How does Dusk Network's selective disclosure mechanism work for RWAs
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Dusk Network implements selective disclosure for real-world assets by combining zero-knowledge proofs with asset-level compliance logic, so only the minimum necessary information is revealed and only to authorized parties. Here is how it works step by step. Dusk uses a privacy-by-default transaction model called Phoenix. RWA balances and transfers do not exist as public account balances. Instead, they are represented as encrypted notes that only the owner can read. The blockchain verifies correctness using zero-knowledge proofs rather than by inspecting raw data. When an RWA is issued, it is wrapped inside a Confidential Security Contract (XSC). An XSC embeds regulatory rules directly into the asset itself, such as who is allowed to hold it, which jurisdictions are permitted, whether KYC or accreditation is required, and what transfer conditions must be satisfied. These rules are enforced cryptographically, not socially or off-chain. During a transfer, the user generates a zero-knowledge proof that shows all rules were followed. For example, the proof can show that the sender owns the asset, the recipient is on the correct whitelist, the transfer respects jurisdictional limits, and AML conditions are met. Crucially, this proof does not reveal the transaction amount, wallet identities, the full ownership history, or unrelated user data. The network validates the proof and finalizes the transaction without ever seeing the sensitive details. Selective disclosure happens only when oversight is required. If an auditor, regulator, or issuer needs verification, the asset holder can provide either a viewing key, or a targeted zero-knowledge proof. This reveals only the specific fact being requested, such as this holder is EU-verified, this transfer complied with MiCA rules, this bond ownership exceeds a reporting threshold, or this transaction does not involve sanctioned entities. Nothing beyond that scope is exposed. The rest of the user’s activity remains encrypted. Importantly, disclosure is consent-based and scoped. The holder explicitly authorizes what is revealed and to whom. There is no global backdoor and no permanent public exposure. This aligns with data-minimization principles under GDPR and financial privacy laws. From an RWA lifecycle perspective, this allows private issuance, private transfers, private dividend distributions, and private redemptions, while still enabling audits, regulatory reporting, and legal enforcement when required. The result is a system where the public ledger only sees cryptographic commitments, authorized parties see verifiable facts on demand, and institutions can operate on-chain without leaking trade data or client information. In short, Dusk’s selective disclosure mechanism turns compliance from a visibility problem into a cryptographic proof problem, allowing RWAs to be private by default, auditable when necessary, and usable at institutional scale without compromising either side. $DUSK {spot}(DUSKUSDT) #Dusk @Dusk_Foundation