# Beyond Global State Blockchains: Solving DeFi's Privacy Trilemma — Jatin Pandya | Canton Foundation

- Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community)
- Date: 2026-10-06
- Duration: 23:17
- Topics: People & Blogs
- Watch: https://streameth.org/watch/yt-xQbwtTBOZvc
- YouTube: https://www.youtube.com/watch?v=xQbwtTBOZvc

## Transcript

I'm Hey, so good to meet everybody who is still here. Um, I'm Jatan. I work at the Canton Foundation. So those of you who don't know about Canton yet, so Canton Foundation is a nonprofit organization that basically stewards and caters towards the Canton network's governance and I am the developer relations manager at the Canton Foundation and Canton network right now is one of the most active and leading blockchains out there for institutional DeFi and you might have seen a lot of growth in the past few months in terms of onboarding various institutions across the world and we are while doing that and we are a kind of blockchain where we put privacy at the first place. So for the talk that I currently want to give today um it's more around the same way about how composibility, scalability and privacy have to come together. It's no more pick between the two out of the three. So before that I have been in the crypto and web3 space for almost four plus years now. I have been in multiple ecosystem across my career and uh I have catered many chains and now I am dedicated towards Canton network at the Canton Foundation where I basically lead on boarding experiences work on all level developers toolings and whatnot for all of our existing open-source and institutional clients as well. So as a foundation developer relations person, I have seen firsthand on how institutions, how enterprises and how individual developers see each of this aspect of blockchain. So credit where due I don't want to start off with like hey this is the problem I want to start by giving the credit where it is actually due is that global state was the right call when we needed the finance on chain you know imagine that every single state every single thing visible to every single player across the chain right you can see everybody can basically exercise each other's contracts without permission without verification ation everything boiled down to simple mathematical arithmetic problems and solutions right you don't need to ask for somebody's permission to be able to do something on a blockchain so that global state ended up becoming a major revolution that we needed to put finance on blockchain right that later we all often like you know be like hey DeFi is on chain and onchain finance is back right so global state was the right call everybody can see every data. Every node replicates the part of data to its own. So nobody can verify you know by asking somebody's permission or nobody has to manipulate something on their own without you know having any evidence. That was the right call at that point and it still is for so many use cases. But now I want to take a few step back here. I want us all of us who are here to read it in two different ways. First is everyone sees everything. Okay, here it is never about that it is a problem. It is about basically two different sides of a coin. Two different perspectives to see things. First is that everybody sees everything. The other thing is that it also sees everything that you don't want them to see. So when you say that integrity is about everybody be able to see everything but a lot of people who are at the institutional level they are like integrity basically mean for us that everybody who is impacted by our decisions should be able to see everything. But sometimes that also means that you don't want to put a lot of sensitive information out there, right? Not everything needs to be transparent to every single player because not everybody is a good actor to the ecosystem, right? And in the past few months in crypto or at least in this whole year, we have seen how that can go horribly wrong when we trust that integrity is all about everything visible to every player including your competitors. Right? Now let's look at on the other side of a coin. Imagine that so far we have been seeing the tales of the coin. you know that amazingness of the D5 is in the transparency and the way that you can verify everything without asking. Now let's just see the heads of the coin where we say that when an institution comes in right they comes with a different direction they come with a different size of the order many of times the transactions carry the information which could lead to a bigger announcement about their clients who are settling down in millions billions trillions and quadrillions right various times for institutions it is not just about transparency it is also also about the work that they are doing on blockchain is so sensitive that if that comes out before an official announcement it could lead to front running and what not you know you never know you may end up front running your own client right so for the other side of the coin the heads of the coin right it the issue is that hey why are we able to see everything even the sensitive information about our books that's the one thing that we got to think about you The thing is there is no problem here like we there is never a problem. It is one design just two way of seeing things. First is you see everything is transparent. Amazing fair right? The other side of the coin is if everything is transparent, what about the data that should not be transparent in the first place which can do more damage out there in the community if it gets to the wrong person, right? That's why we needed privacy, right? That's if you know Apple's whole sell point is that we provide the best privacy, right? if I'm wrong but the thing is they know that privacy has to exist and that's the that's the thing that I want to land here with this talk to everybody who's still sitting here is that it's not about picking the one that works the best you know now some of you are like Jatin it's not that hard you know just write a new smart contract put verifications and just do something that protects us see it's not as simple as that Sometimes talking to institutions and believe me as a blockchain that talks to the most institutions it's never about just telling them that hey just find a new undercut you know or find a new way around it's never about that the amount of people who are involved in this are way too huge if you talk to for example JP Morgans of the world or Shinhan banks of the world or SBI in Japan or you talk to Cyberport in Hong Kong right everybody has a regulatory leak legal committees, you know, they see the risk versus the outcome. So if you just tell them that, hey, it's nothing big. It's just that our books are visible by everybody and they are like, wait, what? This is no no more