DeFi has reached today, still facing a fundamental paradox. Over the years, liquidity has been abundant, but stability is extremely poor—when policies change, big players turn around and leave. The root cause is not complicated: legitimate large-scale capital simply dares not enter the market.

Imagine a bank managing hundreds of billions in assets, considering investing client funds into a completely anonymous liquidity pool with an unknown counterparty. How would the risk control department think? This is not a technical issue, but a compliance issue. Therefore, DeFi has been kept outside traditional finance not because of insufficient performance, but because the trust foundation is absent.

Blockchain privacy has long been regarded as the opposite of regulation. After the Tornado Cash incident, people became even more wary of "privacy," as if privacy equals money laundering. But recently, I saw a project idea that is completely different—it's called Dusk.

**From Opposition to Balance**

Dusk does not follow the old path of "absolute invisibility," but instead designs a mechanism of "controllable transparency." The logic is quite clever:

For users, transaction data is encrypted and stored, so your holdings and transaction history won't be visible on the entire chain. For regulators, they have special permissions that allow them to verify the legality of transactions on demand—whether there is money laundering, whether investor identities are compliant—but they cannot see business details.

This move completely reverses the nature of privacy. Originally seen as a "tool to evade scrutiny," it now becomes a "bridge to meet regulatory requirements." Large financial institutions never wanted complete invisibility; they want to be able to prove their innocence to superiors while protecting their business strategies from being exposed to competitors.

**Why is this so important**

If this design can truly be implemented, it means DeFi has the chance to break through that glass door. Compliance is no longer the enemy of DeFi but a prerequisite for entry. Institutions managing large funds finally have a reason to enter. Liquidity issues might really be solved—not because retail investors suddenly increase, but because institutional-level capital is willing to stay long-term.

This is not a revolution, but an evolution. Moving from outright confrontation to finding a space for coexistence.