Decentralization and privacy protection are core demands of Web3. Why do they always clash with regulation and compliance? Many believe these two are fundamentally incompatible, but Dusk Network offers a different answer——it doesn't fall into the dilemma of either/or. Instead, it paves a more challenging but long-term vision: using cryptographic technology to build a "secret yet transparent" channel between traditional finance and the decentralized world.

**Where is the core issue?**

Traditional public blockchains with fully transparent mechanisms are like glass vaults for enterprises and institutions—business secrets and customer privacy are exposed to the sunlight, which deters many traditional financial institutions from going on-chain. On the other hand, privacy chains take an extreme approach, almost instinctively rejecting regulation, which makes it difficult to support large-scale compliant assets.

**Dusk's solution**

The key lies in its "selective disclosure" technical approach. By leveraging cryptographic tools such as zero-knowledge proofs (ZK-SNARKs) and homomorphic encryption, users can prove that a transaction is legitimate and compliant without revealing transaction details (amounts, counterparties). It’s not all public or all hidden, but precisely controlling who can see what information.

**How are these technical tools used?**

· **Privacy transaction layer**: Mixing protocols and other methods anonymize transaction information, making it impossible for others to trace your transaction links.

· **Compliance pass**: The Citadel protocol allows users to complete compliance identity verification once, so they can perform privacy transactions within the ecosystem without repeated KYC.

· **Auditable privacy**: The Hedger module ensures sensitive data is hidden from ordinary users, but authorized parties (tax authorities, regulators, etc.) can access the information they need.

The brilliance of this combination is that—privacy and compliance are no longer conflicting but can be finely managed as two dimensions.