Chainlink solves the 3.4 trillion USD privacy problem for Wall Street

Banks do not publicly disclose their risk positions, and investment funds also do not reveal their clients' portfolios. However, both want to have the ability to execute programmable transactions and verification — without disclosing the content of the transactions or the identification of the parties involved.

This very contradiction has caused institutional capital to stay away from public blockchains, waiting for security technology to develop enough to meet compliance requirements. If banks cannot participate in the blockchain market without security mechanisms, then the entire crypto market worth 3.4 trillion USD will still be “locked out” from them.

Chainlink believes it can address this issue first with “Confidential Compute”, a layer of data security integrated within the Chainlink Runtime Environment (CRE). This technology processes sensitive data off-chain, sending verified results on-chain without revealing the input data or processing logic.

The service was launched along with CRE on November 4th, with an early access phase expected in 2026 and widespread deployment thereafter. Initially, tasks are run in Trusted Execution Environments (TEE) — isolated hardware environments that allow code execution without exposing data to the host system.

The development roadmap of Chainlink also includes the integration of zero-knowledge proofs (ZK), multi-party computation (MPC), and fully homomorphic encryption (FHE) as these technologies mature.

Chainlink simultaneously announced two sub-systems to serve organizational needs:

• Distributed Key Generation (DKG) – create distributed short-term session key.
• Vault DON – decentralized long-term secure data storage.

The company describes this as a solution for tokenized assets, cross-chain “delivery versus payment” transactions, and compliance checks that can occur without exposing the position, identification of partners, or API information to the public mempool.

Combining bank data and transparency verification capabilities

The short-term value of the solution is quite clear: organizations can use proprietary data or external data sources on the blockchain without needing to disclose the original information.

Examples of Chainlink include the token of real assets (RWA) for private use, distributing confidential data to paying subscribers, DvP transactions between public and private chains, or KYC processes that only return “yes/no” results on-chain while still maintaining an audit trail for regulators.

Each process in CRE generates a (cryptographic attestation) of the logic executed and the execution time, without revealing data or business rules. This approach provides two main benefits:

1. Separate the verification layer from the data layer, allowing auditors to confirm integrity without accessing sensitive data.
2. Seamless operations across public chains, private networks, and Web2 APIs through a single coordination point.

This allows treasury exchanges or tokenization platforms to only require a single integration, rather than having to build individual bridges for each environment.

TEE and Cryptographic Security Philosophies

Currently, security technology is being developed in three main directions, each with its own advantages and disadvantages:

• Privacy rollups ( such as Aztec ): use ZK proofs to keep transaction secret, but have high costs and poor interactivity between chains.
• Confidential EVM with FHE ( such as Fhenix, Inco, Zama ): allows direct computation on encrypted data, but the cost is extremely high and the tools are not yet fully developed.
• TEE-based EVM ( like Oasis Sapphire ): fast speed thanks to running in isolated hardware, but still relies on the reliability of the physical chip.

Chainlink chooses TEE as the starting point because it is the most feasible option for organizations today. According to Microsoft's definition, TEE allows the execution of code and data in an isolated environment, maintaining high security and near-native speed without incurring heavy cryptographic costs.

Nevertheless, Chainlink is aware of the concerns regarding the trust model of TEE, so CRE adds a layer of decentralized verification and secret sharing on its oracle network. The long-term roadmap still aims to integrate ZK, MPC, and FHE when the technology is mature enough.

Balance between security and liquidity

The distinguishing feature of Chainlink is the construction of a security layer as an off-chain service, rather than creating a separate blockchain. As a result, real asset tokens or private data streams can still be traded and settled on public chains like Ethereum or layer 2 Base, where liquidity is available.

Private rollups offer stronger security but isolate liquidity and require bridges to interact with DeFi. Therefore, the question arises: do organizations prioritize absolute security or interoperability and speed?

Chainlink also integrates Confidential Compute with the Automated Compliance Engine – a tool for KYC checks, regulatory compliance, and position limits right within the transaction process. This duo is expected to become a “bank-grade” solution package: private execution, verifiable compliance, and cross-chain payments from a single service layer.

If the initial pilot projects fully utilize this package for processes such as controlled treasury transfers or issuing tokenized credit, it shows that Chainlink is gaining an advantage due to its capability for full-process integration, not just because of its security technology.

The race against time and trust

Confidential Compute is expected to be ready for the first users in 2026. Meanwhile, competitors like Aztec (ZK rollup) and Aleo (private-by-default applications) already have public testnets, while FHE platforms are quickly moving towards availability.

If organizations prioritize speed, auditability, and Web2 infrastructure compatibility, Chainlink's TEE-based approach may have a short-term advantage. However, in the long run, the game will depend on whether Chainlink's “multi-security technology” model can be perfected before ZK or FHE solutions become cheaper and faster.

The final question remains: who will lead - the banks that need privacy to transact, or the cryptographers who want to eliminate trust in hardware altogether? Chainlink is betting that they can serve the first group while waiting for the second group to catch up.

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