Confidential Wrapped Ethereum

TL;DR

This paper proposes a confidential version of wrapped Ethereum (cWETH) that balances blockchain transparency with user privacy by integrating cryptographic protocols and zk-SNARKs within the application layer.

Contribution

It introduces a novel application-layer confidential wrapped Ethereum (cWETH) combining EC-based commitment schemes, Diffie-Hellman protocols, and zk-SNARKs for privacy preservation.

Findings

Achieves confidentiality of transactions on wrapped Ethereum

Ensures correct commitment, encryption, and decryption processes

Balances transparency with user privacy effectively

Abstract

Transparency is one of the key benefits of public blockchains. However, the public visibility of transactions potentially compromises users' privacy. The fundamental challenge is to balance the intrinsic benefits of blockchain openness with the vital need for individual confidentiality. The proposal suggests creating a confidential version of wrapped Ethereum (cWETH) fully within the application layer. The solution combines the Elliptic Curve (EC) Twisted ElGamal-based commitment scheme to preserve confidentiality and the EC Diffie-Hellman (DH) protocol to introduce accessibility limited by the commitment scheme. To enforce the correct generation of commitments, encryption, and decryption, zk-SNARKs are utilized.