<h1 id="shortdescription">Short Description</h1>
<p>In this proposal, we are going to implement privacy transfer primitives and applications, specifically confidential transfers and anonymous transfers. The confidential transfer hides transfer amount and the anonymous transfer hides transfer amount and relevant address. These functionalities are mainly realized by homomorphic encryption and zero knowledge proof. By implementing these functionalities and applications, not only whole Polkadot network users can use privacy transfer but also Polkadot developers can use latest cryptographic libraries compatible with no_std environment and parity scale codec.</p>
<p><img src="https://user-images.githubusercontent.com/39494661/224523701-ed2310fe-34b8-4f0b-a9c5-899cbadda6b0.png" alt="architecture" /></p>
<h1 id="problemstatement">Problem Statement</h1>
<p>Privacy is one of the most important blockchain missing pieces because all transaction history is public on blockchain. Everyone knows what kind of NFT you have and your account balance. The more blockchain closest to daily life, the more privacy users want. Polkadot needs a simple to use and trustless privacy payment system. We also think it's a problem that there is no fully Polkadot compatible homomorphic encryption and zero knowledge proof libraries. We have been working on four web3 foundation grants programs related to zero knowledge proof. Everytime we started the programs, we needed to make all related libraries compatible with Polkadot and it took more than half of our workload of the whole development process. It may make other privacy projects hesitate to work on Polkadot. We would like to address these problems through this proposal.</p>
<h1 id="proposal">Proposal</h1>
<p>In this proposal, we are going to implement privacy transfer functionalities and the latest cryptographic scheme. The privacy transfer consists of client wallet, cryptographic primitives and encrypted on-chain storage, verification function. The on-chain users balances are encrypted by default with homomorphic encryption. When users transfer their assets, they generate the proof which proves the validity of state transition and correct encryption. The proof is attached to the transaction, on-chain verification checks the proof and executes the state transition. For criminal prevention, the scheme can use rerandomize signatures to make transactions auditable as optional. We need to think about privacy with a combination of auditability. To force exchanges to send transactions with rerandomize signatures, we can prevent money laundering.</p>
<h2 id="howdoesthisproposalchangethenetwork">How does this proposal change the network</h2>
<p>Polkadot developers, users and investors get benefits from this proposal.</p>
<p>Firstly, we are going to implement zero knowledge proof circuit language and related primitives. These libraries are totally compatible with Polkadot so they can use these functionalities on the Substrate blockchain and build new privacy projects on top of these.</p>
<p>Secondly, we are going to implement privacy transfer transactions functionality and wallet client. These libraries are public and users can use it and send privacy transfer transactions. They can hide the transfer amount and even the relevant address.</p>
<p>Finally, our project focuses on Polkadot. There are quite a few projects working on privacy blockchain and there are no official libraries related to privacy transaction components totally compatible with Polkadot. The zero knowledge proof is also used for scaling. This makes Polkadot far easier to support privacy and scaling functionality. More users and projects will want to use Polkadot instead of other blockchains.</p>
<h2 id="whypolkadotnetwork">Why Polkadot Network?</h2>
