Hedger Protocol is the core privacy technology of the Dusk network. The recently launched DuskEVM mainnet has deeply integrated this solution into the EVM execution environment. In simple terms, it achieves a previously difficult balance: transactions are fully private while supporting regulatory audits.

Why is this so important for institutional finance? The transparency of traditional blockchains often conflicts with data protection regulations. Hedger uses a combination of zero-knowledge proofs and homomorphic encryption. Transaction inputs, outputs, and state transitions are encrypted throughout the process. Validation nodes cannot see the real data but can verify the correctness of computations through ZK proofs. No one can see transaction amounts, addresses, or contract details, but authorized parties such as regulators or auditors can selectively decrypt necessary information using specific view keys to ensure KYC/AML compliance. This "default privacy with controllable disclosure" design cleverly bypasses the regulatory pitfalls of fully anonymous chains while filling the privacy gap of fully transparent chains.

The most practical aspect is that Hedger on DuskEVM incurs no additional gas costs or complexity; developers don't need to modify Solidity code at all, as privacy capabilities are automatically added. This means that existing DeFi protocols can be migrated directly to launch privacy versions: private lending, tokenization of private funds, confidential derivatives trading, and other use cases can operate within a compliant framework. Compared to ZK-Rollup or MPC solutions, Hedger is directly built into the Layer 1 settlement layer, offering stronger security and finality.

When DuskTrade launches in 2026, Hedger will undergo real-world testing with over €300 million in RWA transactions. This will not only validate the maturity of the technology but also attract more licensed institutions to participate. Privacy is shifting from an optional feature to a default guarantee, redefining the standards for institutional-grade blockchains.