State of Decentralized Privacy Report 2026

This research began with a hypothesis: that decentralized privacy is advancing rapidly at the infrastructure level, but real-world adoption is shaped by usability challenges, fragmented implementations, and growing tension between institutional and individual privacy needs. The evidence largely confirms it with one refinement. The institutional–individual tension is not merely background. It is the organizing dynamic of the ecosystem, and how it resolves will shape who can use these tools, for what purposes, and under what conditions.

Privacy is often discussed as a coming feature of decentralized systems. This report argues that it has already arrived; unevenly, incompletely, and under genuine tension. In 2025, the privacy infrastructure of decentralized systems expanded significantly. More than 820 documented projects are now actively building privacy tooling across every major blockchain ecosystem. Over four billion dollars moved through RAILGUN (Ethereum) alone since its launch, including a record $1.6 billion in 2025. The Ethereum Foundation formed a dedicated 47-person Privacy Cluster (may, 2026) and shipped its first privacy SDK Kohaku; with its RAILGUN integration live as of May 25, 2026. FHE proving times dropped by orders of magnitude. Zero-knowledge tooling reached developers who, three years ago, would have needed a full cryptography team. And yet the infrastructure is not reaching people. Only one in four privacy projects has privacy on by default. Every Ethereum wallet tested by independent research fails the most basic privacy criterion. The tools that offer the strongest privacy guarantees are, with few exceptions, unusable by anyone who hasn’t already decided to learn them. Alongside this technical gap sits a political one. Institutions and individuals do not agree on what “privacy” means. Circle, the issuer of the world’s second-largest stablecoin, launched a privacy product in 2025 that keeps a compliance record accessible to regulators on request. Users of Tornado Cash, where sanctions were lifted in March 2025, overwhelmingly choose DAI: the stablecoin that cannot be frozen. Both groups are seeking privacy. They are seeking different things. This report is focusing on that tension.

Documentation

May - June 2026 – Delivery

Jensei

Research

Teresa Neppi

Design

Mykola Siusko

Facilitation

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