Ethereum founder Vitalik Buterin: Deutsche Bank adopts zero-knowledge revolution, institutions rush into Decentralized Finance and privacy assets.

Vitalik Buterin's advocacy for zero-knowledge proofs (ZK) is reshaping the blockchain infrastructure for decentralized finance (DeFi) and privacy-centric assets. He emphasized the critical role of privacy in blockchain innovation, and the groundbreaking advancements of the GKR protocol have achieved transaction speeds of 43,000 TPS. He noted that Deutsche Bank and Sony have adopted a ZK-based hybrid compliance model.

GKR protocol achieves 43,000 TPS technical breakthrough

(Source: X)

Vitalik Buterin's improvements in the GKR protocol greatly enhance the effectiveness of zk-SNARKs, reducing computational costs by up to 15 times, and in practical scenarios, even up to 10 times. This leap has given rise to the Ethereum platform ZKsync, which can process up to 43,000 transactions per second (TPS) with extremely low Gas fees, addressing Ethereum's ongoing scalability issues.

The significance of this technological breakthrough far exceeds surface numbers. The current processing capacity of the Ethereum mainnet is about 15 to 30 transactions per second, and this limitation has been a major bottleneck for its large-scale applications. A processing capacity of 43,000 TPS means that ZK layer two solutions perform thousands of times better than the mainnet, allowing Ethereum to support applications that require high throughput, such as high-frequency trading, large-scale payment systems, and real-time games.

The reduction in gas fees is equally crucial. According to market research, gas fees on ZK platforms have decreased by 70% compared to 2023, making it a practical choice for large investors. When transaction costs drop from several dollars to less than a cent, many application scenarios that were previously infeasible due to cost considerations become viable. For example, micro payments, high-frequency arbitrage trading, and cross-border remittances can all benefit from low transaction fees.

In addition to transaction speed, Vitalik Buterin also envisions that zk-SNARKs will be combined with Multi-Party Computation (MPC), Fully Homomorphic Encryption (FHE), and Trusted Execution Environments (TEE) to establish “compliance privacy” for application scenarios such as secure voting and confidential finance. This combination of technologies provides multi-layered security and privacy protection, enabling blockchain applications to meet regulatory requirements while protecting user privacy.

Core Advantages of the GKR Protocol

Cost reduction: Up to 15 times lower, in real scenarios up to 10 times.

Processing Power Improvement: ZKsync achieves 43,000 TPS, thousands of times that of the mainnet.

Significant reduction in costs: Gas fees have decreased by 70% compared to 2023.

Quantum Resistance: Paving the way for future-oriented Blockchain design

The efficiency of the GKR protocol also paves the way for blockchain designs that are resistant to quantum attacks, which is a robust and future-oriented security emphasized by global regulatory bodies and financial institutions. For example, Ethereum's “EIP-1559” update eliminated the modexp precompilation and implemented GKR, which has drawn attention for its increased transaction capacity at the cost of temporarily higher gas fees — a trade-off that is reasonable given the stronger quantum protection.

Deutsche Bank and Sony adopt ZK hybrid compliance model

Under the challenge of balancing privacy and regulatory requirements, the application of zero-knowledge (ZK) technology by institutions is accelerating. The collaboration between Deutsche Bank and ZKsync is a typical example. The bank has launched a second-layer blockchain technology based on ZKsync as part of its Dama 2 project, which integrates public transparency and controlled access. This dual approach enables regulators to monitor the flow of funds through “super administrator privileges” while protecting sensitive information from being disclosed.

The ZK Stack of ZKsync also enables Deutsche Bank to process transactions at a speed of 10,000 transactions per second, with transaction fees as low as $0.001, making it a strong competitor to traditional settlement networks. This performance and cost advantage is highly attractive to financial institutions that handle a large volume of transactions. The traditional SWIFT cross-border payment system is not only slow (usually taking several days), but also has high fees (typically between $25 and $50). ZK solutions provide a faster and cheaper alternative.

Similarly, Sony and Citibank have also adopted ZK-driven platforms for private settlements and digital rights management, using zk-SNARKs to ensure compliance while avoiding the leakage of sensitive business data. Sony's application scenario is particularly interesting, as the company uses ZK technology to protect the copyrights of its digital content while allowing users to verify the authenticity of the content. This application demonstrates that ZK technology is not limited to the financial sector but can also extend to various fields such as the content industry, supply chain management, and identity verification.

