Solana founder: Privacy is not a core factor of product-market fit

Solana Labs founder Toly, says that privacy alone does not make a crypto product or feature compelling enough to alter how users engage with it.

In a recent post, the Solana (SOL) founder contributed to a thread on X discussing the biggest hurdles facing the DeFi industry. He does not recognize privacy as a “killer feature” in that sense.

“There is lack of pmf for privacy. In of itself it’s not a killer feature that would change user behavior,” said Toly in his post.

In this context, concepts such as privacy may have technical or ideological significance, but it doesn’t guarantee widespread adoption. For a feature to drive adoption, it must solve a tangible problem, offer clear utility, and encourage ongoing user engagement.

According to Toly, privacy fails to meet these criteria on its own. It is not a standalone “killer feature” that fundamentally changes user behavior or adoption patterns when it comes to crypto projects.

In the discussion thread, the trader on X that started the discussion tried to counter Toly’s point by saying that privacy is still a pretty determining factor, considering there have been incidents on-chain where the system doesn’t hold up to technical attacks like the case of the Hyperliquid whale which triggered mass liquidation due to the sheer size of the perp.

“Are there not cases where privacy is preferable for certain trades?” asked the trader.

“No. Complaining about a problem doesn’t mean that that there is pmf for the solution,” said Toly.

In an earlier post, former Solana Head of Growth Matty Taylor suggested that the achieving PMF would involve other criteria that are based on features centered on more economic and utility, such as sustainable revenue, demand, and liquidity instead of privacy.

How does Solana’s privacy stack up against other chains?

Solana offers native privacy features through its Token-2022 standard, which supports confidential transfers, encrypted balances, and optional auditor keys. However, these features are opt-in and require token migration.

Solana also hosts early-stage privacy projects that employ zero-knowledge proofs, such as Elusiv, Arcium, and Light Protocol.

Compared to other leading chains in privacy, Solana is pushing innovative native and app-layer privacy. However, it is still behind Ethereum (ETH) in terms of institution-grade privacy infrastructure and ecosystem maturity.

Ethereum doesn’t offer privacy at the base layer. Instead, it relies on a mature Layer 2 ecosystem zk-Rollups, zkEVMs, and protocols like Tornado Cash for privacy tooling.