Zero-Knowledge Settlement Layer for Distributed Ledger Privacy
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Solution Overview
Problem
Current distributed ledger systems lack effective mechanisms for private settlement of transactions, compromising user privacy and security, as they often reveal sensitive information about senders, recipients, and asset quantities during transactions.
Innovation Solution
The implementation of a zero-knowledge settlement layer using zk-SNARKs (Succinct Non-interactive ARgument of Knowledge proofs) enables private and confidential transactions on distributed ledgers by verifying computations without executing them, ensuring sender authorization, preventing double spending, and maintaining transaction balance without disclosing transaction details to non-parties.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If distributed ledger systems record all transaction details publicly for verification, then transaction transparency and trust are improved, but user privacy and security deteriorate due to exposure of sensitive information
Solution Approach 1:
The patent extracts sensitive transaction details (sender, recipient, amount) from the public ledger record while retaining the essential verification functionality. Zero-knowledge proofs allow the system to prove transaction validity without exposing the underlying sensitive information, effectively separating verification needs from privacy protection.
Solution Approach 2:
Zero-knowledge proofs act as an intermediary mechanism between public verification requirements and private transaction details. This cryptographic intermediary enables third-party verification of transaction validity without revealing actual transaction content, mediating between transparency and privacy needs.
2Measurement precision
If transaction details are disclosed on the distributed ledger for verification, then cryptographic proof of correctness is improved, but sensitive information about senders, recipients, and asset quantities is compromised
Solution Approach 1:
The patent extracts only the essential verification elements from complete transaction details. Zero-knowledge proofs enable verification of transaction correctness (sender authorization, no double-spending, balance maintenance) without extracting or exposing sensitive information about who sent what to whom.
Solution Approach 2:
The patent changes the parameters of verification from direct transaction data exposure to cryptographic proof validation. Instead of verifying transactions by examining visible details, the system verifies by checking mathematical proofs that guarantee correctness without revealing parameters like sender identity, recipient identity, or transaction amount.
3Loss of information
If private settlement mechanisms are implemented using zero-knowledge proofs, then user anonymity is improved, but transaction verification complexity increases
Solution Approach 1:
The patent applies preliminary action by pre-computing zero-knowledge proofs before transactions are submitted to the ledger. This preparation work is done in advance, allowing the actual ledger verification to focus only on validating the pre-computed proofs rather than performing complex verification from scratch, thereby reducing on-chain computational burden.
Data Source
AI summary
Systems and methods for private settlement of distributed ledger transactions are disclosed. In one embodiment, in an information processing device for a node for a first party in a computer network comprising at least one computer processor, a method for transferring assets with transaction privacy using a distributed ledger may include: (1) receiving, from the first party, a transaction to transfer ownership of one or more first z-tokens to a second party in exchange for second z-tokens; (2) receiving, from the second party, acceptance of the transaction; (3) committing the transaction to a distributed ledger; and (4) executing the transaction and updating a state to update a number of first z-tokens and a number of second z-tokens for the first party and the second party based on the transaction.