Starknet developer StarkWare has integrated EY's Nightfall privacy protocol to enable institutions to process private payments and decentralized finance (DeFi) activities on public, Ethereum-focused rails, targeting banks and enterprises that require confidentiality without sacrificing auditability.
In a press release shared with Cointelegraph on Tuesday, StarkWare positioned the move as a way for corporations to make use of a shared, open Layer 2 network moderately than closed, bank-only networks, while partnering with a Big Four company that’s already vetting most of the organizations it wants to incorporate.
The integration brings Nightfall, an open-source zero-knowledge (ZK) privacy layer developed by EY that enables transactions to be verified without exposing underlying data, to Starknet to enable private B2B and cross-border payments, confidential treasury management and tokenized wealth transfers 24/7 on-chain.
StarkWare said institutions may also access Ethereum DeFi for activities resembling lending, swaps and yield strategies, where transactions are private by default but support selective disclosure, auditability and Know Your Customer (KYC) protocols.
Starknet and Nightfall goal institutional flows
StarkWare calls this a “major breakthrough” in leveraging public blockchains for institutional capital, which has previously been deterred by complete on-chain transparency and the resulting compliance and competitive risks.
Eli Ben-Sasson, co-founder and CEO of StarkWare and founding scientist of privacy-focused cryptocurrency Zcash (ZEC), said within the press release that blockchains could offer any institution “the equivalent of a personal highway for stablecoins and tokenized deposits,” positioning Nightfall on Starknet as a concrete step toward that vision.
Alex Gruell, global head of business development at StarkWare, told Cointelegraph that Nightfall is “particularly useful for institutions that require out-of-the-box KYC verification as a part of their onboarding to the blockchain,” and is a component of a broader data protection initiative at Starknet.
Alex Gruell, global head of business development. Source: StarkWare
He said native crypto teams had “moved mountains” in constructing the ZK infrastructure, however the system developed by EY added a complementary layer of institutional credibility and “regulatory competence.”
Gruell also referred to Starknet plus Nightfall as an interoperability layer between institutions, contrasting this with “siloed” institutional environments on competing networks, which he said “doesn’t function interoperability infrastructure,” and with licensed models like Canton Network, that are “not yet integrated into the Web3 ecosystem.”
He emphasized that Nightfall will remain permissionless and fully integrated into Starknet, with a phased rollout where the initial deployment will give attention to “private payments and transfers with compliance gating and secure sequencing,” while “verifier upgrades and expanded functionality will follow because the system scales.”
Starknet's growth and teething problems
Starknet has steadily grown into certainly one of the larger ZK rollups by Total Value Locked (TVL), currently at roughly $280 million, with usage driven primarily by DeFi protocols and native ecosystem apps.
At the identical time, Starknet's rapid scaling push has exposed reliability challenges. In 2025, the network experienced significant outages related to sequencer and infrastructure issues, prompting public postmortems and pledges to extend reliability before encouraging more institutional inflows.
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