StarkWare’s Starknet is expanding its privacy capabilities by integrating EY’s Nightfall protocol, enabling institutions to run private payments and DeFi activity on public Ethereum-aligned rails, with confidentiality preserved alongside auditability. In a Tuesday release, StarkWare positioned the move as a bridge for enterprises to use a shared, open layer-2 instead of siloed, bank-only networks, while partnering with a Big Four firm that already audits many prospective onboarding clients. Nightfall—EY’s open-source zero-knowledge privacy layer—lets transactions be verified without exposing underlying data, unlocking private B2B and cross-border payments, confidential treasury management, and on-chain transfers of tokenized assets around the clock. The rollout appears staged, focusing on privacy-forward onboarding with selective disclosure for regulators and auditors.
Key takeaways
- StarkWare is integrating EY Nightfall into Starknet to support private transactions on an Ethereum-compatible chain, enabling private payments and DeFi activity at scale.
- The plan emphasizes an open, layer-2 solution rather than siloed, bank-only networks, with a Big Four auditor involved in onboarding.
- Nightfall’s zero-knowledge privacy layer lets verifications occur without revealing private data, while still allowing selective disclosure for compliance and audits.
- The rollout will be staged, starting with compliant private payments and transfers and expanding to additional features as the system scales.
- Starknet has grown to be a major ZK rollup by TVL, but has faced outages in 2025 that prompted post-mortems and reliability enhancements ahead of broader institutional flows.
Market context: The initiative signals a growing emphasis on privacy-preserving rails and interoperable, on-chain workflows for institutions within the expanding Layer-2 ecosystem, as DeFi and cross-border token transfers push for compliance-ready, scalable solutions.
Why it matters
The blending of Nightfall with Starknet is more than a technical upgrade; it represents a strategic attempt to unlock institutional participation in public blockchains without forcing a trade-off between privacy and auditability. By anchoring the privacy layer to a public, open network, StarkWare aims to encourage banks and corporates to explore private payments, treasury management, and cross-border settlement on-chain, while maintaining visibility for regulatory and internal controls. The approach could lower the barriers for traditional financial players who have historically shied away from fully transparent on-chain activity, offering a path to leverage distributed ledger technology within established compliance frameworks.
Eli Ben-Sasson, StarkWare’s co-founder and CEO and a founding scientist of privacy-focused cryptocurrency Zcash (ZEC), described the Nightfall-on-Starknet initiative as paving the way for “the equivalent of a private superhighway for stablecoins and tokenized deposits.” The framing underscores a broader privacy push across Starknet, where institutions could gain confidential access to Ethereum DeFi activities—such as lending, swaps, and yield strategies—without sacrificing auditable records. Alex Gruell, StarkWare’s global head of business development, emphasized that Nightfall’s readiness for KYC-verified onboarding could be a critical differentiator for large organizations entering the blockchain space, aligning privacy with regulatory compliance at scale.[Zcash (CRYPTO: ZEC) is referenced here to reflect Ben-Sasson’s broader background and the privacy ethos behind the technology.]
Gruell also argued that Nightfall, when paired with Starknet, functions as an interoperability layer that could bridge otherwise siloed institutional environments. He contrasted this architecture with permissioned, stand-alone networks such as Canton Network, which he argued are not yet integrated with the Web3 ecosystem. The planned rollout remains permissionless and fully integrated into Starknet, with a staged deployment that starts with private payments and transfers guarded by compliance gates and secure sequencing. Verifier upgrades and expanded functionality will follow as the system scales, aiming to preserve privacy by default while enabling selective disclosure for audits and regulatory checks.
Starknet’s growth and teething trouble
Starknet has established itself as one of the larger ZK rollups by total value locked (TVL), with current estimates hovering around $280 million, driven largely by DeFi protocols and native ecosystem apps. This rapid ascent has not come without challenges. In 2025, Starknet experienced outages tied to sequencer and infrastructure weaknesses, prompting public post-mortems and commitments to harden reliability before courting broader institutional flow. The ongoing efforts to improve resilience are central to appealing to banks and corporates that require robust operational continuity alongside privacy guarantees.
As Starknet matures, proponents argue that a privacy-first path—especially when supported by a reputable auditor—could unlock new capital channels on public rails. The integration with Nightfall is positioned as a concrete step toward that vision, offering institutions a controlled yet verifiable on-chain environment. Yet observers will be watching how the privacy layer handles cross-border compliance challenges, including KYC/AML workflows and data-access requirements, as real-world usage scales beyond pilots and proof-of-concept tests.
What to watch next
- Timeline and milestones for the staged rollout, including the initial private-payments phase and planned expansions of on-chain features.
- Auditing milestones and regulatory reviews tied to the Nightfall integration, especially around KYC verification workflows.
- Verifier upgrades and any announced improvements to sequencing, privacy guarantees, and throughput as adoption grows.
- Real-world usage metrics from early institutional deployments and any interoperability benchmarks with other networks.
Sources & verification
- StarkWare’s announcement detailing the Nightfall integration with Starknet for private payments and DeFi on public rails.
- EY’s Nightfall privacy protocol, describing zero-knowledge privacy for on-chain transactions.
- Cointelegraph coverage of the Nightfall integration and related commentary from StarkWare and EY.
- DefiLlama data showing Starknet’s TVL around $280 million and its DeFi usage drivers.
- Starknet outage post-mortems and reliability commitments published in 2025.
What the story means for users and builders
The integration positions privacy-preserving on-chain activity as a standard feature for institutional users within public blockchain networks. For builders, it creates an opportunity to design DeFi products and treasury solutions that satisfy typical enterprise compliance requirements without sacrificing the openness and composability that characterize open ecosystems. For users and investors, the development signals ongoing maturation of Layer-2 privacy capabilities and a potential shift in how incumbent financial institutions interact with blockchain technologies—moving from isolated pilots to scalable, auditable, and privacy-respecting deployments on public rails.
Key figures and next steps
With Nightfall in tow, Starknet’s roadmap includes extended privacy controls, selective disclosure options for audits, and broader cross-border transaction support. The collaboration’s success will hinge on robust reliability improvements, effective onboarding workflows, and the ability to demonstrate real-world compliance without eroding the user experience. If these elements come together, institutions could begin treating public blockchains as viable platforms for confidential settlement and asset management, painting a more nuanced picture of privacy, scalability, and openness in decentralized finance.
Why it matters for the broader market
Privacy-preserving instrumentation on public blockchains aligns with a broader industry trend toward compliant, enterprise-grade blockchain ecosystems. As institutions weigh the benefits of public networks against privacy and regulatory requirements, solutions like Nightfall could help reconcile these tensions by offering auditable privacy with flexible disclosure. The broader market will be watching how this approach affects competition among Layer-2 providers, the pace of DeFi institutionalization, and the evolution of cross-chain interoperability as the ecosystem grows more interconnected.
