In a chat, I overheard a friend from traditional finance complaining with a helpless expression: "Blockchain indeed has many benefits—transparency, efficiency—these are solid advantages. The problem is, our team really can't use it. Where do we put client privacy? How do regulators handle this? How do we pass audits?"

This might be the most genuine thought many traditional financial institutions have when facing blockchain technology. On one side is the alluring prospect of new technology; on the other are the practical pressures of privacy protection and compliance review. The two seem to always be at odds—either sacrifice privacy for compliance or hide and dodge scrutiny. Is it really so black and white?

Coincidentally, amid such controversy, a project that has been quietly working since 2018 chose a different path. Not taking sides, but asking a tougher question: can we design a system that encrypts and protects transaction data while legally handing over review rights to regulators? It sounds a bit crazy, but this project (Dusk) is really trying to make that happen.

Today, let’s take a closer look at this public chain, which claims to be "institution-level financial infrastructure," and see what it’s really up to.

**1. Modular Decomposition: It’s not just a puzzle, but a precise division of labor**

When it comes to modularity, the mind often pictures LEGO bricks—various colored blocks that can be assembled freely. But Dusk’s understanding of modularity is closer to the specialized departments in a hospital: cardiology, surgery, anesthesiology—each department has its own responsibilities and focuses on its field, yet they work seamlessly together to complete a complex operation.

In the context of blockchain, what does this mean? Simply put, the system has dedicated modules for settlement and clearing (basic computations), modules responsible for executing smart contracts (business logic), and special modules for privacy and compliance (special requirements). Each part has its own responsibilities, doesn’t interfere with others, but collaborates in the most efficient way.

This is very different from solutions that try to stack all functions on a single chain. The result is a system that doesn’t slow down due to privacy processing, nor compromise security for performance.

**2. Privacy and compliance: a duet**

If modularity is an architectural innovation, then combining privacy and compliance is the core challenge Dusk aims to solve.

Imagine this scenario: a bank wants to process cross-border transfers on-chain. They need to—

Hide data from other users (client privacy must not be leaked); at the same time, they need to prove to regulators that "this transfer is legal and not involved in money laundering." Contradiction, right?

Dusk’s approach is to introduce "conditional transparency." Transaction information is encrypted, but regulators hold special keys. When review is needed, they can decrypt and verify without exposing the data to all network participants. This way, user privacy is protected, and compliance review isn’t hindered.

It sounds like magic, but underneath are cryptographic tools like zero-knowledge proofs and MPC (multi-party computation)—these are mature, academically validated technologies, not just ideas pulled out of thin air.

**3. Why is this critical for institutions**

Traditional financial institutions have been hesitant to go on-chain, not because of technical issues, but because their compliance frameworks can’t keep up. You put a client account on a public chain? You’ll be summoned by regulators in no time.

Dusk’s design works within the existing financial regulatory framework. It doesn’t try to overturn rules but uses technology to make old rules applicable in new systems. This means that truly compliant institutions—banks, insurance companies, asset managers—are more likely to seriously consider going on-chain.

Conversely, this also provides these traditional players with a real entry ticket into Web3, rather than just staying in the "research" phase.

**4. Risks and realities**

Of course, a good idea and actual implementation are two different things. Dusk needs to prove itself in performance, usability, and ecosystem development. Moreover, its target clients (institutional users) have extremely strict security requirements—any vulnerability could be fatal.

But from the current situation, this project born in 2018 is sticking to a very difficult path, and it’s the right one. While most projects chase hot trends, Dusk focuses on solving real problems.

This might be the true innovation of Web3—not throwing money to burn traffic, but finding the genuine intersection between the traditional world and the crypto world, then using technology to bridge that gap.