Vitalik Buterin, the co-founder of Ethereum, has collaborated with a group of researchers to co-author a research paper exploring the fusion of user anonymity and regulatory compliance.
Vitalik Buterin And Researchers Have Prepared A Paper For The Blockchain Protocol
Vitalik Buterin, the co-founder of Ethereum, has collaborated with a group of researchers to co-author a research paper exploring the fusion of user anonymity and regulatory compliance within blockchain transactions.
The research paper builds upon the Privacy Pools protocol, introduced by Soleimani in March 2023, aiming to enhance its model by incorporating regulatory compliance measures. Privacy Pools operates in a manner similar to Tornado Cash by blending multiple user transactions to obfuscate their origins.
However, it introduces an innovative feature: users can generate a zero-knowledge proof when withdrawing funds. This proof assures that the user is not involved in any illicit blockchain activity while protecting their identity.
The paper's main focus is on "association sets," which are groups of wallets connected together via zero-knowledge proofs. The researchers develop the concept of association set providers (ASPs), which are in charge of producing these sets. ASPs can be built entirely on-chain or generated independently and published on-chain. The authors also address pool management centralization concerns while attempting to maintain regulatory compliance.
Incorporating insights from legal experts, the researchers aim to tailor the protocol and its ecosystem to ensure compliance across diverse legal jurisdictions.