Published Jul 21, 2026
Private Atomic DvP on Ethereum: No More Trade-offs
Transcript
Private Atomic DvP on Ethereum: No More Trade-offs
Alex Gluchowski, CEO, Matter Labs — July 21, 2026
Hello everyone. My name is Alex. I'm going to be talking today about atomic DvP on Ethereum. If you're not familiar, DvP is a term from institutional finance which stands for delivery versus payment. Our focus at Matter Labs has been very institutional for the last two years, and this is one area where there is a lot of excitement despite the market situation right now. DvP stands essentially for a token swap. And this is a difficult problem for institutions, because today's blockchain options are not quite meeting the requirements of institutional finance. They are facing trade-offs between several important properties, each of which is actually a hard requirement. [CHECK: audio garbled here — "each of them is actually getting requirement" in raw transcript] I'm going to briefly walk you through the existing solutions and why they don't work.
We start with public chains. Obviously, Ethereum has lots of fantastic properties, and it has been used by institutional finance for a lot of use cases. But it's public by default, and everything you do — all your positions, all your transactions — is going to be visible to everyone in the world. That's not really working for banks, who have to adhere to strict bank secrecy rules. It does not work for enterprises, who don't want to disclose their business models to the world. So that's just a no-go — you cut off ninety-nine percent of use cases. So we're going to skip that and move to the solution that they have experimented with for several years now: private chains — institutional, permissioned chains. They work. They have internal usage in banks and in financial market infrastructure providers, who use them for managing liquidity between different subsidiaries, for internal operations, all of that. They have perfect privacy, because the data never leaves your zone of control. But they are obviously not connected to each other, and so the value of these systems is very, very limited — arguably more limited than the public chains. The whole idea of blockchains is that it's a network, it's the internet of value, and there is no internet if you cannot connect.
There is an obvious, tempting solution: to connect them with external bridges. The problem here is that the bridge operators then see everything that's happening between the chains. But that's the smaller problem. The larger problem is that your bridges essentially become your settlement layer for everything that passes over the bridge. All the tokens that you expose to the bridge, you settle on the bridge. You don't have the security of the origin chain; you don't have the security of the target chain. You replace that with trust assumptions on the bridge. If that is okay for you, fine — but you have to be comfortable with this, and a lot of institutions are not.
The third type of solution that has been considered for a while now is what I would call mediated networks. It has a mix of properties of the previous two, and there are different kinds of implementations. There are some purely operator-attested systems, where you get individual privacy domains and you trust certain operators to attest to the security of the zones and guarantee privacy — but these guarantees are contractual. A different subtype of a similar system is something like fully homomorphic encryption, which is, on the one hand, cryptographic; but on the other hand, you still have a number of operators who collectively hold the full picture of what's happening inside, and they can decrypt it with a threshold. So you still trust a majority of these operators to behave honestly. And that is not really meeting the strict requirements of institutions to have full control over the data, with strong — not contractual — guarantees.
So we've seen that, and we built the architecture called Prividium, which is the one that checks every box from the requirements that we discussed. It's a framework for building private chains, or private zones, that are cryptographically secured. You generate proofs of execution for everything inside the chain. Institutions run them on their own infrastructure — you have physical data privacy guarantees, because the data never leaves the devices under your control. And yet you have this private atomic connectivity between the chains, and you settle on Ethereum as a credibly neutral settlement layer.
Prividium comes with a bunch of middleware layers that give you control over individual accounts and transactions. The operator sees everything inside and can control everything — full permissioning, full data properties. You can connect your OIDC directory of users and configure rights there. You can configure rights per role of the users, per smart contract, per individual function of a smart contract. You have a lot of flexibility there, and you can also do it programmatically. And cryptography — zero-knowledge proofs — guarantees that everything that executes on a Prividium is correct. Even if the operator is not honest, or if the operator was compromised, they would not be able to finalize invalid transactions.
What this enables is transactions that can span multiple zones simultaneously, at scale, executing together, fulfilling certain rules. We'll talk about how this works on a slightly more technical level. But also, very interestingly, you can set rules that apply beyond your zone. What I mean by this is: you can deploy a smart contract once. Let's say you're the issuer of an asset — you are a bank who deploys a tokenized deposit, and you have a whitelist of users who can use this deposit, or a certain set of KYC/KYB rules that have to be enforced on every single transaction. What you would have to do in today's configurations with private chains: you would have to go and do a bilateral agreement with every bank that you want to operate with. You would have to integrate into their systems, prescribe these rulebooks to them, and get a contractual guarantee that they're going to enforce them. And you have no way of checking if they enforced it, because you don't see what's happening there — you cannot really guarantee that it happened in the first place. With Prividium, you can deploy a smart contract which will be virtually mirrored into all the zones, and it will enforce the rules automatically — without you seeing the data, and without you having to be there. Whatever is invalid just won't execute.
