Private and Atomic Exchange of Assets over Zero Knowledge Based Payment\n Ledger

Abstract

Bitcoin brings a new type of digital currency that does not rely on a central\nsystem to maintain transactions. By benefiting from the concept of\ndecentralized ledger, users who do not know or trust each other can still\nconduct transactions in a peer-to-peer manner. Inspired by Bitcoin, other\ncryptocurrencies were invented in recent years such as Ethereum, Dash, Zcash,\nMonero, Grin, etc. Some of these focus on enhancing privacy for instance crypto\nnote or systems that apply the similar concept of encrypted notes used for\ntransactions to enhance privacy (e.g., Zcash, Monero). However, there are few\nmechanisms to support the exchange of privacy-enhanced notes or assets on the\nchain, and at the same time preserving the privacy of the exchange operations.\nExisting approaches for fair exchanges of assets with privacy mostly rely on\noff-chain/side-chain, escrow or centralized services. Thus, we propose a\nsolution that supports oblivious and privacy-protected fair exchange of crypto\nnotes or privacy enhanced crypto assets. The technology is demonstrated by\nextending zero-knowledge based crypto notes. To address "privacy" and\n"multi-currency", we build a new zero-knowledge proving system and extend note\nformat with new property to represent various types of tokenized assets or\ncryptocurrencies. By extending the payment protocol, exchange operations are\nrealized through privacy enhanced transactions (e.g., shielded transactions).\nBased on the possible scenarios during the exchange operation, we add new\nconstraints and conditions to the zero-knowledge proving system used for\nvalidating transactions publicly.\n