Bolt Labs extends zkChannels protocol to enable privacy-preserving state channels on top of Tezos.
Today, we’re proud to announce that we are working to bring the zkChannels protocol to the Tezos blockchain. zkChannels is a chain-agnostic anonymous off-chain protocol that enables cheap and private value transfer between a customer and merchant. We are thrilled to bring this technology to the Tezos community, and are currently collaborating with the teams at Nomadic Labs and Metastate to deploy zkChannels on Tezos via an amendment proposal in the next year.
While we will be releasing a more comprehensive explanation of how the zkChannels integration with Tezos will work in the coming weeks, there are a few unique features the protocol offers that are worth highlighting.
In order to preserve privacy, zkChannel data is kept asymmetrically. The customer keeps and updates all relevant channel information and proves, every time a payment is made, that the channel state is consistent with that payment. This ensures the merchant learns nothing beyond the payment amount, so customer privacy is maintained.
A consequence of this is that a customer and merchant have completely different views of the channel’s state. Specifically, in zkChannels, only the customer knows the current distribution of funds; the merchant knows the total channel balance, but cannot link any received payments to the channel. Nonetheless, zkChannels can be safely closed down at any time by either party.
We are also interested in building a cross-chain bridge via zkChannels for connecting Zcash or Bitcoin to Tezos, and provides censorship-resistance to decentralized finance (DeFi) applications.
These factors make zkChannels an essential technology for numerous privacy-enhancing technologies. With zkChannels, we can support private micropayments that allow customers to pay as they go for content or a digital service without the merchant being able to link the transaction to the customer’s identity. zkChannels will also provide privacy for decentralized applications that want to use state channels to scale.
zkChannels is already live for Bitcoin and soon to be live for Zcash, and we look forward to building on Tezos, which has a number of features that make it a natural fit for our technology.
For one, Tezos provides upgradability without contention due to its efficient governance mechanism. This on-chain governance mechanism reduces the friction for extending Tezos with the necessary features to support zkChannels.
Tezos also offers a secure-by-design smart contract language with formal verification properties. This means we are able to prove that smart contracts perform correctly with respect to the intended specification. This is particularly important for financial smart contracts (e.g., tokenized assets, loans, etc) which require guarantees that funds will not be lost or frozen due to bugs in the code.
Finally, a potential upcoming sapling protocol integration will mean that Tezos can support the ability to create a shielded pool of tokens within a smart contract. This enhances the privacy properties of zkChannels off chain.
We can’t wait to make zkChannels a reality on Tezos, and will be providing more details about the integration in the near future. Stay tuned, and welcome to zkChannels for Tezos!
Special thanks to Ian Miers, Colleen Swanson, Charlie Wiser, and the rest of our team for valuable feedback on this announcement.