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zkSwap leverages the zkERC20 proposal to offer not just asset movement obfuscation, but also complex swap tracking between multiple assets, ensuring superior privacy for users. πŸ”’πŸ’± #zkSwap #PrivacySwap


Created At

ETHOnline 2023

Project Description

zkSwap is a protocol that leverages the principles of the zkERC20 proposal to offer enhanced privacy and functionality in the realm of decentralized finance (DeFi).

What sets zkSwap apart is not just its capability to obfuscate the movement of a single asset, but its ability to further complicate tracking by facilitating swaps between multiple assets.

For instance, one might initiate shielding with USDC, swap it for ETH midway, and subsequently distribute the asset. All these transaction details are concealed from everyone except the asset holder. If the asset is later deshielded back to ETH, tracing it becomes even more challenging.

Swapping Mechanism

What truly distinguishes zkSwap is its swapping mechanism. Unlike traditional protocols where asset movements can be easily traced, zkSwap adds multiple layers of obfuscation. A user can start by shielding an asset like USDC, swap it internally for another asset like ETH, and then distribute or move it. The intricacies of these transactions remain hidden, known only to the asset holder.

To facilitate the swap functionality, zkSwap integrates with Uniswap v4 hooks. This ensures seamless and efficient swaps between different assets within the protocol.

Volatility Trading Aspect

At its core, zkSwap can be seen as a platform for volatility trading. Liquidity providers essentially place bets on the stability of asset prices. They anticipate no significant price changes and, in return, earn swap and protocol fees. This mechanism is akin to the principles of volatility trading in traditional financial markets, where traders capitalize on the price volatility of assets.

Centralized Features, but ...

While zkSwap offers decentralized features, it does have some centralized elements. The existence of an owner is one such feature. This is primarily because the secret note structure necessitates a private key to sign at the note. This centralized aspect ensures the integrity and security of the secret note structure.

The team behind zkSwap is committed to pushing the boundaries of DeFi. With plans to transition from a centralized to a decentralized model, zkSwap is poised to set new standards in the industry. This evolution will further enhance user trust, security, and the overall utility of the platform.

How it's Made

zkERC20 Assets

zkSwap is fundamentally built upon the zkERC20 standard. This standard introduces a confidential token contract where the values of ownership and transfers are encrypted, ensuring transactional privacy.

zkSwap employs a secret note structure, which means that every transaction detail is concealed, ensuring utmost privacy. This structure is pivotal in maintaining the confidentiality of transactions, making it a cornerstone of the zkSwap protocol.

Technologies Used

Ethereum's Solidity was used for smart contract development, and web3.js facilitated the interaction between our frontend and the Ethereum blockchain.

Smart contracts were deployed on the Ethereum testnet initially.

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