EY's Nightfall Protocol Integrated into Starknet for Confidential Ethereum Transactions
The integration of EY's Nightfall privacy solution into Starknet by StarkWare enables financial institutions to conduct confidential payments and participate in DeFi on Ethereum-compatible infrastructure while maintaining audit capabilities.
StarkWare, the development team behind Starknet, has incorporated EY's Nightfall privacy protocol to enable financial institutions to conduct confidential payments and engage in decentralized finance (DeFi) operations on Ethereum-compatible public infrastructure, specifically addressing the needs of banks and corporations requiring confidentiality while maintaining the ability to conduct audits.
According to a Tuesday announcement provided to Cointelegraph, StarkWare characterized this integration as an opportunity for enterprise users to utilize an open, shared layer-2 solution instead of exclusive, bank-specific networks, all while partnering with a Big Four accounting firm that currently audits numerous organizations they aim to attract.
Through this integration, Nightfall—an open-source zero-knowledge (ZK) privacy layer developed by EY that enables transaction verification without exposing the underlying information—is brought to Starknet, facilitating confidential B2B and cross-border payment processing, private treasury management operations, and round-the-clock tokenized asset movement on the blockchain.
According to StarkWare, financial institutions will gain the ability to participate in Ethereum DeFi for various activities including lending, swaps and yield strategies, with all transactions maintaining privacy by default while still supporting selective disclosure capabilities, auditability requirements and Know Your Customer (KYC) protocols.
Institutional transaction flows targeted by Starknet and Nightfall
According to StarkWare, this represents a "major breakthrough" in rendering public blockchains viable for institutional capital, which has been previously held back by complete onchain transparency and the associated compliance and competitive concerns.
In the release, Eli Ben-Sasson, StarkWare co-founder and CEO and a founding scientist of privacy-focused cryptocurrency Zcash (ZEC), stated that blockchains have the potential to provide every institution with "the equivalent of a private superhighway for stablecoins and tokenized deposits," describing Nightfall on Starknet as a tangible advancement toward realizing that vision.
In an interview with Cointelegraph, Alex Gruell, StarkWare's global head of business development, explained that Nightfall was "particularly useful for institutions requiring ready-to-go KYC verification as part of their onboarding to the blockchain," and represents one component of a wider privacy initiative on Starknet.
He noted that although crypto native development teams had "moved mountains" in constructing ZK infrastructure, the system built by EY contributes an additional layer of institutional legitimacy and "regulatory fluency."
Additionally, Gruell described Starknet plus Nightfall as functioning as an interoperability layer connecting institutions, drawing a contrast with what he characterized as "siloed" institutional environments present on competing networks, which he asserted "do not serve as an interoperability infrastructure," and permissioned frameworks like Canton Network, which are "not yet integrated with the Web3 ecosystem."
He emphasized that Nightfall would continue to operate in a permissionless manner and remain fully integrated within Starknet, with implementation occurring in phases, where the initial deployment concentrates on "private payments and transfers with compliance gating and secure sequencing in place," while "verifier upgrades and expanded functionality follow as the system scales."
Growth trajectory and operational challenges for Starknet
Starknet has progressively expanded to become one of the more prominent ZK rollups measured by total value locked (TVL), currently standing at approximately $280 million, with activity predominantly fueled by DeFi protocols and applications native to the ecosystem.
Simultaneously, Starknet's aggressive scaling efforts have revealed reliability obstacles. During 2025, the network experienced significant outages related to sequencer and infrastructure problems, leading to public incident reports and pledges to strengthen reliability prior to pursuing additional institutional activity.