Almost the entire crypto industry is fighting against regulation, but one project is taking the opposite approach — it has made compliance its core competitive advantage. Dusk’s choice is quite interesting: instead of competing for the broadest application scenarios, it is focusing on the financial sector that most needs compliance.

In simple terms, Dusk is building a Layer 1 that natively supports both privacy and compliance simultaneously. The core idea is to embed identity verification and programmable rules directly into the protocol at the blockchain’s foundational layer — processes like KYC and AML, which are essential for institutions, are written into the protocol itself. This provides traditional financial institutions with compliance guarantees when deploying applications and assets.

Why is this positioning important? Because the biggest challenge for on-chain real assets (RWA) isn’t the technology but the regulatory barriers. Whoever can solve this problem most elegantly will be the biggest beneficiary of this wave of institutional adoption.

**Where are the core risks?** The ecosystem’s cold start. The value of the entire network is highly tied to actual institutional adoption. So, the key isn’t just how many partnership announcements the project makes, but rather the real on-chain compliant financial activities — are institutions using Dusk’s privacy smart contracts (XSC) to handle securitized assets? Are private equity transactions happening on this chain? These data points are more convincing than any press release.

From a technical perspective, Dusk deeply integrates privacy technologies like zero-knowledge proofs with its compliance framework. But this also introduces a hidden risk — high complexity could become a ceiling for ecosystem expansion. Developers need to learn more, which means more resources must be invested in refining developer tools, and community engagement needs ongoing attention.

Regarding liquidity, it should be viewed separately. On the surface, it’s about the price fluctuations of the DUSK token, but the real underlying risk lies in whether on-chain financial assets can be liquidated. This depends on a professional market maker system, which is still in the observation phase and not yet mature.

From a different angle, in an era where compliance is becoming the mainstream narrative, is this vertically focused approach the right path? When will the tipping point for large-scale institutional on-chain adoption arrive? These questions are worth continuous attention.