Privacy is back in focus for the Ethereum ecosystem, with the Ethereum Foundation introducing a new toolkit designed to give wallets stronger protection and more autonomy.
In a Thursday post on X, the foundation wrote that the ‘Kohaku’ toolkit is a set of primitives that enables wallets to be “secure and to process private transactions while minimizing dependencies on trusted third parties.”
In a separate X post, Ethereum co-founder Vitalik Buterin also mentioned Kohaku, adding that full-stack privacy and security “are first-class priorities in Ethereum.”
As Nicolas Consigny, a protocol supporter and coordinator at the Ethereum Foundation, explained in a roadmap paper, Kohaku will target three core goals: an SDK that exposes strong privacy/security primitives, a power-user-oriented reference implementation wallet, and collaborations with other wallets to implement the SDK “either in full or in parts that they care about.”
To start, the team will focus on “privacy features and a browser extension that demonstrates the power of these features,” adding that the reference wallet “will not be a consumer-oriented product.”
Among early priorities are support for private sends and receives, social recovery through zero-knowledge tools like ZKemail and ZKpassport, and optional peer-to-peer transactions that bypass RPC nodes.
According to Consigny, the team also plans to showcase these features in a demo at Devconnect ARG, an Ethereum developer conference in Buenos Aires, scheduled for Nov. 17-22.
Privacy Coins Rally
One of the listed collaborators for the initiative is Railgun, a zero-knowledge privacy protocol that functions like an on-chain mixer but is built to provide broader private smart-contract interactions.
Amid the news and the broader trend for privacy coins, Railgun’s RAIL token soared 112% on the day, hitting a new all-time high at $5.48.
But, as is often the case with crypto applications, Railgun was also abused by bad actors. According to the FBI, in January 2023, North Korea’s notorious hacker group, the Lazarus Group, used Railgun to launder over $60 million worth of Ethereum (ETH) stolen during the June 2022 heist from Harmony’s Horizon bridge.
Later, however, the protocol demonstrated an evolving approach to balancing privacy and compliance.
Using its “Private Proofs of Innocence” system, which automatically screens deposits against known malicious addresses, Railgun blocked the zkLend attacker’s attempt to launder $9.5 million in stolen ETH, prompting Ethereum co-founder Vitalik Buterin to call it a “solid demonstration of Railgun's privacy pools mechanism working in practice, allowing Railgun to avoid serving proceeds of crime without using any snooping/backdoors.”
