Can Privacy Features Drive Real Adoption? Solana Founder Questions Whether It's a True Market Driver

The debate around privacy in crypto has heated up recently, with Solana Labs founder Toly challenging a widely held assumption: that privacy alone is sufficient to drive user adoption. In a discussion thread on X, Toly argued that privacy lacks what the industry calls “product-market fit” (PMF)—the alignment between a product and user needs that triggers organic adoption.

“There is lack of pmf for privacy. In of itself it’s not a killer feature that would change user behavior,” Toly stated. This observation cuts to the heart of a fundamental challenge in DeFi: distinguishing between features that sound important in theory and those that actually change how people behave in practice.

The PMF Problem: Why Technical Merit Doesn’t Guarantee Adoption

When Toly made his case, another X trader pushed back, citing real-world examples where privacy would clearly benefit users. They referenced instances like the Hyperliquid whale liquidation event—where the sheer size of a single position triggered cascading liquidations that might have been avoidable with better privacy mechanisms. The trader asked: “Are there not cases where privacy is preferable for certain trades?”

Toly’s response was direct: “No. Complaining about a problem doesn’t mean that there is pmf for the solution.”

This distinction matters enormously. A feature can address legitimate pain points without necessarily becoming something users actually want to pay for or migrate their assets to use. Privacy, in Toly’s view, falls into this category—it’s a solution seeking a problem that users are willing to act on, not one that reshapes market behavior by itself.

Matty Taylor, who previously led growth efforts at Solana, expanded on this thinking. Rather than privacy-focused features, he suggested that real PMF emerges from criteria like sustainable revenue models, market demand, and adequate liquidity—factors grounded in economic incentives rather than privacy guarantees alone.

How Does Solana Stack Up in Privacy Technology?

While Toly questions privacy’s market appeal, Solana has nevertheless invested in native privacy infrastructure. The blockchain’s Token-2022 standard enables confidential transfers and encrypted balances, with optional auditor keys for compliance purposes. However, these capabilities require opt-in adoption and token migration, limiting their reach.

Beyond base-layer features, Solana hosts emerging privacy protocols built on zero-knowledge proofs. Projects like Elusiv, Arcium, and Light Protocol represent the ecosystem’s attempt to layer privacy solutions onto the network. These initiatives showcase technical sophistication and innovation.

When compared to other major blockchains, Solana’s approach to privacy appears competitive but not dominant. Ethereum (ETH), by contrast, doesn’t implement privacy at the base layer. Instead, the Ethereum ecosystem has matured around Layer 2 solutions—including zk-Rollups, zkEVMs, and established privacy protocols such as Tornado Cash—that provide institutional-grade privacy infrastructure.

The Bigger Picture: Privacy as Feature vs. Privacy as Necessity

The tension highlighted by Toly’s remarks reveals a deeper truth in crypto markets: not every legitimate technical concern translates into a feature that drives adoption. Privacy is technically valuable and ideologically important to many, but as a standalone selling point, it may not reshape user behavior unless it’s bundled with other compelling reasons to move assets or switch platforms.

This doesn’t diminish privacy’s importance in crypto. Rather, it suggests that privacy works best as a supporting feature—part of a broader value proposition that includes performance, security, economic sustainability, and user experience—rather than as the central attraction that convinces someone to choose one chain or protocol over another.