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Restructured from flat .tex/.pdf files into per-paper subdirectories. Added Antje Worring as co-author on all papers. Synced PDFs to pdfs/ for download site.
18 lines
1.7 KiB
TeX
18 lines
1.7 KiB
TeX
\section{Introduction}
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Blockchain transaction privacy and regulatory compliance have been viewed as fundamentally opposed goals. Privacy-preserving protocols like Tornado Cash \cite{pertsev2019tornado} provide strong anonymity but make it impossible to distinguish legitimate privacy-seeking users from money launderers. This led to regulatory action, including OFAC sanctions against Tornado Cash addresses \cite{ofac2022tornado}.
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Privacy Pools, proposed by Buterin, Illum, Nazeri, Wahrstatter, and Jain \cite{buterin2023privacy}, offer a middle path: users can prove their deposits belong to a curated set of compliant addresses (the ``association set'') without revealing which specific deposit they are withdrawing. This preserves transaction privacy within the compliant set while allowing regulators to verify that funds did not originate from sanctioned sources.
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Lux Privacy Pools adapt this framework to the Lux Network with the following innovations:
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\begin{enumerate}[label=(\roman*)]
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\item \textbf{Multi-chain privacy}: Privacy pools span multiple Lux appchains via Warp Messaging, enabling cross-chain private transfers.
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\item \textbf{BLS12-381 integration}: Groth16 proofs verified via Lux's native BLS12-381 precompile at 326,000 gas.
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\item \textbf{Association Set Providers (ASPs)}: A decentralized marketplace of compliance oracles producing signed association sets.
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\item \textbf{Tiered privacy}: Multiple association set granularities from ``all non-sanctioned'' (maximum privacy) to ``KYC-verified'' (maximum compliance).
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\item \textbf{Incremental Merkle tree}: Efficient deposit accumulation supporting millions of deposits with $O(\log n)$ proof size.
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\end{enumerate}
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