<p>The most significant feature of Polkadot is that we can customize the blockchain itself. If we try to implement privacy transfer, we would need to implement a layer 2 solution on Ethereum or build blockchain from scratch. Former one is not a good option from usability and workload perspective. If users use a layer 2 solution, they would need to deposit their asset to contract and the layer 2 node synchronizes it to layer 2. After that, users request transactions on layer 2 and layer 2 node synchronize with the main chain. Then the recipient can withdraw assets from the contract. It&rsquo;s quite complicated. Latter one is not a good option from security and feasibility. Building blockchain from scratch needs a lot of development cost and computation to maintain the network. On the contrary to these, by implementing complex functionalities as built-in of blockchain and, optimizing data structure and arithmetic domain, not only we can keep architecture simple but also build use case specific blockchain. The more unique blockchains are connected to Polkadot, the more value Polkadot has. Combination of unique functionality increases Polkadot capabilities exponentially. It will be the best differentiation from other blockchains. By implementing cryptographic primitives, it drives other projects to create new things on Polkadot.</p>
<h1 id="ganttchart">Gantt Chart</h1>
<p><img src="https://user-images.githubusercontent.com/39494661/224523787-61beced0-ff25-4256-b961-35ecdf46f8f5.png" alt="gantt_chart" /></p>
<h1 id="note">Note</h1>
<p>Hello there, I am Ash.</p>
<p>This proposal can be found following.</p>
<p><a href="https://docs.google.com/document/d/14RM72brMzxUR0I8BrrRa40RussjjDaiB/edit?usp=sharing&amp;ouid=116197126832835062977&amp;rtpof=true&amp;sd=true">https://docs.google.com/document/d/14RM72brMzxUR0I8BrrRa40RussjjDaiB/edit?usp=sharing&amp;ouid=116197126832835062977&amp;rtpof=true&amp;sd=true</a></p>
<p>I would appreciate it if you could check, comment and post somethings to improve. Thank you.</p>

<p>You can find discussion on Polkassembly is <a href="../post/1720">here.</a></p>
<p>We provide the Polkadot community with <strong>simple usage</strong> and <strong>high-performance</strong> advanced functionalities through Substrate pallets by crypto best practices<strong> virtual integration</strong>.</p>
<h2>&nbsp;Abstract</h2>
<p>In this proposal, we implement a <strong>crypto-friendly Substrate scaffold</strong> and realize <strong>privacy and scaling </strong>functionalities. Every library is fully<strong> </strong>compatible with Substrate (<strong>no_std and SCALE</strong> support) and provided community as <strong>open source</strong> libraries.</p>
<p>Full compatible libraries can be imported by existing Substrate pallets thus every parachain can use high-performance privacy<strong> </strong>and<strong> scaling </strong>functionalities and other crypto projects can implement their functionalities by combining libraries. The same scaffold-based functionalities allow <strong>simple usage</strong>, <strong>high performance</strong>, and <strong>composable</strong> between functionalities.</p>
<p>With our libraries, we can empower existing parachains and accelerate future crypto projects. Full proposal is <a href="https://docs.google.com/document/d/14RM72brMzxUR0I8BrrRa40RussjjDaiB/edit#heading=h.gjdgxs">here</a>.</p>
<h2>What&rsquo;s new?</h2>
<p>Zero-knowledge proof <strong>Plonk-based</strong> construction is new to the Polkadot. Plonk can set up params independent from functionalities thus params can be used for various types of functionalities. Our implementation is <strong>the first Polkadot compatible </strong>(no_std and SCALE) Plonk as far as we know.</p>
<p>Additionally, we replace the <strong>hash function</strong>, <strong>signing algorithm</strong>, and <strong>arithmetic domain</strong> with an efficient scheme for Plonk. Not only the sidechain but also the mainchain is optimized based on Plonk. This is hard for existing blockchains and a trick of <strong>simple usage</strong> and <strong>high performance</strong>.</p>
<h2>Why Polkadot</h2>
<p>We think that the most significant feature of the Polkadot is the <strong>Substrate pallet system</strong> because it allows best practices virtual integration.</p>
<p>It&rsquo;s hard for <strong>traditional blockchains</strong> to upgrade their infrastructure runtime and storage. When they support new functionalities, they need to extend their blockchain by precompile, off-chain relayer, and so on. This causes <strong>complex usage</strong>, <strong>expensive gas cost</strong>, and <strong>less development flexibility</strong>.</p>
