Experts at Circle Research, in collaboration with Inco Network, have released a framework for converting ERC-20 standard assets into confidential wrapped versions.
Introducing the Confidential ERC-20 Framework @IncoNetwork and Circle Research release a new whitepaper and open-source repo on transforming ERC-20 tokens into confidential wrapped versions that preserve user privacy using fully homomorphic encryption (FHE) while maintaining… pic.twitter.com/Vvrx7KfX5T
— Circle Developer (@BuildOnCircle) October 28, 2024
The Confidential ERC-20 Framework tools conceal user balances and transaction amounts.
To ensure compliance with regulatory requirements, the framework allows for the delegation of account access rights to auditors, law enforcement, and other authorized parties.
The solution provides programmable transfer rules, which can include anti-money laundering measures, set limits, and other options at the smart contract level.
The framework employs fully homomorphic encryption (FHE), integrated with the EVM as an intelligent contract execution environment. This technology enables arbitrary computations on data without decryption.
Developers believe the privacy features of the Confidential ERC-20 Framework could see widespread use in finance. Potential applications include employee payroll, payments to supply chain providers (where amounts are best kept confidential from competitors), and P2P transfers like Venmo.
Back in 2023, the startup Nocturne Labs launched a protocol for anonymous transactions, implementing the concept of private accounts within the Ethereum ecosystem.