StarkWare Integrates EY’s Nightfall Protocol to Bring Confidentiality to Public Ethereum Rails for Institutions

StarkWare, the developer behind the Starknet scaling solution, has announced a significant integration of EY’s Nightfall privacy protocol. This collaboration aims to enable institutions to conduct private payments and decentralized finance (DeFi) activities on public Ethereum-aligned infrastructure. The move is strategically positioned to attract banks and corporations that require enhanced confidentiality in their transactions without compromising auditability.

In a release shared with Cointelegraph, StarkWare articulated that this integration represents a pivotal step in allowing enterprises to leverage a shared, open layer-2 (L2) scaling solution rather than being confined to private, bank-only networks. The partnership is further bolstered by EY’s established position as a "Big Four" firm, already auditing many of the very organizations StarkWare seeks to onboard.

The core of this integration lies in bringing Nightfall, an open-source zero-knowledge (ZK) privacy layer developed by EY, onto the Starknet platform. Nightfall’s fundamental capability allows for the verification of transactions without the need to reveal the underlying sensitive data. This technology will now empower Starknet to facilitate private Business-to-Business (B2B) and cross-border payments, confidential treasury management, and 24/7 on-chain tokenized asset transfers.

Furthermore, StarkWare stated that institutions will gain access to Ethereum’s robust DeFi ecosystem. This includes engaging in activities such as lending, performing swaps, and participating in yield generation strategies. Critically, transactions executed through this integrated solution will be private by default. However, the system is designed to support selective disclosure of information, maintain auditability, and seamlessly integrate with Know Your Customer (KYC) protocols, addressing a key concern for regulated entities.

Starknet and Nightfall Target Institutional Capital Flows

StarkWare is framing this integration as a "major breakthrough" in making public blockchains more accessible and appealing to institutional capital. Historically, this sector has been hesitant to adopt public blockchains due to concerns over full on-chain transparency, which can pose compliance challenges and competitive risks.

Eli Ben-Sasson, co-founder and CEO of StarkWare, and a recognized figure in the privacy-focused cryptocurrency space as a founding scientist of Zcash, emphasized the transformative potential of this development. He stated that blockchains could offer every institution "the equivalent of a private superhighway for stablecoins and tokenized deposits." Ben-Sasson views the implementation of Nightfall on Starknet as a tangible stride towards realizing this vision.

Alex Gruell, StarkWare’s global head of business development, further elaborated to Cointelegraph on the specific advantages of the Nightfall integration. He highlighted its particular utility for institutions that necessitate ready-to-deploy KYC verification as an integral part of their blockchain onboarding process. Gruell also indicated that this move is part of a broader strategic push by Starknet to enhance privacy features.

Gruell pointed out that while the cryptocurrency-native development community has made significant advancements in building ZK infrastructure, EY’s involvement with Nightfall adds a crucial layer of institutional credibility and "regulatory fluency." This combination is expected to bridge the gap between nascent blockchain technology and the stringent requirements of traditional financial institutions.

Moreover, Gruell positioned Starknet combined with Nightfall as a vital interoperability layer connecting various institutional players. He contrasted this with what he described as "siloed" institutional environments found on rival networks, which he argued do not inherently serve as interoperability infrastructure. He also drew a distinction with permissioned models like Canton Network, suggesting they are "not yet integrated with the Web3 ecosystem."

Gruell underscored that Nightfall will retain its permissionless nature and remain fully integrated with Starknet. The rollout will be staged, with the initial deployment focusing on "private payments and transfers with compliance gating and secure sequencing in place." Subsequent phases will introduce "verifier upgrades and expanded functionality as the system scales." This phased approach allows for iterative development and testing in a controlled environment.

Starknet’s Growth Trajectory and Navigating Challenges

Starknet has steadily emerged as one of the leading ZK rollups in terms of total value locked (TVL), currently holding approximately $280 million. Its usage is predominantly driven by DeFi protocols and native applications within its ecosystem.

However, Starknet’s ambitious scaling initiatives have not been without their challenges. In 2025, the network experienced significant outages, which were attributed to issues with its sequencer and underlying infrastructure. These incidents prompted public post-mortem analyses and firm commitments from StarkWare to enhance network reliability and robustness, particularly in preparation for attracting greater institutional participation. The integration of Nightfall signals a renewed focus on building trust and addressing the security and operational concerns of large-scale financial entities.