<p>However, the <strong>Substrate pallet system</strong> allows blockchains to replace blockchain infrastructure runtime and data structure with an efficient and suitable for processing crypto functionalities. This significant feature unlocks <strong>blockchain potential</strong> and accelerates<strong> the next innovation</strong> happening in the Polkadot ecosystem.</p>
<p>Additionally, we can share our<strong> knowledge</strong> with other Polkadot projects, stack<strong> the best practice</strong>, and improve the Substrate scaffold. This causes synergy between <strong>compatible </strong>functionalities and enhances Polkadot Network value.</p>
<p><img src="https://i.ibb.co/23RjhJf/architecture.png" alt="" width="640" height="316" /></p>
<h2>Details</h2>
<p>In this project, we implement <strong>Substrate crypto-friendly</strong> scaffold pallets and realize <strong>privacy</strong> and <strong>scaling</strong> functionalities. Deliverables are as follows.</p>
<p><img src="https://i.ibb.co/Fs1D3rV/chart.png" alt="" width="639" height="404" /></p>
<p>As this was proposed on 4.25.2023, we improved and added some deliverables. We implement every crypto primitive from scratch. Deliverables consist of Substrate<strong> crypto-friendly scaffold</strong>, <strong>ZkRollup</strong>, and <strong>privacy-preserving </strong>transactions. Unique features are as follows.</p>
<h3>&nbsp;</h3>
<h3>Substrate crypto-friendly scaffold</h3>
<ol>
<li>Full SCALE and no_std <strong>Compatible</strong></li>
<li>Avoid <strong>Code Duplication</strong></li>
<li>Replace with new Algorithm <strong>Easily</strong></li>
</ol>
<p><strong>Firstly</strong>, the main issue is <strong>runtime compatibility</strong>. We have been working on crypto projects and when we tried to use crypto functions on Substrate runtime, we needed to make every library dependency compatible with Polkadot or implement host functions and connect each other with conversion interfaces. This accounted for most of the development workload. To avoid this workload and import directly to Substrate runtime, we implement <strong>fully compatible libraries</strong>.</p>
<p><strong>Secondly</strong>, we think how easy it is to apply optimization is important because performance directly affects the user's experience. We separate the interface and algorithm in order to <strong>avoid code duplication</strong> and replace them with new algorithms<strong> easily</strong>.</p>
<h3>&nbsp;</h3>
<h3>ZkRollups</h3>
<ol>
<li><strong>Crypto-Friendly Signing Algorithm</strong></li>
<li><strong>Batch Signature Validation</strong></li>
<li><strong>Runtime Compatibility</strong></li>
</ol>
<p>When we worked on the EVM ZkRollups previously, we found that it reduced gas costs and the prover process was not so heavy as it could be done on the GitHub Actions environment.</p>
<p>However, users were necessary to create <strong>layer2-specific wallets</strong> aside from the main blockchain, and the prover cost was<strong> not optimized</strong>.</p>
<p>We integrate the wallet between layer 2 and the main blockchain to <strong>avoid wallet recreation</strong> and, replace the signing algorithm with an efficient hash function and curve, and introduce batch signature validation to <strong>reduce the prover workload</strong> by native field proving. This ZkRollup works in a <strong>WASM</strong> environment.</p>
<h3>&nbsp;</h3>
<h3>Privacy-Preserving Transactions</h3>
<ol>
<li><strong>Account-Based</strong></li>
<li><strong>Auditable</strong></li>
<li><strong>Plonk</strong></li>
</ol>
<p>When we worked on the confidential transfers previously, we found that <strong>audibility</strong> was necessary because of recent regurgitation and <strong>UTXO-base</strong> was inefficient perspectives from zero-knowledge proof and on-chain memory space.</p>
<p>We implement the first <strong>account-based</strong> privacy-preserving transactions with Plonk. This privacy-preserving transaction is <strong>auditable</strong> and saves<strong> computation and memory space</strong> because of account-based. Account-based is also useful when we extend transaction functionalities and <strong>interact </strong>with other crypto schemes.</p>