The architecture of the ZKsync network is a “cross-chain network” that allows institutions to operate in a secure, permissioned environment while sharing settlement infrastructure, thereby reducing costs and improving interoperability. This design enables different financial institutions to run their own private chains on the same underlying infrastructure while still being able to settle and interact with each other.

Shielded CSV protocol for regulatory compliance

A noteworthy application is the “Shielded CSV” protocol, which utilizes zk-SNARKs. Shielded CSV leverages Merkle trees and decentralized identifiers (DIDs) to provide privacy-compliant DeFi solutions. By utilizing an invalidation commitment mechanism, Shielded CSV can prevent double spending, comply with the U.S. Bank Secrecy Act, and meet EU GDPR standards.

This method aims to address the growing concerns of regulators following the “Tornado Cash case,” requiring protocols to integrate Compliance features to mitigate legal and reputational risks. Tornado Cash was sanctioned by the U.S. Treasury for being used in money laundering, and this case has sounded the alarm for the entire privacy coin and privacy protocol industry. Pure privacy without consideration for Compliance may lead to protocols being sanctioned or even developers being prosecuted.

The innovation of Shielded CSV lies in its implementation of “optional transparency.” User transactions are private by default, but necessary information can be disclosed to specific entities through ZK proofs when requested by regulatory authorities, without exposing all transaction details to the public. This “compliance privacy” model is the direction that Vitalik Buterin has always advocated, balancing user privacy rights with the legitimate needs of regulatory agencies.

The Ethereum Foundation demonstrated the Kohaku wallet during the conference, which integrates privacy features such as privacy pools, with 47 developers dedicated to building such infrastructure. This shows that the Ethereum ecosystem is actively responding to Vitalik Buterin's vision of bringing privacy features from edge experiments to mainstream applications.

2025 Regulatory Policy and Institutional Adoption Outlook

The changes in regulatory policies have played an important role in the popularization of zero-knowledge (ZK) technology. The U.S. government's shift in policy regarding privacy technologies—such as lifting sanctions on Tornado Cash—has made the environment for zero-knowledge (ZK) based innovations more favorable. However, organizations still have to deal with ongoing regulations from agencies like the Financial Crimes Enforcement Network (FinCEN) and the U.S. Securities and Exchange Commission (SEC), which requires the design of compliance systems. Solutions like Shielded CSV and ZKsync are actively responding by embedding anti-money laundering mechanisms and Know Your Customer (KYC) protocols.

The U.S. “GENIUS Act” and “CLARITY Act” are set to pass in 2025, which will further enhance institutional trust in cryptocurrencies. With zk-SNARKs networks being cost-effective and compliant, cryptocurrency investments are expected to grow. These two acts provide a clearer legal framework for cryptocurrencies, reducing regulatory uncertainty and allowing institutional investors to enter the market with greater confidence.

The long-term impact of Zero-Knowledge (ZK) integrations is significant. By 2025, the processing capabilities of ZK Layer 2 solutions such as Lighter and ZKsync are expected to reach 24,192 TPS and 15,000 TPS respectively, by which time ZK rollups will manage 83% of enterprise smart contracts. This transformation is not limited to DeFi; pilot projects for cross-border payments conducted with platforms supporting Zero-Knowledge Proofs (ZK) like Mastercard also show the growing influence of this technology.

For investors, projects based on zero-knowledge proof (ZK) technology are expected to lead the next wave of blockchain development. Protocols like Shielded CSV and ZKsync, which combine technical strength with governance models that reduce risk, are likely to continue attracting institutional investment. Meanwhile, with the establishment of international standards, privacy-oriented assets that achieve transparent compliance using ZK proofs (such as tokenized securities) are expected to gain broader recognition.

Vitalik Buterin's strong support for zero-knowledge proof (ZK) technology has ushered in a new era of blockchain appeal for institutional investors. ZK proofs simultaneously address issues of scalability, privacy, and regulatory compliance, and are gradually becoming the cornerstone of the future financial system. As industry giants like Deutsche Bank and Sony adopt these innovative technologies, ZK-based Decentralized Finance (DeFi) and privacy-first assets are bound to reshape the cryptocurrency landscape. For investors, the implications are clear: ZK technology has moved from the realm of speculation to the strategic level.