The Ethereum and XRP Ledger ecosystems have each marked significant milestones this week, with the launch of two major blockchain innovations aimed at expanding functionality and improving user privacy. Ethereum developers, in collaboration with 0xbow.io, have rolled out the new Privacy Pools protocol, offering a semi-permissionless solution for private transactions while incorporating compliance measures. Meanwhile, blockchain firm Peersyst Technology has announced the testnet launch of an Ethereum-compatible sidechain for the XRP Ledger, paving the way for decentralized finance applications within the XRP ecosystem.
Ethereum’s New Privacy Pools Launch With Vitalik Buterin’s Backing, Aiming to Make Privacy Normal Again
A new privacy-focused protocol has officially launched on the Ethereum blockchain, promising to strike a balance between financial privacy and regulatory compliance — a goal that has proven elusive in the crypto space over the past several years.
Privacy Pools, a semi-permissionless privacy tool developed by Ethereum builders 0xbow.io, was unveiled on March 31 with backing from some of the most prominent names in the industry, including Ethereum co-founder Vitalik Buterin, who personally made one of the first deposits into the protocol.
The launch of Privacy Pools comes amid years of heated debate between regulators, crypto privacy advocates, and law enforcement agencies over the fine line between user privacy and illicit financial activity. 0xbow.io’s new solution attempts to solve this conundrum by introducing a feature that allows users to prove their funds aren’t tied to criminal actors — while still keeping their financial activity private.
At the core of Privacy Pools is an innovation called Association Sets. This mechanism dynamically groups users’ deposits into anonymous pools while enforcing a key feature — screening transactions to ensure they are not linked to illicit activity such as hacking, phishing, or scams.
If a transaction is admitted but later determined to be connected to criminal behavior, it can be removed from the Association Set without impacting other users’ funds or privacy. For those whose deposits are disqualified, a "ragequit" function allows them to withdraw their funds and return them to their original address.
The protocol’s creators say this dynamic model can allow Privacy Pools to offer a higher level of compliance and auditability compared to earlier privacy protocols, while still preserving individual privacy.
The project is part of 0xbow.io’s broader mission to “Make Privacy Normal Again,” reflecting the belief that privacy in financial transactions is not just a luxury but a right — a principle increasingly under threat in the digital age.
Privacy Pools isn’t just a niche experiment — it has earned support from some of the most influential figures in the Ethereum ecosystem. Vitalik Buterin not only praised the platform’s approach but also made an early deposit into the Privacy Pools smart contract, demonstrating his confidence in the project.
In total, over 21 ETH has already been transferred into Privacy Pools from 69 individual deposits, according to 0xbow.io’s data. Buterin’s participation is seen as a major vote of confidence in the privacy-focused initiative.
The project has also attracted investment from several leading venture capital firms and angel investors, including Number Group, BanklessVC, Public Works, and others.
The concept behind Privacy Pools was originally outlined in a September 2023 white paper co-authored by Vitalik Buterin, Chainalysis Chief Scientist Jacob Illum, academics from the University of Basel, and 0xbow.io strategic adviser Ameen Soleimani. That paper has since garnered over 12,000 downloads and has been cited in nine other academic publications, reflecting the growing interest in compliant privacy solutions for blockchain transactions.
The Privacy Pools smart contract underwent a successful audit by Audit Wizard, a security firm co-founded by former Apple engineer Joe van Loon, ensuring a degree of safety and transparency for early adopters.
Currently, deposits on Privacy Pools are limited to 1 ETH per user to minimize risks and encourage gradual, responsible growth. 0xbow.io has stated that these limits will be increased once the platform becomes more battle-tested and stable.
A Changing Privacy Landscape in Crypto
The launch of Privacy Pools is taking place against a backdrop of growing tension between crypto privacy projects and regulators worldwide. Privacy-enhancing protocols like Tornado Cash have been at the center of this conflict.