risk. This is just straightforward sacrificing your own sensitive data for just composibility with other blockchain ecosystems. Isn't that more than a risk? Isn't that like pure uh dumbest way to do things right now in finance? And that is the reason why you know a lot of people especially in the past four or five months I feel like people on X are continuously asking you know where is the institutional finance where is the next trillions and quadrillions of dollars. You know why people are running out of money but where are where is the revenue source? Where is the trillions of dollars in finance that we were asking? What is stopping them almost at the doors and not able to enter the world of crypto and blockchain in the first place. This is the major reason why because an institutional desk does not only settles a transaction. When this settles something, this settle a lot of major confidential data. It also settles who they are in deal with. It also settles how much money are we talking about. It also settles on where exactly that money is going to and coming from. This data can be accumulated and managed by somebody in a way where they manipulate the market. If you have seen the movie called Big Short, it's on Netflix. is the about the whole collapse of the economy and how people bet against it. Basically like shorting the banks and shorting the land prices, right? It's all about that. It's about people figuring out and betting against something, right? So it's like wait, so we needed something better. We can no more sacrifice privacy for composibility. We cannot sacrifice scalability, right? Why scalability is the main thing here? You're like Jatin. So if we have privacy and if we have composibility then why do we even bother about scalability in the first place? That's the question that comes into your head and that is the third part of this triangle. The trilma hence the word trilma is because if you can see $4.7 quadrillion dollars that is the amount of you know post setup and trade settlement that DTCC has done right trillions of dollars after the sub US treasury transactions. If you can imagine the scale that a blockchain has to think about to have it all settled on and not just like crash in the middle of a transaction. You know we have seen blockchains going going down like twice in 2 months you know that is not scalability that is just bad infrastructure. So the trma is scalability, confidentiality that is privacy and the composibility you know pe a institution in Europe should be able to work with an institution in Asia that is the pure composibility yet they should have their own control they should have the control of their privacy and they should have a control of how much they want to scale that's the trma and that's where my whole talk is basically trying to land at First is composibility. You have to make sure that by being on a blockchain, the first thing that your eye is now everything is digital and everything is tokenized. Everything is in a digital asset. So I should be composite with every single other organization out there. Things should be easier. You know how they say Bitcoin is basically just sending money more easily from one place to another without minding the geopolitics, right? Composibility is the best thing that you get when you think about finance on blockchain, right? If I want to send money to India right now, I should just be able to send it without thinking about a 100 different forms to fill. Confidentiality, that is the actual privacy, right? If I am a trillion dollar asset manager, things that I don't want to reveal to the desk where I'm settling my trade on should not be revealed in the first place. If the settlement trade desk has all of the data about my source, my asset manager as well, it can lead to some horrible consequences. And the third part of the dilemma is scale. As we have seen, we are talking about quadrillions of dollars. Not millions, not billions, not trillions, but quadrillions of dollar. You need a blockchain and you need a technology that actually scales to be able to handle trillions of dollar. Like at Caner Network, we basically have Broadri that process billions of assets and transactions every day. And that's why they have a setup of their own dedicated synchronizer and validators, right? Scalability matters insanely much. Now the general and conventional way people are have been telling us that hey you have to pick two out of the three you get the best of two. I'm here the talk is here to land the part where why should not we go for all the three? Why should we sacrifice the one that matters equally much if not more in the recent times? You know, there should be a way by which the global state public chains should be able to handle all three and that's where selective disclosure comes in. You know, this trilma is all about the problem. We discussed the trilma. We discussed the problem. Now, it is not a law. It is a consequence. I cannot emphasis more on this. You know, it is not a problem that somebody somewhere sitting in their homes have created. It is just a consequence of the design that we created in blockchain. It is just the other side of the coin, you know. So, we have to make sure that selective disclosure, atomicity and everything works in a manner where now we get all three. An example of selective disclosure where which that the the chains who are working with institutions including canton and many others as well are working is party based mechanisms. If I have to give you an example it basically is that for example you have m three parties right now Alice, Bob and Charlie right Alice is paying Bob, Bob is paying Charlie. Now the single truth that solves the trilma says that as Bob I am I am able to see both Charlie should not see that money is coming from Alice right Alice should not see that the money is going to Charlie it is called selective disclosure you should be able to define where the money is coming from where the money is going but the other person should not be able to see where the money is coming from or where the money is going. Only the person in the middle, the asset managers should be able to see that. When you provide that kind of privacybacked settlement, that's when the asset managers can bring their trillions of dollars because now they are like, "Oh, so nobody can frontr run us by just taking a transaction on any explorer on a blockchain. They are very sensitive about the information." And then you have a synchronizer. You know all three should be able to be composite with each other and synchronizer should be able to make the composibility happen but should not be able to read anything. You know the whole part of the point boils down to the one thing. Why a validator which is not a part of the transaction in any way possible should see the data in the first place. Why are