A group of cryptographers, including Ethereum veterans Ameen Soleimani and Zak Cole, have introduced a new tool to enhance on-chain privacy. These so-called “Privacy Pools,” first proposed in 2023, launched on the mainnet Monday, according to an announcement on X.
Privacy Pools are a type of mixnet system that uses zero-knowledge proofs and an "Association Set Provider" to ensure that only "clean" funds enter the pool. The goal is to offer everyday crypto users privacy while maintaining regulatory compliance.
The system was developed by 0xbow, which built the infrastructure and wallets necessary to enable private transactions on a public blockchain like Ethereum. 0xbow has received funding from Bankless, Number Group, Public Works and a number of angels, including Ethereum co-founder Vitalik Buterin.
"Privacy Pools, our new onchain privacy product from 0xbow, is how we reclaim privacy from the terrorists," Soleimani told The Block in a direct message. "Privacy Pools builds on the work that the Tornado Cash team did with their compliance tool and iterates on it, now allowing users to publicly dissociate from and isolate illicit funds, without revealing their specific deposits. Privacy for the good guys."
Users can deposit and withdraw ERC-20 tokens privately using zero-knowledge proofs, while an ASP ensures compliance by vetting funds. The process involves connecting through a compatible wallet on networks like Ethereum or Layer 2 Gnosis, creating a dedicated 0xbow Wallet, depositing funds into the pool and withdrawing to a new shielded address.
Unlike previous mixers like Tornado Cash, Privacy Pools can feature Association Set Providers that maintain lists of sanctioned or sketchy accounts. 0xbow, or another entity, can act like a gatekeeper to prevent dirty funds from entering the mixing pool.
0xbow’s protocol has its roots in a paper Buterin co-wrote in 2023 with Chainalysis researcher Jacob Illum as well as academics Matthias Nadler and Fabian Schar, among others. The ideas in that paper have been adopted by several projects, including Railgun, which was instrumental in preventing the zKLend attacker from laundering stolen funds in February.
“This is only the beginning The road to making privacy normal again is long and exciting, and we can’t do it alone!” 0xbow wrote in its announcement.
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