Ethereum Proposal Outlines GDPR Compliance Path via Modular Design

As the Ethereum ecosystem and its core principles evolve to address data privacy concerns, a new proposal recommends a modular compliance strategy as a path to reconcile public blockchains with the European Union’s General Data Protection Regulation (GDPR).

On Monday, a proposal drafted by Ethereum community member Eugenio Reggianini suggested the use of modular architecture for effective data management and privacy.

“By pushing personal data to the edges (wallets and DApps), using offchain storage with metadata-erasure, and splitting roles cryptographically, we can focus GDPR controller duties on a small set of entities, while the wider network becomes mere processors or falls out of scope,” Reggianini said.

Ethereum’s transition to a modular architecture could enable the integration of various privacy-enhancing technologies (PETs), which, according to Reggianini, can achieve GDPR compliance in permissionless blockchain environments.

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Technical roadmap: PETs to the rescue

The proposal outlines several technologies already being integrated or proposed for Ethereum that help reduce personal data exposure, including proto-danksharding (EIP-4844), which limits transaction blob lifespans to around 18 days, enforcing storage minimization.

Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zk-SNARKs) can also help improve privacy as they involve validators confirming succinct cryptographic proofs rather than viewing transaction payloads, dramatically reducing onchain data visibility. 

Other PET integrations that could help with GDPR compliance include Fully Homomorphic Encryption and Trusted Execution Environments (TEEs), multiparty computation (MPC), Proposer-Builder Separation (PBS) and Peer Data Availability Sampling (PeerDAS).

Ethereum’s modular compliance strategy

The proposal breaks down GDPR implications across the Ethereum network’s three layers: the execution layer, consensus layer and data availability layer. 

The execution layer would operate as processors relaying only encrypted or blinded data, while the consensus layer would solely validate commitments and zero-knowledge proofs. Lastly, the data availability layer, under PeerDAS, would store only anonymous shards for limited timeframes, bringing them in line with GDPR’s data minimization principle.

By focusing data controllership on the application layer and leveraging PETs, Ethereum can protect user privacy without sacrificing its core principles, Reggianini claimed. 

Still, the framework’s success will depend on broad community adoption, developer buy-in and potential alignment with EU regulators.

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