A Practical Guide to Privacy Protection on the Ethereum Network
Editor's Note: This article comes fromChain News ChainNews (ID: chainnewscom), Author: Pan Zhixiong, Lianwen Research Director, published with authorization.
Editor's Note: This article comes from
Chain News ChainNews (ID: chainnewscom)Chain News ChainNews (ID: chainnewscom), Author: Pan Zhixiong, Lianwen Research Director, published with authorization.
Time to add some privacy to your Ethereum account.
Many people think that blockchain or digital currency will enhance the anonymity of users. In fact, this is a widespread misunderstanding. (Lianwen previously published an article that fully introduced this misunderstanding:
Nakamoto has no clothes on! Time to fully assess blockchain privacy protection
Among all the projects, the most notable ones are Bitcoin and Ethereum. The former is an entry-level investment product in the field of cryptocurrency, while the latter has the most extensive user base, application ecology and developer community. There should be no one who is willing to disclose the balance and transfer records of their home bank accounts, and banks have no right to do so. Cryptocurrency itself has its own financial attributes, but in most blockchain projects, every transaction of a user is is public.
Because if you do not pay attention to protecting privacy, users may leak asset information or lead to other more dire consequences. As the overall value of the entire blockchain network gradually increases, more and more professional data mining companies and black industries will enter. Someone has done a simple experiment, through the Ethereum domain name system (ENS), you can find the Ethereum addresses of some famous people in the industry, and check their assets. If a more professional team conducts more in-depth data analysis, it is hard to imagine what other information they will dig out.
Fortunately, thanks to blockchain and cryptography. We have some tools to solve such problems and enhance users' privacy protection and anonymity.
Anonymity technology based on the Bitcoin network has been developing over the past few years. In addition to some improvement proposals such as SNICKER (Simple Non-Interactive Mixing Coin Reuse Mechanism with Encryption Keys) to enhance privacy, users can also take advantage of Currency mixing services enhance the interchangeability of BTC, such as Samourai Wallet (Samurai Wallet)'s currency mixing function Whirlpool (vortex) or Wasabi Wallet (wasabi wallet).
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Wasabi Wallet Features
In contrast, Ethereum has a larger and more complex application ecosystem, and many projects are exploring anonymity and privacy technologies, such as Tornado Cash, AZTEC Protocol, ZeroPool, etc.
Here, we have selected the easy-to-use tools for you, which, together with the appropriate strategy, can instantly provide your Ethereum account with more difficult-to-trace privacy protection. Before we get into the details, let's offer some basic advice:
For other traditional Internet services, it is enough to use tools such as VPN or Tor to improve the anonymity of the network transport layer. However, based on the particularity of the blockchain ledger, although the anonymity of the network layer is important, the more important thing is obviously the ledger level. privacy. For many ordinary users, if the following strategies are adopted, the possibility of account funds being untraceable can be significantly increased:
Use a non-custodial cryptocurrency wallet and do not provide any authentication information to the wallet tool;
Use currency mixing services, such as using services such as Tornado Cash to transfer some assets to a new Ethereum address to achieve anonymity;
Do not associate any direct transfer between centralized exchanges, especially accounts that have completed KYC, and Ethereum addresses that have achieved anonymity;
Do not associate any direct transfer between the Ethereum address that has been used and the Ethereum address that has achieved the anonymity effect;
Do not use the Ethereum Name Service (ENS), or do not register a name that has any connection with your own identity when using ENS;
At the same time, we should keep our attention on the following technologies, which can be adopted when they are popularized in consumer products:
The Ethereum mainnet has been launched, but AZTEC for consumer-grade products has not yet appeared;
The Ethereum mainnet has been launched, but the security audit has not yet been conducted ZeroPool;
The currency mixing tool MicroMix has been launched on the test network.
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Not paying attention to privacy, the Ethereum addresses of those industry leaders have been turned upside down
Let's start with why we need to consider privacy protection technology.
The media Decrypt recently analyzed 130,000 Ethereum domain names and their balances. Through some simple methods, some famous people in the Ethereum community can be identified, and only through the blockchain, data and users of business operations can be obtained. trading behavior.
The analysis method only uses public information such as name, organization, social network account, Google search, etc. The most typical example is the Ethereum domain name "bobbyong.eth" of Bobby Ong, co-founder of cryptocurrency data platform CoinGecko. Through the transaction records of this account, it is possible to know that he will participate in a DAIsucki party in Osaka City 17 days in advance, because participating in this event requires depositing USD 10 worth of DAI into the Ethereum address of the event in advance.
Two days after the event, he received $19 in DAI, showing that he not only attended the event, but was rewarded for it.
