale of changes required for Privacy proposals, it may take some time to get them approved, despite getting support from Ethereum Foundation researchers.

What the Ethereum Privacy Upgrade Would and Wouldn’t Change?

It is important to have better clarity about these privacy proposals, since they won’t make regular ETH transfers private by default. Sending ETH between two standard addresses would remain just as visible as it is today.

Instead, the proposals would reduce dependence on custom privacy infrastructure while enabling developers to build and maintain applications on Ethereum. Frame Transactions, Keyed Nonces, and Recent Roots are protocol-level building blocks, not a built-in “private mode.”

The Hegotá list also includes proposals unrelated to privacy, such as one that could reduce ETH issuance to zero if the amount of staked ETH reaches $112 billion, as well as early development of quantum-resistant cryptography. This shows that developers are working on several long-term priorities at the same time, rather than making privacy the main focus of the upgrade.

Ethereum ETF Inflows | Source: SoSoValue
Ethereum ETF Inflows | Source: SoSoValue

On the market side, ETH has spent much of August trading below $1,900. SoSoVaue data showed that U.S. spot Ethereum ETFs recorded a fifth consecutive week of positive ETF flows.

However, Ethereum price movement is not directly linked to the Hegotá upgrades. Changes like Hegotá are more likely to affect Ethereum over the long term. For now, Ethereum’s privacy upgrade remains under discussion, and FOCIL is the only confirmed proposal of Hegotá. The other 65 proposals, including the privacy-focused ones, are still being reviewed.



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