Starknet Integrates EY Nightfall for Secure Institutional DeFi on Ethereum

The team behind Starknet, known as StarkWare, has now incorporated EY’s Nightfall privacy protocol. This integration allows financial institutions to conduct private payment transactions and participate in decentralized finance (DeFi) operations directly on Ethereum-compatible public networks. It specifically caters to banks and large corporations seeking strong confidentiality measures while maintaining the ability to conduct audits effectively.

According to an announcement released on Tuesday and provided to Cointelegraph, StarkWare describes this development as a strategic advancement. It enables businesses to leverage a collaborative, open layer-2 solution instead of relying on exclusive, bank-specific private networks. Importantly, the partnership involves a prominent Big Four accounting firm that already performs audits for many of the target enterprises StarkWare aims to bring onboard.

Through this integration, Nightfall—an open-source zero-knowledge (ZK) privacy layer developed by EY—becomes available on Starknet. This technology verifies transactions without exposing the sensitive underlying data. As a result, users can perform private business-to-business (B2B) payments, cross-border transfers, confidential treasury operations, and round-the-clock transfers of tokenized assets entirely onchain.

StarkWare highlights that participating institutions will gain access to Ethereum’s DeFi ecosystem for various activities, including lending services, token swaps, and yield-generating strategies. By default, all transactions remain private, yet the system supports selective disclosure features, full auditability, and compliance with Know Your Customer (KYC) requirements.

Starknet and Nightfall Focus on Institutional Workflows

StarkWare presents this collaboration as a significant milestone in adapting public blockchains for institutional capital deployment. Previously, such capital has been hesitant due to the complete transparency of onchain activities, which poses compliance challenges and competitive risks.

Eli Ben-Sasson, co-founder and CEO of StarkWare, who also contributed as a founding scientist to the privacy-oriented cryptocurrency Zcash, stated in the announcement that blockchains hold the potential to provide every institution with what amounts to a private superhighway for stablecoins and tokenized deposits. He views the deployment of Nightfall on Starknet as a tangible realization of this ambitious goal.

Alex Gruell, StarkWare’s global head of business development, explained to Cointelegraph that Nightfall proves especially valuable for institutions needing immediate KYC verification during their blockchain onboarding process. This integration forms part of Starknet’s wider initiative to enhance privacy capabilities across its platform.

Gruell emphasized that although cryptocurrency-native teams have made remarkable progress in developing zero-knowledge infrastructure, the EY-engineered Nightfall introduces an additional dimension of credibility tailored for institutions, along with a strong understanding of regulatory landscapes.

Furthermore, Gruell positioned the combination of Starknet and Nightfall as a vital interoperability layer connecting various institutions. He differentiated it from what he describes as isolated institutional setups on competing networks, which fail to function as true interoperability frameworks. He also contrasted it with permissioned systems like the Canton Network, noting that these have not yet achieved seamless integration with the broader Web3 environment.

Gruell underscored that Nightfall will operate in a permissionless manner and remain fully embedded within Starknet. The rollout will proceed in phases, starting with core features for private payments and transfers equipped with compliance controls and secure sequencing mechanisms. Subsequent phases will introduce verifier enhancements and additional functionalities as the network expands and matures.

Starknet’s Expansion and Associated Challenges

Starknet has progressively established itself as one of the leading zero-knowledge rollups, measured by total value locked (TVL), which currently stands at approximately $280 million. The platform’s activity is predominantly fueled by DeFi protocols and applications native to its ecosystem.

However, Starknet’s aggressive scaling efforts have also revealed certain reliability hurdles. Throughout 2025, the network encountered significant downtime incidents linked to sequencer malfunctions and underlying infrastructure problems. These events led to detailed public post-mortems and firm pledges from the team to bolster network resilience, particularly as they prepare to accommodate greater volumes of institutional activity.