Later Bobby Ong said, "In this case, I should consider the privacy of my Ethereum address more carefully, and I should separate the transactions I want to make public and the transactions I want to protect privacy. ENS provides convenience for users, but Users should choose whether they need to protect their personal privacy. I hope that building more privacy features on Ethereum can improve user privacy and security.”
In addition, the following famous people also leaked their own assets and related transaction records because of ENS. If we further analyze, we may be able to dig out more information. They are the CEO of SpankChain, Ameen Soleimani, who owns two domain names "ameen .eth" and "ameensol.eth"; Jordan Muir, the creator of Frame, owns multiple Ethereum domain names, "jordan.eth", "framehq.eth" and "smartaccounts.eth"; Breaker (formerly SingularityDTV) "Chief "Propaganda Officer" Jack Cheng owns "jackcheng.eth" and "ethoutlet.eth".
In addition to ENS, user assets and transaction records have long been used in accurate advertising. When the concept of ICO and airdrops prevailed in 2018, many airdrop solution organizations could filter and airdrop tokens based on the user’s Ethereum asset balance and activity level, with the purpose of delivering tokens to more precise user groups. After all, there is a cost to airdrop on the Ethereum network, and the number of accounts is also large.
Even well-known investment institutions in the industry cannot avoid the risk of being closely tracked and accurately invested. Last year, it was discovered that a16z’s Ethereum account received SNX tokens. It was believed that a16z may have privately invested in Synthetix tokens, which also led to a surge in the price of SNX tokens. Later, neither side answered the question positively, so nothing happened.
For ordinary users, if they do not adopt a suitable privacy policy, they may also be closely tracked like these famous people, whose transaction records are closely tracked.
Just imagine, if you have registered an ENS account with the same nickname as a social network, if you have disclosed your career history on Linkedin, if you have withdrawn and recharged with an exchange, if you have used a bound mobile phone number All of the above situations will expose the privacy of users, associate you in real life with your identity (Ethereum address) in the virtual world, and leak all your assets and transaction history in the virtual world.
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Privacy can be divided into two categories: network layer privacy and ledger layer privacy
Let's start with the basics and illustrate the various possibilities of privacy protection.
The "network layer privacy" tool solves the metadata that users may leak when they access the Internet, such as user IP, access history, access time, etc. For example, the user's IP information is recorded in the Internet service provider (ISP), and the user's IP will be recorded by the other party after visiting the website or service, and this information may be processed or used.
Solutions like VPNs, Tor or I2P have been around since before blockchain. Through such tools, users can hide their original IP, access Internet services more securely or initiate blockchain transaction applications. There are also blockchain-based projects that attempt to provide a more modern privacy infrastructure, such as Nym, but are still in development.
Nym is a new privacy-enhancing infrastructure project. It first attracted the attention of Lianwen because it was selected for the 10-week incubation camp launched by Binance Incubator in December 2018. Based on the Mixnet communication protocol, the project provides full-stack privacy. Any application, service or blockchain can protect the privacy of traffic in its network without building a privacy system from scratch. Moreover, Nym has launched an incentive system Proof Of Mixing designed to enhance privacy performance, encouraging Nym's node operators to mix traffic in the network, thereby enhancing privacy and security. Developing a basic platform with high privacy protection features to promote the emphasis on privacy protection features application product development. Nym is currently in the Mixnet Alpha testnet stage.
For users of cryptocurrencies and Ethereum, the privacy of the ledger layer is more important, because the ledger is data that is open to the entire network, while the privacy of the network level will only be exposed to a small number of people.
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In privacy at the ledger level, a core concept can be called "coin mixing", and many privacy projects are derived based on this concept.
Based on the account model of the Ethereum network, the blockchain stores transaction records. Each transaction record can be simply understood as: address A transfers X ETH to address B. This 1-to-1 transaction can easily directly associate two addresses.
Bitcoin based on the UTXO model encourages each address to be used only once in the design of the account structure, which will increase the difficulty of tracking transaction records. For example, in the above case, address A may consist of 5 addresses, and address B may consist of 2 addresses.
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A random bitcoin transaction consisting of 5 input addresses and 5 output addresses
For such situations, the Bitfury team proposed in the paper "Bitcoin Address Automatic Clustering Method" published in 2017 that based on several assumptions and deduction, it is possible to cluster Bitcoin addresses and determine the relationship. "This method allows users to avoid unsafe bitcoin usage patterns and allows investigators to conduct more advanced 'de-anonymization' analysis," the paper said.
Bitcoin address automatic clustering method paper
However, "coin mixing" is a method to completely break the relationship between transactions. By packaging the transactions of different people into the same transaction, it is difficult to track the transaction purpose of each person.
Even Chanalysis, a well-known blockchain data analysis company, said that currency mixing tools will significantly increase the difficulty of tracking funds. ", "Some currency mixing tools further increase the difficulty of tracking funds by allowing users to accept funds of different sizes."