<h2>Progress</h2>
<p><strong>19 out of 31</strong> milestones were completed.</p>
<h3>&nbsp;Polkadot Compatible Crypto Primitive</h3>
<ul>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/primitive/zkstd">Zero Knowledge Proof Standard</a></li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/primitive/elgamal">ElGamal Encryption</a></li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/primitive/jubjub">Jubjub curve</a></li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/primitive/bls12_381">Bls12 381</a></li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/primitive/poly">Polynomial Commitment</a></li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/primitive/redjubjub">Redjubjub Signature</a></li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/primitive/zksnarks">ZkSnarks Primitive</a></li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/primitive/pairing">Tate Pairing</a></li>
</ul>
<h3>Substrate Pallet Functionalities</h3>
<ul>
<li><a href="https://kogarashinetwork.github.io/Kogarashi/tutorial/reddsa_wallet/">RedDSA Wallet CLI Tutorial</a> &nbsp;</li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/pallets/encrypted_balance">Encrypted Balance</a></li>
<li><a href="https://github.com/KogarashiNetwork/zksubstrate">Zero Knowledge Friendly Substrate Runtime</a></li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/pallets/confidential_transfer">Confidential Transfer</a></li>
<li><a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/pallets/plonk">Plonk on Substrate</a></li>
</ul>
<h2>Past Activities</h2>
<h3>Web3 Foundation Grant</h3>
<ul>
<li>ZkRollups: EVM ZkRollups W3F grant collaboration with Astar Network</li>
</ul>
<p><a href="https://github.com/w3f/Grants-Program/blob/master/applications/zk-rollups.md">https://github.com/w3f/Grants-Program/blob/master/applications/zk-rollups.md</a> <a href="https://github.com/AstarNetwork/ZKRollups">https://github.com/AstarNetwork/ZKRollups</a></p>
<ul>
<li>ZkPlonk: Polkadot compatible Plonk W3F grant collaboration with Astar Network</li>
</ul>
<p><a href="https://github.com/w3f/Grants-Program/blob/master/applications/zk-plonk.md">https://github.com/w3f/Grants-Program/blob/master/applications/zk-plonk.md</a> <a href="https://github.com/AstarNetwork/plonk">https://github.com/AstarNetwork/plonk</a></p>
<ul>
<li>Privacy Transfer: Account-base privacy transfer transaction</li>
</ul>
<p><a href="https://github.com/w3f/Grants-Program/blob/master/applications/zero-network.md">https://github.com/w3f/Grants-Program/blob/master/applications/zero-network.md</a> <a href="https://github.com/KogarashiNetwork/Kogarashi/tree/master/pallets/confidential_transfer">https://github.com/KogarashiNetwork/Kogarashi/tree/master/pallets/confidential_transfer</a></p>
<h3>Substrate Builder Program</h3>
<ul>
<li>Deliverly Milestone 1<br /><a href="https://twitter.com/KogarashiCrypto/status/1684396867944349696">https://twitter.com/KogarashiCrypto/status/1684396867944349696</a></li>
</ul>
<h2>&nbsp;Legal Structure</h2>
<ul>
<li>&nbsp;Registered Address</li>
</ul>
<p>2F・3F Emblem Nishiarai, 3-33-6 Umejima, Adachi City, Tokyo-to 121-0816, Japan</p>
<ul>
<li>&nbsp;Registered Legal Entity</li>
</ul>
<p>Invers Inc.</p>
<h2>About Us</h2>
<p><a href="https://kogarashi-network.com/">Website</a> <a href="https://twitter.com/KogarashiCrypto">Twitter</a> <a href="https://discord.gg/g3q7tsHKTd">Discord</a> <a href="https://github.com/KogarashiNetwork">Github</a> <a href="https://kogarashinetwork.github.io/Kogarashi/">Documentation</a></p>

Crypto-Friendly Substrate Scaffold Pallets for Every Parachains

- The proposal is about implementing privacy transfer functionalities and applications on the Polkadot network.
- The goal is to hide the transfer amount and relevant address using encryption and zero knowledge proof.
- This will provide privacy for users and make it easier for developers to build privacy projects on Polkadot.
- The proposal will also include the implementation of cryptographic libraries compatible with Polkadot.
- The project aims to make Polkadot a preferred choice for privacy and scaling functionality.

#1720 Polkadot Treasury: Implement Privacy Transfer Primitives and Application

No Active Proposals