Vitalik's Privacy Pools vs Galactica Network Compliant Privacy Design

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The key takeaway on the matter of compliant privacy is that the discussion of privacy vs. compliance in the Web3 space can be articulated as a simple economic trade-off: slippage is the cost of privacy.

A DApp that is less focused on prioritizing privacy also can contend to have less slippage. Inversely related, slippage decreases with increased liquidity as a market with high liquidity has sufficient volume to match orders without significantly impacting the asset’s price. Higher liquidity often will attract institutional capital (i.e. large volumes of trade), which are usually subject to higher regulatory compliance requirements imposed by governments or regulatory bodies. Stricter regulations equate to greater transparency which generally comes at the expense of privacy. A lower privacy guarantee stipulates a lowernvalue in the aforementionedm/nthreshold. Summarily, institutional capital favors high liquidity DApps that prioritize complying with regulatory standards over privacy. Thus, slippage is the cost of privacy.

∵ (↑ liquidity, ↓ slippage) ⋏ (↑ liquidity, ↑ volumes of institutional trade, ↑ regulatory compliance, ↓ privacy)
∴ (↓ slippage, ↓ privacy)