Mike Smith
2 days ago
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With the ever-evolving digital ecosystem and growing demands for data protection, the blockchain community is looking for solutions to one of the most difficult problems - harmonizing public ledgers with strict regulations. A new initiative introduced in the Ethereum ecosystem proposes a novel modular strategy that can reconcile the principles of blockchain openness with the European Union’s General Data Protection Regulation (GDPR).
Developed by community member Eugenio Reggiani, the proposal is based on the idea of a modular architecture for intelligent data management and privacy. The essence of the concept is to move the processing and storage of personal data to the edge of the network - directly into users’ wallets and decentralized applications (DApps). "By moving personal data to the edge, using off-chain storage with metadata removal, and cryptographically separating roles, we can concentrate the responsibilities of the GDPR data controller on a small set of entities, while the main network becomes a mere processor or is not subject to the regulation at all," the author explained. This approach allows for the integration of various privacy enhancing technologies (PETs), which will be the key to GDPR compliance.
The technical roadmap for this plan includes several technologies that already exist or are proposed for integration into Ethereum. One of the central elements is the proto-danksharding mechanism (EIP-4844), which limits the storage period of large amounts of transaction data (BLOBs) to approximately 18 days. This directly corresponds to the principle of data minimization laid out in the GDPR. Another powerful tool is zero-knowledge proofs, in particular zk-SNARKs. They allow validators to confirm the validity of cryptographic proofs without viewing the contents of the transactions themselves, dramatically reducing the visibility of sensitive information on the blockchain. In addition, fully homomorphic encryption, trusted execution environments (TEE), multi-party computation (MPC), and the separation of the roles of creator and proposer (PBS) are proposed to enhance security.
The proposed GDPR compliance framework breaks the network into three logical layers with a clear distribution of functions. The execution layer will operate exclusively on encrypted or hidden data, acting as a processor. The consensus layer will only be responsible for verifying commitments and zero-knowledge proofs, without delving into the essence of the data. Finally, the data availability layer, within the framework of PeerDAS technology, will only store anonymous pieces of information for a limited period of time. This multi-layered system allows Ethereum to protect user privacy without sacrificing its fundamental principles of decentralization and security.
The successful implementation of such a comprehensive system will depend not only on broad community and developer support, but also on the willingness of EU regulators to recognize such a modular approach as sufficient to comply with the law. In essence, this becomes a test of flexibility for both the technology and the legal system.
