TL;DR

• Ethereum's privacy ambition is undergoing a major shift. The Ethereum Foundation recently rebranded its "Privacy & Scaling Explorations" initiative as Privacy Stewards of Ethereum (PSE), outlining a roadmap around private writes, private reads and private proving.
• Despite the growing focus, Ethereum still lacks a fully-integrated, high-performance privacy layer that is ready for institutional, regulated or real-world use.
• COTI, a Layer-2 network compatible with Ethereum tooling, already offers a working privacy-infrastructure using garbled circuits-enabling confidential smart-contract logic, encrypted transactions and selective disclosure.
• For builders, institutions and privacy-sensitive applications, the key differentiator is not just anonymity-but a confidentiality framework that works at scale, respects compliance and integrates seamlessly.
• In short: Ethereum may get there eventually, but COTI is already there when privacy becomes non-optional.

In today's blockchain landscape, privacy is no longer a niche feature-it is rapidly becoming a foundational requirement. Individuals expect control over their data. Institutions demand confidentiality, auditability and compliance. Governments view privacy not just as a luxury but a legal and operational imperative.

Here lies the paradox: the largest smart-contract network, Ethereum, appears poised to support this demand, but still faces significant gaps in delivering a privacy layer that meets the expectations of enterprises, regulators and global users. Meanwhile, platforms like COTI have quietly built that layer already.

In this article, we'll examine what Ethereum is trying to accomplish, why it still has a major gap, how COTI has addressed the "one thing" Ethereum still can't do, and what this means for developers, institutions and the future of Web3.

What Ethereum Is Doing: Privacy Roadmap in Motion

The Ethereum Foundation recently unveiled its next-stage push into privacy. The rebranded PSE team emphasises three major pillars: private writes (confidential transfers, shielded conduits), private reads (RPC privacy, metadata protection) and private proving (making proofs cheap and accessible).

Under private writes, Ethereum aims to make shielded transactions and confidential transfers as common, cheap and seamless as public ones. Private reads target the problem of information leakage (for example through RPC calls or network metadata). Private proving covers the efficiency of proof generation, device compatibility and broad developer access.

Yet despite the ambition, these are largely research- and roadmap-stage efforts. Privacy at scale, integrated into live DeFi, institutional flows or regulated applications, remains a work in progress. For example, some protocols remain opt-in, and many tools are experimental.

The Big Gap: Real-World, Scalable Confidentiality

When we talk about “privacy in crypto,” most people still imagine wallet anonymity or hidden balances. But real-world confidentiality runs much deeper. It’s about keeping sensitive logic, business rules, and personal data protected ~ not just from the public, but sometimes even from the participants in a transaction, while still maintaining verifiability on-chain.

Ethereum, to its credit, has inspired an entire ecosystem of privacy research from zero-knowledge proofs to account abstraction. Yet, despite all the brilliant mathematics and proof systems, Ethereum still lacks one crucial quality: operational privacy that scales in the wild. The challenge isn’t theoretical. It’s architectural. Ethereum was never designed for encrypted execution. Its state machine was built for transparency by default - a feature that became a liability as blockchain use cases moved from public tokens to private contracts. Every contract call, every event log, every storage slot is visible to anyone running a node. Even “shielded” designs that sit on top of Ethereum often require separate circuits, trusted setups, or sidechains that fragment liquidity and developer experience.

The Performance Wall

Scaling privacy isn’t simply a matter of adding cryptography. Every layer of encryption introduces computational cost. Zero-knowledge systems like zkSNARKs and zkSTARKs have made incredible progress, but they’re still heavy to compute and expensive to verify on-chain. A single proof may require seconds or even minutes to generate - a lifetime in DeFi or real-time trading environments. This performance barrier has kept most privacy-preserving smart contracts confined to research environments or niche applications. When developers attempt to deploy them at scale, costs skyrocket, latency increases, and usability drops. Ethereum’s modular roadmap aims to mitigate this, but integration remains complex and fragmented.