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The well-known currency mixing tools on the Bitcoin platform include Samourai Wallet (Samurai Wallet) and Wasabi Wallet (Wasabi Wallet), both of which can create mixed currency transactions for users. The CoinJoin protocol used by Wasabi Wallet will provide users with a trustless wallet service that allows multiple users to combine their transactions with multiple recipients into one transaction. Depending on the tool, the user may also have to pay a handling fee of about 1%.
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Wasabi Wallet's Currency Mixing Interface
Since Ethereum does not have a UTXO structure, and an ordinary transaction cannot merge multiple senders, it is not exactly the same as the "coin mixing" implemented in Bitcoin. However, the advantage of Ethereum is that it supports Turing-complete smart contracts. By embedding logic into smart contracts, the same function as the concept of "mixing coins" can be achieved.
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Try Tornado Cash
For users who are concerned about anonymity and privacy for the first time, the first tool recommended for the Ethereum network is Tornado Cash, which can be used to create the first "anonymous address", and all future transactions can be based on this The address is extended.
Tornado Cash is currently a popular currency mixing tool in Ethereum. In addition to using a non-custodial method to achieve the effect of currency mixing, it also uses zero-knowledge proof related technologies.
For users who need to mix coins, they need to send their cryptocurrencies to Tornado Cash’s smart contract fund pool. The contract will also generate a series of zero-knowledge proof codes for users, which can be used later to withdraw funds to another anonymous Ethereum address. As the number of users of the pool increases, or the frequency of transfers in and out increases, the degree of anonymity increases.
In order to further increase the intensity of confusion, Tornado Cash's smart contract fund pool is divided according to the amount of money. For example, ETH has 4 independent fund pools of 0.1, 1, 10, and 100 ETH, and all transfer-in and transfer-out amounts in the same fund pool are fixed at the same size (and there may be additional transaction fees).
Because if you can use a specific amount of ETH to transfer in and out, you can reason and correlate based on the amount. For example, the correlation between 0.55 ETH transferred into the fund pool and 0.55 ETH transferred out a few days later will be higher.
Taking the 1 ETH fund pool as an example, the user's usage process is as follows:
Access the Tornado Cash website through a non-custodial decentralized wallet and select a fund pool with an amount of 1 ETH;
Wait at least 24 hours, and the longer the better, because while you wait, more people will use the pool for subsequent transfers in and out, and as the number of these transactions increases, the degree of anonymity will increase ;
When the user decides to withdraw cash, he visits the website and submits the previously saved zero-knowledge proof text. Tornado Cash provides a relay node service, which means that the user can authorize a third party to trigger the smart contract transaction for the user and retrieve the funds to a new The anonymous Ethereum address, because the other party needs to pay the blockchain transaction fee when initiating a transaction, and also provides privacy protection for the user, so the user needs to pay about 1% of the fee. Fortunately, there are many service providers to choose from, some with lower fees;
It is also worth noting that for users who use this process for the first time, it is recommended to create a brand new Ethereum address without any transaction history as the recipient of Tornado Cash funds. After all, the various addresses used before may have been exposed Privacy information is gone.
For outside observers, in the smart contract of the fund pool, hundreds of thousands of addresses frequently enter and exit transactions of 1 ETH. There is a gap of a few days or even longer between the "original address A" used by the user when transferring funds in and the "anonymous address B" used when transferring funds, and there are dozens or even hundreds of transactions between them, so outside observers It is almost impossible to associate "original address A" with "anonymous address B".
It is very difficult to judge the relationship between two addresses in thousands of identical transactions
It should be pointed out that although Tornado Cash has passed the security audit, the tool is still in the early development stage and there are unknown risks.
At the beginning of 2020, Tornado Cash confirmed that there had been a vulnerability in the platform, which may have caused the privacy of 12 addresses to be leaked. ". In any case, widespread use is not recommended at this time.
All assets can be anonymous through currency mixing services
wallet
There are also some transactions that need to be avoided, leaving no possible connected transactions
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Centralized exchange
Before that, choose a non-custodial decentralized cryptocurrency wallet as the entrance. It needs a built-in Web3 browser or WalletConnect to support DApp operation. Common choices include MetaMask, MyEtherWallet, imToken, Trust, MATH, AlphaWallet, etc. If some of these wallets add user identity authentication functions in subsequent updates, please do not submit personal information, especially nicknames, mobile phone numbers, email addresses, etc. Maybe you can change to another wallet.
