Stanford Researchers Propose Cost-Effective Privacy Protocol for Ethereum

  • Visa Research and Stanford University's researchers propose improved financial privacy for Ethereum with Zether in new paper.
  • Zether-based smart contracts may be processed more cost-effectively and in a confidential manner.

Researchers at the prestigious Stanford University and Visa Research have created new privacy features for Ethereum (ETH)-based smart contracts.

On February 20, Stanford University’s applied cryptography group published a research paper that explains how the newly developed privacy protocols for ETH-based smart contracts can be integrated on the cryptocurrency’s blockchain.

An Account-Based Approach To Financial Privacy

As mentioned in Stanford’s research document, the team at Visa Research and the private university have developed a protocol called “Zether” - which is “a fully-decentralized, confidential payment mechanism.”

Explaining how Zether can be integrated on the Ethereum platform, the paper’s abstract notes: 

We take an account-based approach similar to Ethereum for efficiency and usability. We design a new smart contract that keeps the account balances encrypted and exposes methods to deposit, transfer and withdraw funds to/from accounts through cryptographic proofs.

Increasing Interoperability With "Σ-Bullets"

Additionally, the research paper’s authors “describe techniques to protect Zether against replay attacks and front-running situations.” Zether has also reportedly been designed to allow for interoperability between multiple smart contracts.

Enabling interoperability between arbitrary smart contracts helps in maintaining the privacy of several applications built on Ethereum including payment channels, voting, and auctions - according to Stanford and Visa’s researchers.

Other features incorporated into the Zether protocol include “Σ-Bullets” - which are intended to be “an improvement of the existing zero-knowledge proof system” (called Bulletproofs). As mentioned in the research paper: 

Σ-Bullets make Bulletproofs more inter-operable with Sigma protocols, which is of general interest. We implement Zether as an Ethereum smart contract and show the practicality of our design by measuring the amount of gas used by the Zether contract.

Litecoin May Add New Privacy Features

Currently, a confidential transaction with Zether “costs about 0.014 ETH”, an amount valued at $2.06 according to CryptoCompare data. However, the paper’s authors suggest certain changes to the Ethereum protocol - which are currently being considered independently of Zether’s ongoing development. Per the research team at Visa and Stanford, “small changes to Ethereum's” codebase could “drastically reduce” the cost of confidential Zether-based transactions.

Notably, various altcoins incl moudingnero (XMR) and zcash (ZEC) have been created in order to help users maintain financial privacy. As CryptoGlobe reported earlier this month, litecoin (LTC) might potentially add privacy features. According to Charlie Lee, the founder Litecoin: 

Fungibility is the only property of sound money that is missing from Bitcoin and Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy. I am now focused on making Litecoin more fungible by adding Confidential Transactions.