The Compliance Paradox
Then there's the compliance paradox. True privacy is a double-edged sword. Regulators worry that fully shielded networks can be exploited for money laundering or tax evasion. Ethereum's transparent design helps with traceability but fails to offer controlled confidentiality - the middle ground where information is encrypted, yet still auditable when required. Real-world enterprises from fintechs to health-tech startups - need this balance. They can’t use privacy systems that hide everything, nor can they expose sensitive data to every node on the internet. 

What they need is privacy with policy, the ability to selectively disclose information under specific conditions, such as audits, disputes, or regulatory checks. Ethereum’s current model doesn’t provide that flexibility natively.

Integration and Ecosystem Maturity
Even as new research directions like “Private Writes” and “Private Reads” emerge, Ethereum's privacy roadmap is still fragmented across different experimental projects, each with their own SDKs, constraints, and assumptions. For most builders, privacy isn't a plug-and-play feature - it’s a maze of cryptographic decisions and performance trade-offs. That's the real gap: not just privacy itself, but usable privacy. A system where developers can integrate encrypted logic without breaking composability, where confidentiality doesn't compromise scalability, and where compliance isn’t an afterthought.

COTI identified this weakness early. By focusing on garbled circuits, a cryptographic approach that allows smart contracts to execute on encrypted data efficiently, it built privacy as a first-class computational primitive, not an optional add-on. Instead of fragmenting liquidity or introducing new trust assumptions, COTIs architecture makes confidentiality native, efficient, and developer-friendly.

Ethereum is evolving toward privacy; COTI was born for it. That’s the difference between a network preparing to support real-world confidentiality someday, and a network already capable of it today.

How COTI Solved It Already

Garbled Circuits & Confidential Computation
COTI's core innovation is the integration of garbled circuits, a cryptographic protocol originally devised for secure multi-party computation. In COTI's design, smart contracts execute over encrypted inputs, preserving confidentiality for both data and logic. In a benchmark study, COTI reported that its solution is able to process private operations thousands of times faster than competing approaches, with reduced storage overhead and better scalability. 

According to benchmarking: 

EVM-Compatibility & Layer-2 Infrastructure
Rather than a completely separate chain, COTI's privacy layer is EVM-compatible and built as a Layer-2 network. That means developers can write Solidity, use familiar tooling, and integrate encrypted logic without reinventing their stack.

Privacy + Compliance + Real-World Readiness
Unlike many privacy-coins whose anonymity design created regulatory hurdles, COTI's architecture supports selective disclosure-allowing users to decide what gets revealed and under what conditions. As COTI's CEO stated:

This positions COTI for real-world adoption by institutions, enterprises, banks and even governments.

Why This Matters: Implications for Builders & Institutions

For Developers
If you build dApps today and you plan for the next 5-10 years, the ability to include privacy by default matters. With COTI you get a privacy-foundation that is already deployable and compatible-meaning less rework, more flexibility and future-proof architecture.

For Institutions
Banks, payment providers and corporate users demand confidentiality, auditability and regulatory alignment. COTI meets those criteria. Ethereum may get there eventually, but COTI has the head-start.

For the Ecosystem
This dynamic suggests a broader shift in crypto: privacy is no longer just for fringe usage-it's for mainstream infrastructure. The projects that succeed will provide confidentiality, compliance and performance at scale. COTI has arguably crossed that threshold; Ethereum is currently building toward it.

Risks & Things to Watch

• Execution remains key. Architecture is promising, but real-world adoption, developer traction and ecosystem support will determine success.
• Competitive pressure is high. Other protocols and layers may emerge with comparable privacy tools.
• Regulatory clarity will continue changing. Even privacy-infrastructure must adapt to global frameworks.
• Developer adoption and usability matter. Encrypted smart contracts add complexity, so tooling, documentation and community support are crucial.

Final Thought

Ethereum's ambition to embed privacy at every layer is commendable and necessary-but it remains a future promise. Meanwhile, COTI has taken the risk-heavy step of building privacy infrastructure now. That doesn't mean Ethereum loses-it means choices matter. Builders, institutions and users who prioritise confidentiality, scalability and integration might find that the one thing Ethereum still can't do is already done by COTI.

The future of Web3 isn't just about decentralisation or token value-it's about giving private data the protections it deserves while enabling real-world applications. In that journey, COTI isn't a competitor-it might just be the missing piece.