Key Takeaways:
- Privacy Pools, the on-chain privacy tool, launched its mainnet today, allowing private withdrawals while filtering out illicit activities.
- Vitalik Buterin made one of the earliest deposits, expressing his support for the tool.
- Within the first hour of the launch, 50 wallets deposited 16.96 ETH, highlighting strong user support.
0xbow, an on-chain privacy protection infrastructure, launched its latest tool, the “Privacy Pools,” on Ethereum today. Built by Ethereum veterans Ameen Soleimani and Zak Cole, it enables private withdrawals that enhance security and dissociate illicit actors from the wallet. Users can deposit their digital assets into the pools and withdraw them without creating an on-chain link between their deposit and withdrawal web3 addresses.
Vitalik Buterin, the co-founder of Ethereum, made one of the first deposits on the platform, promising his support to the project. At present, the deposit is limited to 1 ETH (minimum 01. ETH), and it will rise as the devs battle test the tool. For the system to approve the withdrawal requests, participants should pass a screen test that ensures that the wallets are not linked to any illicit transactions. If any users don’t pass the test, they can still withdraw back to their original wallets.
“Privacy Pools” are expected to resolve the longstanding issue of ensuring privacy and anonymity while maintaining regulatory compliance. Unlike protocols like Tornado Cash, the tool has a semi-permissionless automation that excludes shady funds and decreases the chances of money laundering. Many users have already started engaging with this innovative protocol, marking a turning point in the blockchain environment. Within one hour of the launch, it hit 16.96 ETH deposits through 50 wallets.
How Do The Privacy Pools Work?
Privacy Pools, first outlined in a 2023 white paper co-authored by Buterin, Chainalysis Chief Scientist Jacob Illum, and researchers from the University of Basel, was later developed by strategic advisor Ameen Soleimani and developer Zak Cole through their 0xbow. Version 0 was first released on the Optimism testnet, and the mainnet went live on Monday, following two years of development.
Users can send their funds from one address to the Privacy Pools and initiate partial or full private withdrawals to another wallet. There won’t be any on-chain link between the deposit and withdrawal addresses. This is achieved through a combination of commitment schemes and zero-knowledge proofs. The prevention of illicit funds is enabled through an Association Set Provider (ASP) that maintains a set of approved deposits.
The Architecture Of Privacy Pools
The protocol uses three distinct layers with complex processes to achieve privacy: a contract layer, a zero-knowledge layer, and the Association Set Provider (ASP) layer. The contract layer is an entry point that consists of asset-specific privacy pools that hold funds. The zero-knowledge layer includes commitment circuits that secure the deposit registration, withdrawal circuits that enable private withdrawals, and on-chain verifiers that validate the circuits. Let us break down the tool’s key features and capabilities.
- Partial withdrawals are allowed. Users can privately withdraw small portions of their funds.
- Apart from ETH, the pool supports all ERC-20 tokens and native currencies.
- Users are in full control of their funds, and there is no time limit for withdrawals.
- If the ASP does not approve the funds, the depositors will receive them back in their original wallets.
Also read: Coinbase CEO Brian Armstrong Critizises Stablecoin Rules: Terms It ‘Outdated’
Can Privacy Pools Balance Privacy And Regulatory Framework?
While traditional mixers allow fund transactions without verification, Privacy Pools check whether the wallet is linked to any potential malicious activity. This is very important in the context of hackers using such decentralized platforms to launder funds. Also, this mechanism provides privacy from current ruling powers that try to control the total crypto environment. As the adoption of blockchain applications continues to grow, it is important to safeguard our funds from hackers and untrustworthy regulators.