Ethereum's Modular Strategy Aims for GDPR Compliance

According to Cointelegraph, the Ethereum ecosystem is exploring a modular compliance strategy to align public blockchains with the European Union’s General Data Protection Regulation (GDPR). A proposal by Ethereum community member Eugenio Reggianini suggests utilizing modular architecture to enhance data management and privacy. This approach involves decentralizing personal data to the edges, such as wallets and decentralized applications (DApps), employing offchain storage with metadata-erasure, and cryptographically splitting roles. This strategy aims to concentrate GDPR controller responsibilities on a limited number of entities, while the broader network functions as processors or remains outside the GDPR's scope. The transition to a modular architecture could facilitate the integration of privacy-enhancing technologies (PETs) within Ethereum, potentially achieving GDPR compliance in permissionless blockchain environments. Reggianini highlights several technologies that are either being integrated or proposed for Ethereum to minimize personal data exposure. These include proto-danksharding (EIP-4844), which limits transaction blob lifespans to approximately 18 days, thereby enforcing storage minimization. Additionally, Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zk-SNARKs) can enhance privacy by allowing validators to confirm succinct cryptographic proofs without accessing transaction payloads, significantly reducing onchain data visibility. Other PETs that could aid in GDPR compliance include Fully Homomorphic Encryption, Trusted Execution Environments (TEEs), multiparty computation (MPC), Proposer-Builder Separation (PBS), and Peer Data Availability Sampling (PeerDAS). The proposal outlines GDPR implications across Ethereum's three layers: the execution layer, consensus layer, and data availability layer. The execution layer would act as processors, transmitting only encrypted or blinded data, while the consensus layer would focus on validating commitments and zero-knowledge proofs. The data availability layer, under PeerDAS, would store anonymous shards for limited durations, aligning with GDPR’s data minimization principle. By concentrating data controllership on the application layer and utilizing PETs, Ethereum aims to safeguard user privacy without compromising its foundational principles, according to Reggianini. However, the success of this framework hinges on widespread community adoption, developer support, and potential alignment with EU regulators.