Inspired by Vitalik Buterin’s idea of non-transferable Soulbound tokens, Ethereum researcher Anton Wahrstätter came up with a new proposal for an ERC-721 extension that would implement “stealth” addresses to hide public blockchain transactions involving non-fungibles tokens (NFTs).
To implement stealth addresses for ERC-721 tokens—Ethereumits current token standard for NFTs—Wahrstätter proposes to use a privacy-focused piece of cryptography known as zk-SNARKs.
Under the proposal, part of a stealth address, which is essentially a one-time address for each transaction, is inserted into a Merkle tree – a data structure used for data verification and synchronization – thereby allowing the sending, storage and burning of NFT -is without leaving much of the transaction details on the public blockchain.
While Wahrstätter’s proposal is still in the conceptual stage, it has already drawn the attention of Vitalik Buterin, one of Ethereum’s co-founders, who described it as “a low-tech approach to add a significant amount of privacy to the NFT ecosystem.”
“So you would be able to [for example] send an NFT to vitalik.eth without anyone but me (the new owner) being able to see who the new owner is,” he wrote in a tweet on Monday.
However, Buterin had some objections to Wahrstätter’s proposal, arguing that the idea of anonymous NFT transactions could probably be achieved “with much lighter technology.”
Commenting on the proposal, he said that “the reason you don’t need Merkle trees or ZK-SNARK level privacy is that each ERC-721 is unique, so there is no way to create an ‘anonymity set’ for an ERC – 721.”
“Rather, you just want to hide the sender’s link and the recipient’s highly visible public identity (so you can send an ERC-721 to ‘vitalik.eth’ and I can see it, but no one else can see that vitalik.eth received an ERC-721 ; they just want to see that someone received an ERC-721),” Buterin added.
“One remaining challenge,” according to the co-founder of Ethereum, is figuring out how to pay fees.
“The best I can come up with is, if you send someone an ERC-721, also send enough ETH to pay fees 5-50 times to send it on. If you get an ERC-721 without enough ETH, you can tornado in some ETH to keep the transfer chain going,” he wrote.
“Tornado some ETH” to protect NFTs
Buterin’s latest comment referred to the use of Tornado Cash, a privacy tool designed to obscure the origin of Ethereum transactions by mixing users’ coins.
Tornado Cash came under the spotlight on Monday after the US Treasury Department sanctioned the mixing service by adding it, along with a list of Ethereum addresses, to the Specially Designated Nationals list. This means that US citizens are now banned from using the tool or trading with these addresses.
While the move sparked some strong reactions from the crypto community, with Ethereum core developer Preston Van Loon telling Decrypt that Tornado Cash, just like any other tool, “can be used for good or bad,” it also came amid a broader debate surrounding privacy and transparency in the crypto space.
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