**Privacy, Institutions, and the Question DeFi Will Need to Answer
At a basic level, most people already understand why privacy matters.
You wouldn’t show your bank account to anyone who asks. You wouldn’t hand over your entire financial history just to participate in everyday life. This intuition is almost universal.
At the same time, we also accept that privacy isn’t absolute. Government employee salaries are public. Nonprofit tax returns are public.
Certain kinds of transparency are healthy, even necessary.
So privacy isn’t a binary. It’s contextual.
The real question isn’t whether privacy should exist — it’s when, for whom, and under what conditions.
Privacy should be an option. Not always required, but always available.
When institutions enter the picture
Things get more complicated once institutions are involved.
Institutions need transparency for accountability, compliance, and trust. They also need privacy — to protect users, internal operations, trade secrets, and sensitive coordination.
This is where advanced cryptography begins to matter for privacy in practical, non-theoretical ways.
That’s why Ethereum Layer 2 scaling solutions (L2s) like zkSync and Arbitrum already have a seat at the table when it comes to institutional adoption. Their tech stacks are privacy-ready, designed around institutional-grade requirements.. NEAR Protocol may be headed in a similar direction — though it’s still an open question how explicitly institutional that path will be.
This raises a deeper product and philosophical questions.
Do we build for institutions — or let them come later?
There’s a common saying in tech: build it and they will come.
In practice, that’s rarely true. Good product management is about building features your users actually want and need — not hypothetical users you hope will arrive someday.
Crypto complicates this because it forces us to ask:
who is the user?
Is it individuals seeking sovereignty and freedom?
Is it institutions seeking efficiency and compliance?
Can a system serve both without compromising one for the other?
Crypto manifestos
In The Trustless Manifesto, [Vitalik Buterin], the co-founder of Ethereum, writes that Ethereum was not created to make finance more efficient or apps more convenient.
It was created to empower people — to allow coordination without permission, and without blindly trusting intermediaries.
zkSync’s own cypherpunk-inspired writing echoes this ethos. Their ZK Credo is explicit about decentralization, individual sovereignty, and the dangers of power concentration.
And yet, zkSync is also pushing hard into institutional adoption — most notably with their Prividium product, a ZK based blockchain that keeps data private.
This isn’t necessarily wrong. But it is revealing.
The contradiction isn’t technical — it’s political
The question isn’t whether institutions will use crypto. They already are.
The real question is whether DeFi can remain true to the values it writes about once serious entrenched powers enter the system.
zkSync’s ZK Credo contains one of the most important warnings in the space:
If a network possesses all the right technical attributes but its governance falls into the hands of a privileged few, it is destined to fail.
This isn’t theoretical. It already happened once.
The early Internet promised decentralization, openness, and user empowerment. It delivered global connectivity — and then quietly centralized power, data, and influence into the hands of a few massive corporations.
The missing ingredient wasn’t technology.
It was governance.
Decentralized, permissionless governance is crypto’s invention**
Blockchains didn’t just introduce new cryptography. They introduced on-chain governance — imperfect, messy, slow, and political.
DAOs are not elegant. They’re not efficient. They’re often frustrating.
But they are new.
They represent an attempt — maybe the first serious one — to embed power-sharing directly into the infrastructure itself.
Without governance, privacy technology is fragile.
Institutions don’t need to destroy decentralization to win. They just need governance systems weak enough to capture.
A cultural lens: geeks, mops, and sociopaths
This dynamic reminds me of David Chapman’s essay Geeks, Mops, and Sociopaths.
Crypto is a subculture, and you can see all three archetypes clearly:
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Geeks who care deeply about the tech and its ideals
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Mops who do the bare minimum and generate noise
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Sociopaths who understand power and know how to play the game
Institutions structurally incentivize winner-take-all games and power accumulation
If governance is centralized, institutions will win by default.
The question that matters now
So the question going into this year isn’t necessarily whether DeFi will “sell out.” Institutions are already here, and DeFi has embraced them.
It’s whether its governance systems are strong enough to absorb institutional participation without losing the values that made the space worth building in the first place.
Privacy without decentralized governance won’t survive.
Decentralization without checks and balances won’t last.
Institutions will use whatever systems allow them to operate and win.
The real test for DeFi isn’t technical maturity — it’s whether sovereignty and freedom remains a feature, or quietly becomes a casualty.
This tension has existed since the beginning.
At the most basic level people understand “why privacy”: you’re not going to show your bank account to anyone who wants to access it.
however, government employee salaries are public. and nonprofit tax returns.
so privacy has to be an option. it’s not always needed, but sometimes it is. for institutions, advanced cryptography is necessary?? ZKSync and even Arbitrum can be poised for this because they have really good tech. Perhaps NEAR as well - are they going for institutional adoption?
Broader question: should we build for institutions or should institutions come on their own, as apple says, you build it and they will come.. probably not because that goes against basic product management principles of building features that your users want and need.
On a similar note: Vitalik wrote his Trustless Manifesto https://trustlessness.eth.limo/general/2025/11/11/the-trustless-manifesto.html where this caught my attention: “Ethereum was not created to make finance efficient or apps convenient.
It was created to set people free — to empower anyone, anywhere to coordinate without permission and without trusting anyone they cannot hold accountable.”
ZKsync cypherphunk manifesto also is along those lines. Yet ZKSync is building for institutional adoption hardcore with their Prividium protocol.
ZKCredo: https://github.com/zksync/credo
So the question this year will be wether DeFi will be able to stay true to the manifestos that it writes or will it sell out to the corps?
And oh yeah, the ZK Credo says: “If a network possesses all the mentioned attributes but its governance falls into the hands of a privileged few, it is destined to fail. Such few will tweak the rules for personal gain, eroding network value. The Internet’s history serves as a cautionary tale. Its inception promised decentralization, but over time user data and traffic fell into the control of a few tech giants, shaping the digital landscape to their advantage.”
Governance and DAOs are very important. Early Internet did not have governance, this is a creation of crypto and blockchains.
David Chapman also has a great classic piecer about this kind of selling out that may happen in “Geeks, mops, and sociopaths.” Crypto can be thought of as a subculture, that he writes about, and we can easily see the diffrent types of people and their motives using the buckets of Chapman. Corporate folks are closer to sociopaths: they like and know how to play power games. We have the geeks who are just obsessed with the tech and how cool it is. And then there are mops too - we see them all around. These are the people who do only the bare minimum to get by and otherwise just create noise and shoot the shit in the communities they are in. There are many mops in crypto. https://meaningness.com/geeks-mops-sociopaths