Why Multiparty Computation Could Outshine zk-Proofs for Private Settlements

Zero-knowledge proofs hide transaction details from the public, but also from the institution's own legal and compliance teams. This creates an unresolvable conflict with mandatory audit trails and regulatory reporting requirements like AML/KYC.

• Regulatory Friction: Auditors cannot verify a zk-rollup's private transactions, making institutional adoption legally untenable.
• Operational Blindness: Internal risk teams lose visibility, preventing real-time monitoring for fraud or sanctions evasion.

MPC distributes secret keys among multiple parties, enabling programmable privacy where transaction details are revealed only to authorized entities under pre-defined rules.

• Policy Engine: Settlements can be configured to auto-share plaintext data with internal compliance, external auditors, or regulators, while remaining opaque to the public chain.
• Institutional Control: Firms like Fireblocks and Qredo use MPC to maintain sovereignty over their audit trails, satisfying both privacy and transparency mandates.

zk-Proof generation creates a latency and cost bottleneck for high-frequency settlements, while MPC operations are near-instantaneous and computationally lightweight.

• Sub-Second Finality: MPC signing rounds complete in ~100-500ms, versus minutes for complex zk-SNARK proofs.
• Linear Scaling: Cost per transaction remains low and predictable, unlike the exponential compute growth for zk-circuits handling complex logic.

MPC is a cryptographic primitive, not a new blockchain architecture. It can be bolted onto existing institutional workflows and legacy systems with minimal disruption.

• Non-Custodial Wallets: Integrates directly with MetaMask Institutional and custody solutions without requiring developers to learn new domain-specific languages (DSLs).
• Chain Agnostic: Provides uniform private signing across Ethereum, Bitcoin, and traditional finance rails, unlike zk-rollups which are often chain-specific.

MPC's security is based on well-understood cryptographic thresholds and multiparty signatures, which map directly to existing legal frameworks for digital asset custody.

• Clear Liability: Key shard holders have defined legal responsibilities, unlike the novel and untested legal status of a zk-Proof's validity.
• Proven Resilience: MPC schemes have secured >$1T in assets over the last decade with no fundamental protocol breaches, offering a battle-tested alternative.

The future is hybrid. zk-Proofs will dominate at the layer-2 scalability layer (e.g., zkSync, StarkNet) for verifying batched state transitions. MPC will dominate at the application layer for private, compliant execution of individual high-value transactions.

• Division of Labor: zk for scalable, public verification; MPC for private, institutional execution.
• Winning Stack: Protocols like Aztec (zk) for privacy chains and SwissBorg (MPC) for privacy wallets exemplify this complementary split.

zk-Proofs for complex state transitions (like a DEX settlement) create prohibitive latency (10s of seconds) and high fixed proving costs. This kills UX for high-frequency or low-value transactions.

• Problem: zk-SNARK proving is computationally intensive, creating a ~20-60 second finality delay per batch.
• Solution: MPC settlements are deterministic and synchronous, achieving finality in ~2-5 seconds, matching base layer block times.

zk-Proofs create opaque, self-contained execution environments. Settlements inside a zk-rollup or zkVM cannot be seamlessly composed with other on-chain logic, fragmenting liquidity and application logic.

• Problem: A zk-private pool cannot be a direct liquidity source for a public Uniswap router without a trust-bridged withdrawal.
• Solution: MPC computes over plaintext inputs off-chain but settles atomically on-chain. The resulting state is natively readable by any smart contract, preserving the composable Ethereum execution model.

MPC enables threshold decryption as a core primitive. This allows for conditional logic based on private data (e.g., "execute if price > X") without ever revealing that data on-chain, a use case cumbersome for zk-Proofs.

• Problem: zk-Proofs can validate a hidden condition was met, but coordinating private inputs from multiple parties for dynamic logic is complex.
• Solution: Parties encrypt inputs to a shared MPC key. The network computes the function and only reveals the output upon settlement. Projects like Fhenix and Inco are building this layer.

MPC's security is based on well-understood cryptographic assumptions (e.g., DDH) and can leverage battle-tested libraries. Its incremental trust model (N-of-M parties) is easier for institutions to adopt than the "trust the math" model of novel zk-circuits.

• Problem: Auditing a complex zk-circuit for a novel DEX is a specialized, high-risk endeavor. ZK bug exploits are irreversible.
• Solution: MPC security reduces to the honesty of a threshold of participants. This aligns with existing institutional custody models and allows for slashing mechanisms and recoverability, providing a clearer risk framework.