Private Transactions on Cardano

1. Introduction

Every year more and more personal data is getting collected by corporations and governments all around the world. Storage of real identity - wallet pairs in centralized databases poses considerable risks for crypto assets owners. This happens, for example, when a user sends crypto assets from a centralized exchange, such as Coinbase, Binance, or Kraken, to a personal wallet. There should be an option available for Cardano users to remain pseudonymous or to disconnect their real-world identities from their assets while remaining compliant with the laws of their respective jurisdictions.

While several already existing privacy solutions (e.g., Tornado Cash, Monero, or ZCash) may eventually become accessible on Cardano through cross-chain bridges, using them would be costly and inconvenient for Cardano users. A native private transaction protocol built specifically for Cardano would be a more efficient and practical solution. The protocol we are building relies on zero-knowledge cryptographic proofs: it breaks the link between the sender and the receiver of assets on Cardano Blockchain, enabling private transactions. Our dapp called Cardano Mixer will serve as a nice user-friendly frontend for the protocol.

2. Protocol

Here are some technical details about the protocol. For the first version of the protocol, we are using zkSNARK construction by J. Groth, as it still seems to be the overall best choice for this type of application. The dapp UX would be somewhat similar to Tornado Cash: there will be options to choose the mixing amount, to deposit and withdraw crypto assets, to receive anonymity mining rewards, and to generate your transaction report (with different levels of detail). Our protocol, however, is quite different on the backend as Cardano blockchain uses a different accounting model and has a different native programming language. As for the protocol token, our main objectives are maximal decentralization,  sufficient incentives for anonymity miners, and liquidity (the token design is not yet finalized).

The complete description of the protocol will be released as a whitepaper by the end of September (first version). In particular, it will cover

• How off-chain and on-chain code of our protocol works;
• The specification of deposit/withdrawal transactions;
• The specification of the protocol token and our reasoning of why it will stimulate the adoption of the application.

Besides that, we hope the whitepaper and the subsequent source code release on Github will provide useful insights for the developers' community on building smart contracts focused on zero-knowledge in Cardano's EUTXO model.

3. Roadmap

Here is our roadmap (as of August 2021).

• September            - Whitepaper release;
• October                 - Github initial source code release and testnet deployment;
• November             - Trusted setup ceremony and mainnet release;
• December             - Implementation of governance mechanisms;
• 1st quarter 2022  - Release of additional quality of life features.

Expected launch date: before December 1st, 2021.

Definition of success

• after 3 months is to have at least 500-700 users participating in the trusted setup ceremony;
• after 6 months is for the protocol to be running smoothly with governance and quality of life features such as transaction report generation for compliance purposes;
• after 12 months is to grow the userbase into thousands, as we expect there is such demand potential, and to implement integrations with other dapps that could use our privacy features.

4. Budget requirements

Up to 12-15k USD will be reserved for a code audit of the most critical parts of the protocol. Additional audits may be initiated later using the protocol treasury once it is fully up and running.

About 300-500 USD will be directed towards covering the development and maintenance costs (some software, domain acquisition, etc.).

Up to 3k USD will cover the costs of UI design.

Finally, 12-15k USD will be paid to the developers to go full-time on this project (November-December), which should keep us on track in terms of the roadmap and ensure better code quality.

Total requested funds: 30000 USD

5. More information about the project

As the development progresses, we will keep the community updated on our pages.

Website: https://cardmix.io

Twitter: https://twitter.com/CardanoMixer

Telegram: https://t.me/cardano_mixer

Medium: https://cardmix.medium.com