In August 2022, Tornado Cash was sanctioned by the US Treasury’s Office of Foreign Assets Control (OFAC) after it was linked to over $7 billion worth of laundered funds, allegedly connected to North Korea’s Lazarus Group. However, in a dramatic turn of events, those sanctions were ruled unlawful by a US appeals court in January 2025, and Tornado Cash has since been removed from the OFAC blacklist.
The damage to the privacy protocol sector’s reputation, however, has lingered. Privacy Pools attempts to avoid this fate by integrating compliance features directly into its architecture.
The importance of such innovation is underscored by data from the latest Chainalysis 2025 Crypto Crime Report, which estimated that over $41 billion worth of illicit cryptocurrency transactions occurred in 2024 — accounting for 0.14% of total on-chain volume. While this figure was down 11% from 2023, Chainalysis warned that it could still rise to $51 billion as further criminal-linked addresses are identified.
As the crypto industry continues its fight for privacy and legitimacy in the face of regulatory crackdowns, the arrival of Privacy Pools may mark a turning point.
By blending user privacy, technical transparency, and compliance-friendly features, Privacy Pools has the potential to set a new standard for blockchain privacy solutions — one that could encourage regulators to rethink their stance while giving users back their right to financial privacy.
Peersyst Technology Launches Testnet for Ethereum-Compatible Sidechain on XRP Ledger
In other news, blockchain development firm Peersyst Technology has officially launched the testnet version of its Ethereum Virtual Machine (EVM)-compatible sidechain for the XRP Ledger (XRPL). The move marks a major milestone in Ripple’s broader strategy to integrate decentralized finance (DeFi) capabilities and smart contract functionality into its blockchain ecosystem.
The launch was completed in collaboration with key industry players, including RippleX — the development arm of Ripple — as well as Alexar Network, a prominent Web3 interoperability platform, and Common Prefix, a blockchain science and research firm.
Peersyst Technology described the initiative as a “first-of-its-kind” sidechain, designed to seamlessly bridge the gap between the XRP Ledger and Ethereum's thriving decentralized finance ecosystem.
The testnet rollout is the latest step in an ambitious roadmap that began in October 2022 with the launch of the devnet version of the sidechain. An updated version followed in June 2023, with ongoing improvements leading to this testnet launch.
By introducing Ethereum compatibility to XRPL through this sidechain, the project aims to tap into the massive DeFi ecosystem built on Ethereum, while leveraging the speed, scalability, and efficiency of the XRP Ledger.
One of the key technical features of the sidechain is that it uses XRP as its native token, ensuring that transaction fees and network operations will continue to be powered by the Ripple-linked cryptocurrency. This model is expected to further embed XRP at the heart of decentralized finance applications that will run on the sidechain.
Peersyst Technology stated that the initiative is designed to unlock the full potential of DeFi on the XRP Ledger without compromising the core security and scalability features of the main XRPL network.
Following the successful testnet launch, Peersyst confirmed that it is now actively working on onboarding new partners and validators. These partnerships will play a crucial role in decentralizing the sidechain and ensuring its long-term security and resilience.
Ripple Leadership Backs Sidechain Initiative
The sidechain project has received vocal support from David Schwartz, Chief Technology Officer of Ripple and one of the original architects of the XRP Ledger.
In September 2024, Schwartz expressed his hopes for the project’s success, stating, "I hope the XRPL EVM sidechain is extremely successful and competitive as a smart contract platform and will be another XRP ecosystem."
The testnet launch comes at a pivotal time for Ripple and the broader XRP community. As blockchain platforms increasingly compete to attract DeFi developers and liquidity, the addition of EVM compatibility could transform XRPL into a more versatile and competitive smart contract platform.
By opening the door to Ethereum-based decentralized applications (dApps), the new sidechain can provide developers with access to familiar tooling and programming languages like Solidity, while also benefiting from the XRP Ledger’s fast and low-cost transaction infrastructure.
For XRP holders, the sidechain promises new opportunities to engage in yield farming, liquidity provision, and other DeFi activities without needing to leave the XRPL ecosystem.