why not only the validators who are participating in the transactions or anywhere remotely affected by it should like be the only ones who see the data. Why do we need to do that? You know, but if you do that, you you get much more than that, which is scalability becomes an individual thing, not a global problem. You know, now this must be confusing, right? What if I put an actual institutional flow here? Now look at it. Now you will understand what I meant by a very more lame example before. Now imagine an asset manager, a custodian and a collateral venue. Right? Now you would know that an custodian can see both the information because there is no harm in being the observer of both the source and the origination where the money is coming from. The asset manager should not be able to see the actual collateral value. Similarly, the collateral value should be not be able to see the asset manager and their funds and custodian is the only one who can see where the money is coming from and where the money is going. In this particular case, only the parties who are affected by a transaction see the data. But the people who are not affected by the transaction are not seeing the data. Right? individuality, confidentiality, scale becomes something that everybody owns and everybody configures of their own. This is the most realistic problem that you can think about right now and this is the most realistic situation which is happening out there in the market where people are just thinking about if the collateral venue see who is the asset manager right asset manager for example is me I'm bringing my trillions of dollars but if the collateral venue is able to see all the sensitive information then what can the collateral venues clients be able to frontr run myself, my own clients who are putting money on me. This this feels like Jatan, you are speaking so much finance thing to us. But in reality, we have to speak about these things now because we want those money to come to us. We want that trillions of dollars to come to blockchain. Else how are we going to earn more? Revenue is decreasing. We want to know why that money is not coming in the room. And this is exactly why we have to be aware of all these financial problems and the potential solution. Selective disclosure is a way by which we do that. Having only a validator if it wants to scale just add another synchronizer dedicated to its own and you scale on your own. You should be confidential to who can see how much of your data and who can actually exercise what part of your smart contract. Right? This is actually how things should go if you want to attend all the three things at the same time that solves the existing problems of institutional DeFi and scale is the only thing that trades away that people think about oh confidentiality is easy scalability is not that much important you know if you do not have a global state replication right currently your validator is also holding the load code of some transaction which is you're not even a part of it. You're not even affected by it. You are basically paying for scalability of the load that you are not even affected by or be a part of. Right? The scaling is a global ceiling right now. But when this kind of network of networks infrastructure comes in where every validator is a part of the transaction where they are referred to you know they have their own dedicated synchronizers or a global synchronizer that's when you define how much scale your ecosystem needs. If you don't need much scale you just work with a single global synchronizer. If you need more speed more scale you just add another synchronizer that does the job for you. It is as simple as that. But the thing is that you trade away a lot of things, right? There is always a downside or upside. It is complex. Yes, you trade away the ease. You trade away the comfort, but what you get is much more robust infrastructure to handle the next trillion dollars or quadrillion dollars of finance on your blockchain. And that's the whole point of this conversation that I'm having right now via this talk is where exactly are we falling short and what is the most ideometic way to solve the problem. It was never a problem that we intended to come. We designed an infrastructure. It worked amazingly. But now to welcome the next level of finance, we just have to use the infrastructure that can handle both the defi of the world and the institutions of the world. Right? No global state mechanism where you just define your own state. You just define your own scalability and your own ecosystem. You handle your own data. If the global synchronizer becomes a bottleneck, you add a synchronizer. You scale yourself. Right? Every single problem comes with a solution. When you open to that kind of infrastructure, when you remove yourself from the conventional ways of doing things now, I wanted to keep it very short because I just wanted to interact with the people here. I wanted to share some of the underlying problems of the existing finance right now. Institutional finance is only about the fact that can you give us all the things that we need to put our money on blockchain. It was never about only choosing the two that people say. It was about choosing all the three parts of the dilemma and solving it for the good. You have to make sure that you are solving the way by which you're keeping the data the sensitive data confidential. You're making sure that your blockchain your infrastructure is scaling in a way where it handles the trillions of dollars. And finally, confidentiality and scale should not compromise the way via which the privacy works in the first place which is atomicity. The person sitting in the front should be able to talk to the people sitting in the back easily without having a 100 bridges without having a a 100 middleman in between. You know that's the core point of this conversation that it is time for the builders to build for the institutions and the upcoming where sources of revenue. It is all about building where things are going towards the global state, the transparency. It revolutionized finance, everything on chain. It was a great revolution of billions of dollars, you know. But now we have to institutionalize it. We have to siphon that amount of money and capital into blockchain. And then we have to build for what matters is by making the next level of finance feel more comfortable to also build alongside all of us. You know confidential disclosure or selective disclosure is the way by which we can attain it. But of course this is the end of the talk. I wanted to keep it very short and sweet and on point. But if you have anything to discuss, I'm here afterwards and you can just connect with me on Twitter. I'm I'm like genuinely unhealthily active on Twitter right now so to talk to people. But yeah, any any questions? Anybody?