Starknet developer StarkWare has integrated the EY Nightfall privacy protocol to enable institutions to conduct private payments and decentralized finance (DeFi) activities on public rails tailored for Ethereum, targeting banks and corporations that need confidentiality without sacrificing control.
In a Tuesday announcement shared with Cointelegraph, StarkWare pitched the move as a way for enterprises to leverage a common, open Layer 2, rather than closed, bank-only networks, while working with a Massive Four firm that already audits many of the organizations it wants to deploy.
The integration brings Nightfall, an open-source privacy layer (ZK) built by EY that enables transaction verification without revealing source data, to Starknet to enable private B2B and cross-border payments, confidential treasury management and 24/7 tokenized on-chain asset transfers.
StarkWare said institutions will also be able to access Ethereum DeFi to conduct activities such as lending, swaps and yield strategies, with transactions being private by default but supporting selective disclosure, auditability and Know Your Customer (KYC) protocols.
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Starknet and Nightfall target institutional flows
StarkWare calls this a “major breakthrough” in enabling the utilize of public blockchains for institutional capital, which has previously been hampered by full supply chain transparency and the resulting compliance and competition risks.
Eli Ben-Sasson, co-founder and CEO of StarkWare and founding scientist of the privacy-focused cryptocurrency Zcash (ZEC), said in a release that blockchains could provide any institution with “the equivalent of a private highway for stablecoins and tokenized deposits,” positioning Nightfall on Starknet as a concrete step toward that vision.
Alex Gruell, global head of business development for StarkWare, told Cointelegraph that Nightfall was “particularly useful for institutions requiring out-of-the-box KYC verification as part of their onboarding to blockchain” and as part of a broader focus on privacy on Starknet.
He said that while crypto teams had “moved mountains” in building ZK infrastructure, the system built by EY added a complementary layer of institutional credibility and “regulatory liquidity”.
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Gruell also recognized Starknet and Nightfall as a layer of interoperability between institutions, contrasting it with what he argued are “segregated” institutional environments on competing networks that he said “don’t serve as an interoperability infrastructure” and licensed models like Canton Network that “are not yet integrated into the Web3 ecosystem.”
He stressed that Nightfall will remain permissionless and fully integrated with Starknet, with a phased rollout whose initial rollout focused on “private payments and transfers with compliance and secure sequencing,” while “validator updates and expanded functionality will occur as the system scales.”
The development and initial troubles of Starknet
Starknet has steadily grown into one of the larger ZK suites in terms of total value locked (TVL), currently approximately 280 million dollarswhose utilize is mainly based on DeFi protocols and native ecosystem applications.
At the same time, the rapid growth of Starknet has exposed reliability challenges. In 2025, the network experienced major outages related to sequencer and infrastructure issues, prompting public autopsies to commit to improved reliability before introducing greater institutional flow.
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