Ethereum dev proposes ‘Secret Santa’ protocol to drive privacy – Details!

Privacy became the hottest topic in 2025 and the most profitable narrative across the crypto markets. As Christmas approaches, the frenzy remains. That’s why an Ethereum developer has announced a ‘Secret Santa’ privacy-focused protocol for anonymous gifting. 

Source: ETH Research 

 This is not Ethereum’s first stab at privacy though. In fact, back in September, the Ethereum Foundation unveiled an ambitious privacy roadmap.

It covers all levels of the chain, from user-facing wallets to private payments and transactions for retail and institutional use cases. 

Already, private wallet features are being rolled out thanks to the Kohaku framework.

What’s next for Ethereum in 2026?

That being said, the Ethereum ecosystem’s mid-term goals overlap between privacy, scaling, and AI. 

Interestingly, recent scaling efforts, such as Pectra and Fusaka, are enhancing throughput and reducing the overall cost of transactions to rival other competent chains, like Solana. 

In fact, the cost factor has dropped significantly that the Ethereum mainnet Layer 1 (L1) is now rivalling its Layer 2s (L2s). In a recent post, Vitalik Buterin, the founder of Ethereum, stated that users can now build directly on the L1 at current low rates. 

Source: X

Ethereum L1 vs. L2 debate

However, Buterin’s statement drew some criticism. One of the critics, Blockworks analyst Dan Smith, quipped, 

“I don’t think it’s that straightforward because the largest consumers of blobspace are general-purpose L2s – direct competitors of L1 execution.”

Smith drew parallels between carpenters (L2) and lumber yards (L1), stating that they don’t sell competing end products. 

However, other analysts countered that both mainnet L1 and L2s can still compete for the same builders. Supporters of Buterin’s L1 push, like Hasu, poked holes into Smith’s argument and added, 

“Apple sells phones via own stores + direct distribution, but also on Amazon.”

And, the fight for users between the mainnet and L2s is quite understandable. Currently, L2s capture most of the economic value and hardly share it with L1. 

For example, in the last 24 hours, Base, an L2 incubated by Coinbase, generated over $3.4 million in fees. However, only paid $3,700 as “rent” to the mainnet. 

Source: Growthepie

It is based on this data that most analysts say that L2s extract value from Ethereum more than they give back. And to some extent, this tokenomics has dragged ETH’s value, according to other market watchers. 

It remains to be seen how the scaling and privacy goals will improve ETH tokenomics and demand.

Final Thoughts

• The privacy narrative remains a hot topic, and Ethereum is positioning itself well for the trend. 
• Similarly, Buterin is pushing for more value capture for the Ethereum L1, triggering backlash from some quarters.