DeFi ecosystem faces a seemingly irreconcilable contradiction—user privacy and system transparency are often difficult to achieve simultaneously.

Traditional DeFi protocols have obvious pain points. On-chain transactions are fully public; your wallet address, transaction amounts, and holdings are exposed to everyone. This "show your hand" approach makes large holders easy targets for arbitrageurs and front-runners, increasing the risk for ordinary users. But here’s the problem: if we pursue privacy blindly and close all information windows, how can we verify whether the system is truly fair and operates correctly?

This is the core issue that Confidential DeFi aims to solve. Its approach is straightforward: hide your specific information from the outside, but keep the entire protocol's operational logic fully verifiable. In other words, others cannot see what you are doing, but they can confirm that each of your actions follows the rules.

The beauty of this design is—protecting individual privacy while maintaining the openness and transparency of the system. Users can confidently perform large transactions without worrying about their position information being manipulated by the market. Meanwhile, the entire ecosystem can still be independently verified by anyone, just as blockchain is supposed to operate.

In a sense, this may be the necessary path for DeFi to achieve true large-scale adoption.