So let's talk about private DvP, because it's the most complex — or the most interesting — example of cross-zone interaction, which evokes questions whenever we talk about this. This is a topic which is hard to understand — how exactly it works on a technical level — because it comes down to the legal consequences of what happens if one part of a transaction executes and the other part doesn't execute. Who is liable? Shall I go and sue someone, or is it really guaranteed by technology? In this case, it is guaranteed by technology. Here's how it works.
First, why you need atomicity. DvP in today's banking systems is executed sequentially. You send someone some stock, and they pay you back on different rails. And you always have this counterparty risk window where you send them the money, but maybe you don't get the security back, and then you have to go and sue them. So it only works between a small number of counterparties whom you can actually trust, or where you trust yourself to be able to enforce it through the legal system — which limits your options. On blockchain, it's not the case: with atomic swaps, you don't have to trust the person you're transacting with, because it's either going to happen or it's not going to happen. If we could do that in traditional finance with tokenized assets, we would massively reduce the cost of compliance and the cost of operating these systems, because the settlement risk would collapse. Operations would be a lot easier, a lot simpler, and it would be a lot more capital efficient, because you don't have to wait out the settlement time, which is also costing you money — and sometimes it goes into several days.
Here's how it works. Imagine you have two zones, with assets held on each zone, and they want to transact. The two parties would agree on what exactly they want to do. Let's say one party says: I'm going to send you one hundred million USDC. [CHECK against the video — the raw transcript reads "one hundred Usdc for one hundred Usdc or one hundred million USD, one hundred million Usdc", which as written is USDC-for-USDC; the other leg of the swap was likely a different asset.] They would note down the exact agreement, and they would simulate this transaction — signing down the intent of what's going to happen, with all the consequences, with the full exchange of all the inputs and all the outputs of the transaction, with all the effects. Then they would calculate the hash of this mutual contract, which we call a cryptographic commitment. They would put it on a neutral data availability layer, and they would put the hash itself on Ethereum as the settlement layer. Both parties can access the data availability layer and the settlement layer. Data availability can be Ethereum's native DA, or it could be some third-party place which both trust.
Then, once the hash — the commitment — is on the settlement layer, both zones can see this, because zones are L2s on the settlement layer: they can always read the underlying chain, they see everything that's happening there, and they can access it natively. Once they see that the commitment has been posted and it's firm, they can lock the assets on both sides into an escrow contract. They put the assets there, and they can only be released upon certain conditions. Once the locking happens, both parties can look at the settlement layer and verify the current state of commitment of both chains. Both chains commit independently from each other — I assume you're familiar with how rollups work [CHECK: audio garbled here — "If you're not you, I assume that you're familiar with how to work" in raw transcript]: for each block, there is a new state, and this state has a root hash which is put on the settlement layer. So both parties can read the current state of the counterparty chain if they know what to look for — and they know, because they exchanged this information beforehand; they had this script which explains what's going to happen on each side, so they know what to look for. Once you have the new root hash, and if both parties see that the commitment has happened, they know that they can release the funds according to the rules of the happy path, and they get executed. And if the commitment did not happen until a certain Ethereum block, they will look at the state of the other chain, they will not see the commitment, and they will revert and go back to the pre-agreed release path — which is just sending the funds back on each of the chains.
And this works for delivery versus payment, for payment versus payment — so for swaps of all different types, for collateral movement — and it can span multiple zones simultaneously in one large chained transaction, not only between two zones. The Prividiums can form this cryptographic, credibly neutral network by connecting to each other through Ethereum — which is now already growing with the Cari Network, a consortium of five US regional banks. There are multiple FMIs and big banks building, including Deutsche Bank and some others I'm not going to disclose now. The network is growing, and we'd love to talk more and explain if it was not clear. I'm available after the talk to answer questions. Thank you all.
Alex Gluchowski (CEO, Matter Labs) on how Prividium makes atomic delivery-versus-payment possible between private bank zones, settled on Ethereum with cryptographic proof.
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