Equilibrium Infra Bulletin #48: Confidential Balances on Solana, ZkCloud Proving Ethereum, and more...
Equilibrium designs, builds, and invests in core infrastructure for the decentralized web. We are a global team of ~30 people who tackle challenges around security, privacy, and scaling.
🔍 Confidential Balances: Empowering Confidentiality in the Solana Ecosystem
⚡️ Topic Summary
Solana recently launched a set of token extensions under “confidential balances”, including confidential transfers, fees, and mint/burn functions. The implementation leverages both homomorphic encryption and ZKPs, enabling asset owners and token issuers to get some privacy guarantees by hiding balances and transfer amounts, but not the transaction graph. In other words, external observers can still see who an account interacted with and the frequency of interaction, but not the content of the transaction.
To start with, only server-side proving is available, which additionally limits the strength of privacy guarantees. However, this will change later this year with JS libraries, which will enable client-side proving and easier wallet integration. In addition, confidential balance features are only available for new tokens, but there is already an SPL Token Wrap Program that enables converting tokens between the old and the new token standards.
Confidential Balances token extension has some similarities with Avalanche’s confidential token standard (eERC), Zether (which was never implemented), an early Aztec implementation, and the confidential ERC-20 proposal by Inco and Circle (FHE-based, not implemented).
🤔 Our Thoughts
While the announcement garnered reactions and even critique from the wider ecosystem, it’s hard not to be excited about this implementation and its significance. It isn’t perfect, but one of the largest ecosystems enabling stronger privacy guarantees for its users represents a giant leap in the right direction. More importantly, this is not a theoretical proposal or a talk at a conference - it is already deployed in production (but wallet integration is still quite limited).
We expect this to be the first iteration and that the programmability and strength of privacy guarantees that Solana offers will expand over time - either by enshrining them directly into the base layer or by partnering with add-on privacy protocols (e.g., via MPC or FHE co-processors).
💡 Research, Articles & Other Things of Interest
📚 Tachyon: Scaling Zcash with Oblivious Synchronization: A proposed solution to get around a common scaling bottleneck that many zk-based privacy protocols face, namely a constantly growing nullifier tree.
📚 A maximally simple L1 privacy roadmap: Proposal by Vitalik of different ways to add privacy to Ethereum L1 in ways that are very light on Ethereum consensus changes. Related to this, Vitalik recently weighed in on the value of privacy (both within Ethereum and the broader society), arguing that privacy can no longer be ignored. Worth a read!
🔥 News From Our Partners
🌩️ All Ethereum Blocks Are Now Being ZK-proved by ZkCloud, opening the door to instant full node sync, more trust-minimized bridging, and more. While the ultimate end goal is real-time proving, this is a major milestone for Ethereum (and the wider ecosystem) and a testament that ZK proving is becoming much more practically feasible (cheap and fast enough). Follow live here. ZkCloud was incubated by Equilibrium.
🤌 Personal Recommendations From Our Team
📚 Reading: The Panama Papers - Bastian Obermayer and Fredrik Obermaier: The behind-the-scenes of the investigation into one of the largest data leaks to date, which exposed how the rich and powerful hide their money in secret offshore accounts. Still relevant today.
🎧 Listening: How To Create A New Town - Devon Zuegel: An interesting discussion around what makes a good town, why we don’t see many new ones and the funding challenges of creating a town.
💡 Other: The Helsinki Bus Station Theory: Thoughts about creativity and paving your own way from Finnish photographer Arno Rafael Minkkinen.