Seal protocol adds a privacy shield to storage networks like Walrus. Using threshold encryption, it claims that a single node cannot see user data at all, with the keys dispersed and stored across the network.

It sounds foolproof. But this security framework is actually built on a very fragile foundation—assuming that nodes won't collude. In other words, the system relies on these independently operated storage nodes being rational enough not to team up and break the system.

The problem is, this assumption is a bit naive in the world of cryptography.

Imagine what would happen as the Walrus network grows larger. Storage services become more specialized, market concentration rises, and eventually, the top twenty global node operators control seventy percent of the network share. On the surface, they operate independently, but once they enter a private industry forum or a high-end summit’s social event, their interests become clear.

Rather than struggling over small storage fees, they could band together—exchanging key fragments to decrypt high-value commercial data, multiplying profits by dozens of times.

The most insidious part is that such collusion is almost impossible to detect. Node operators don’t need to tamper with data or cause service disruptions; they just silently exchange fragments in the background. Users wouldn’t notice anything unusual until one day they find their core data listed on the dark web auction.

The mathematical logic of threshold encryption is indeed unbreakable. But it doesn’t address a deeper issue—the economic incentive mechanism of the protocol. Currently, Walrus mainly rewards storage capacity and network availability, but it lacks effective constraints on the most critical factor: "node honesty."

This is a structural contradiction. Without direct incentives or penalties to prevent collusion, no matter how sophisticated the cryptography, it’s just a façade.