Will the Ethereum native privacy proposal EIP-8182 drain liquidity from other privacy coins?

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Author: Blue Fox Notes

If Ethereum EIP-8182 is implemented, it will become the world's largest privacy chain, and may also draw liquidity away from other privacy coins (even users with privacy needs on BTC).

How to understand?

Currently, Ethereum is completely open and transparent; when you transfer ETH, everyone can see the sender, receiver, and amount on the chain.

Existing privacy solutions (such as Tornado, Railgun, Aztec, etc.) are third-party dApps, with several pain points:

• Each project's "anonymity set" (mixing pool size) is small, reducing privacy effectiveness;

• Different projects are incompatible, dispersing users;

• Easy to attract regulatory attention (Tornado Cash has been sanctioned by OFAC).

What exactly is EIP-8182?

In March 2026, developer Tom Lehman proposed EIP-8182, Private ETH and ERC-20 Transfers. It is currently in draft stage.

It aims to embed a unified shared privacy pool (shared shielded pool) + zero-knowledge proof (ZK) precompile directly into the Ethereum protocol layer (L1).

Main features include:

• A super large shared pool: all wallets and all dApps use the same pool, greatly expanding the anonymity set (Ethereum is the largest public chain with the most users and funds, so privacy effects are theoretically the strongest).

• Native support: ETH and any ERC-20 tokens can be transferred privately directly, as simple as regular transfers.

• System contract + partitioned proof architecture: the pool is a fixed address system contract, with no admin, no governance tokens, and no upgrade permissions, only upgradeable via hard fork (extremely decentralized).

• Zero-knowledge proof: using ZK technology to prove "the money comes from the pool, but without knowing which specific transaction," achieving complete privacy.

• No protocol fee: the pool itself does not charge any fees; users only pay normal gas fees.

If EIP-8182 is implemented:

It will make Ethereum the largest privacy chain globally, attracting institutional and user liquidity, competing with privacy tokens like Zcash, Monero, Railgun, etc., and also prompting some BTC privacy users to switch.

• Ethereum's ecosystem is the largest and most liquid;

• Once native privacy is realized, everyone can use it, and the anonymity set will far surpass existing privacy chains like Zcash, Monero, Railgun;

• Essentially turning "privacy" into an intrinsic feature of Ethereum, rather than an external add-on, upgrading ETH from a "transparent public chain" to the "largest privacy public chain."

Finally, considering institutional compliance issues, if EIP-8182 passes, it can be combined with Zama to overlay FHE contracts on the privacy pool, achieving "strong privacy + compliance."