Securities on the chain are an inevitable trend, but there is a classic dilemma between regulators and participants: transaction data needs to be kept confidential, yet regulatory authorities require the ability to audit at any time. How can both be achieved?

In traditional finance logic, disclosure is thorough. But in the on-chain world, this becomes a technical paradox—either everything is public for everyone to see, or it is completely anonymous, making audits impossible. The binary thinking of blockchain has caused many projects to get stuck on this problem.

A team leader, Jelle Pol, was pondering this issue when he suddenly had an epiphany: "Why not keep the data hidden when under inspection?"

The realization led to the development of confidential smart contracts. The core technology is zero-knowledge proofs—giving the code a "cloak of invisibility." The specific operation is as follows: the identities of transaction participants and transfer amounts are encrypted, but the system can generate a cryptographic proof that conveys to regulators "this transaction is compliant," without revealing any sensitive details. It's like applying for a bank loan—you don't need to show your passbook to everyone; just a bank-issued asset certificate suffices.

However, solving privacy issues alone isn't enough. Institutional users also worry about operational burdens after on-chain deployment—traditional public blockchains process transactions inefficiently, requiring all network nodes to participate in confirmation, which is too cumbersome.

The team subsequently introduced the Segregated Byzantine Agreement (SBA) consensus mechanism to address this. They innovatively divided validator nodes into two roles: the "Accounting Group," which focuses on fast transaction processing and can settle within 15 seconds; and the "Verification Group," responsible for safeguarding compliance boundaries and providing real-time supervision. This approach ensures both transaction speed and rule enforcement.

This combination reflects a breakthrough in thinking: privacy and auditing are not mutually exclusive but can coexist through cryptography and mechanism design.