Stanford University and Visa Research have collectively developed a privacy mechanism called ‘Zether’ for Ethereum smart contracts. The paper was published on Stanford University’s Applied Cryptography Group website on February 20.
The paper describes –
“Zether as a smart contract that can be executed either individually or by other smart contracts to exchange confidential amounts of a token, denoted by ZTH. The techniques used in Zether can apply to other account-based crypto-currencies, completely independent of their consensus mechanisms.”
The research paper further summarizes the contributions of authors in confidentiality, zero-knowledge proofs, implementation, interoperability and anonymity of Zether.
Zether ensures that encrypted transactions are correct by utilizing ZK-proofs that verify correctness without revealing any additional information.
Zether’s mechanism consists of three components:
- A global setup algorithm that is run once to produce the global parameters for the protocol as well as to deploy the Zether Smart Contract (ZSC).
- The Zether Smart Contract (ZSC) that handles transactions between users, interoperability with external smart contracts, and keeps the state of the system.
- The final component of the mechanism is the user algorithms, which describe how users can interact with the smart contract and create valid transactions.
The Zether Smart Contract (ZSC) uses five public methods viz. Fund, Burn, Transfer, Lock, Unlock and two additional internal helper methods RollOver, CheckLock. The following table roughly gives you the gas costs for ZSC methods.
Zether’s ability to lock funds to other smart contracts can make several common applications more private. It is also worth to be noted that the “Zether contract will never transfer funds without first checking an appropriate burn or transfer proof, even if the request comes from another smart contract whose rules do not permit illegal transfers.”
Zether’s design decision assures that the security of the mechanism only depends on itself and not on any outside smart contract. Even a maliciously written or insecure smart contract cannot cause Zether to get corrupt.
Some of the applications of Zether that can be applied are Sealed-bid Auctions, Payment Channels, Stake Voting, Privacy-preserving Proof-of-Stake (PoS).
Though, Zether provides an extra security layer for Ethereum smart contracts; we have to look further on how Zether is accepted by the crypto community and other crypto-related businesses.