ShieldArc

ShieldArc is a zero-knowledge–powered, compliance-aware privacy protocol designed to enable private yet verifiable DeFi operations from a single unified liquidity pool. Public blockchains expose transaction histories, wallet relationships, and behavioral patterns, making sensitive use cases like payroll, treasury management, trading strategies, and donations fully transparent. ShieldArc addresses this by decoupling fund ownership from fund usage using zero-knowledge proofs.

Users generate privacy-preserving zk-identities from government-issued documents without revealing personal data on-chain. Wallets are represented as cryptographic commitments rather than public addresses, and balances are updated through commitment replacement inside a shared private pool. Deposits, withdrawals, swaps, and cross-chain actions are authorized via ZK proofs and executed by relayers, ensuring unlinkability between deposits, actions, and recipients.

Unlike traditional mixers that stop at withdrawals, fragment liquidity, and break composability, ShieldArc enables in-protocol private swaps, bridging, and cross-chain swaps while maintaining unified liquidity and compliance awareness. By combining zk-identity, private wallet commitments, relayer-based execution, and cross-chain integrations, ShieldArc delivers privacy by default without sacrificing composability, regulatory viability, or cryptographic integrity.

ShieldArc is built as a full-stack zero-knowledge DeFi protocol combining on-chain smart contracts, off-chain infrastructure, and client-side cryptography. The core privacy logic is implemented using Noir zero-knowledge circuits, which power zk-identity creation, wallet commitment generation, deposits, withdrawals, and cross-chain authorization proofs. These circuits are compiled to verifiers that are deployed on-chain and enforced by Solidity contracts.

On-chain, ShieldArc uses Solidity smart contracts to manage the identity mixer, unified private liquidity pool, and Merkle trees that store identity and wallet commitments. Instead of EOAs, user balances are tracked via cryptographic commitment replacement inside Merkle trees, ensuring balance updates without revealing ownership. Poseidon hashing is used throughout for ZK-friendly commitments.

The frontend is built with Next.js, where passport MRZ data is extracted locally in the browser to generate zk-identity commitments without leaking personal data. Proofs are generated client-side and never expose secrets. A Node.js relayer service submits transactions on behalf of users, breaking the on-chain link between proof generation and execution. The relayer also coordinates with an off-chain Merkle tree manager to supply inclusion proofs efficiently.

For cross-chain functionality, ShieldArc integrates Circle’s CCTP to move stablecoins across chains while preserving privacy. A notable hacky design choice is anchoring all liquidity on a single chain and extending privacy into swaps and bridging via relayer-executed ZK-authorized actions, avoiding liquidity fragmentation while maintaining composability and compliance awareness.