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Centralized exchange
Decentralized Exchange (DEX)
The second important tool is the centralized cryptocurrency exchange. The vast majority of users need to exchange fiat currency for cryptocurrency through over-the-counter transactions on the exchange, or use centralized exchanges for frequent currency-to-currency exchanges. In order to meet KYC and anti-money laundering regulations, centralized exchanges need to collect users’ personal information, so on-chain transactions with exchanges must be extra careful.
When depositing or withdrawing funds with an exchange, do not associate with an Ethereum address that already has a high level of privacy. That is, do not withdraw the assets of the exchange to the "anonymous address", and do not recharge the funds of the "anonymous address" to the cryptocurrency exchange. If there is a real need, the flow of funds can be realized through additional intermediate addresses and Tornado Cash.
Decentralized Exchange (DEX)
The advantage of DEX is that no authentication is required, which avoids the possibility of privacy leakage, so users can also use their own "anonymous address" to interact directly with DEX.
There are also some DEXs that require KYC to be used, such as IDEX, in order to meet compliance requirements. Therefore, it is not recommended to use DEX that requires KYC.
Some users may worry about the liquidity of DEX, but with the rapid development of the decentralized finance (DeFi) ecosystem, the liquidity of DEX is catching up with centralized exchanges, and even the liquidity of some DEXs is not inferior to that of centralized exchanges. For example, the stablecoin trading protocol Curve or the MKR/ETH trading pair in Uniswap.
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Uniswap Liquidity Growth Trend
Ethereum Naming Service (ENS)
Other DeFi and DApps
There are many types of other DeFi platforms and DApps, just keep the principle mentioned before: Do not disclose personal information to such platforms, such as nicknames, email addresses, mobile phone numbers and other information. At the same time, it is best to pay attention to the privacy protection of the network layer, and do not directly expose IP and other information to these services.
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A complete solution for ordinary users
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New Technology to Watch
Tornado Cash is an out-of-the-box consumer product. But there are still many projects that are still under development worthy of attention, because after these projects are launched and stabilized, users will have more choices besides Tornado Cash.
AZTEC: The Ethereum mainnet has been launched and development tools have been provided, but consumer-grade products have not yet appeared
AZTEC, a privacy technology start-up company, has launched a privacy network based on the Ethereum mainnet earlier this year, which will allow users to create, send, exchange, and pay confidential assets on the Ethereum mainnet, thereby allowing digital assets to be represented on the public blockchain. Coin privatization.
Founded by mathematician Tom Pocock and nuclear physics expert Zachary Williamson, AZTEC completed a $2.1 million seed round of financing in November 2018, led by ConsenSys Labs, followed by Entrepreneur First, Samos Investments, Jeffrey Tarrant and Charlie Songhurst.
In January 2020, AZTEC completed the largest MPC setup in history. This MPC setup provided the ultimate proof of non-collusion (proof of non-collusion). This event generated more than 600 check-ins and 2 MPC software Realized, 202 participants ran the software, 176 of which were valid, and the participants came from 105 cities in 41 countries, of which 30️ participants remained anonymous. They were from 6 mainstream blue-chip financial/technology companies, Leaders from two major blockchain infrastructures and three blockchain hosting companies participated in the event. Organizations such as Ambi Labs and Fenbushi Capital in China also participated in the setup. It is worth mentioning that AZTEC awarded the dedication award to Ethereum founder Vitalik Buterin. In this setup, Vitalik Buterin completed the Python implementation of AZTEC MPC by himself and ran it for two days.
In recent days, AZTEC has just disclosed a technology called ZK² Rollup, which is expected to significantly reduce the cost of private transactions in the Ethereum network. ZK² Rollup is also ZK ZK Rollup. The first "ZK" is to use the "succinctness" (succinctness) in SNARKs technology to improve the scalability of the network and combine multiple transactions into one to reduce transaction costs. The second "ZK" uses SNARKs as a privacy technology to upgrade every ordinary transaction before the merger to a private transaction.
The zero-knowledge proof used by AZTEC is based on PLONK technology, a new technology co-created by AZTEC Chief Technology Officer Zac Williamson and Chief Scientist Ariel Gabizon (a former researcher at Protocol Labs, the parent company of Filecoin), which supports general or updateable "Trusted setup" (trusted setup), and has a significant performance improvement over Sonic.
At present, AZTEC is still waiting to be integrated by developers, but it should take too long to wait. AZTEC will provide a limited number of APIs for free private mainnet transactions within 12 months and welcomes Ethereum-based applications to use.
Currently, AZTEC supports developers to use the privacy SDK to deposit, send and exchange the private version of DAI, zkDAI. In the future, AZTEC will release a DApp that allows users to deposit, send and withdraw zkDAI and other privacy tokens.
ZeroPool: The Beta version has been launched on the Ethereum mainnet, but has not yet undergone a security audit
The Ethereum anonymity solution ZeroPool originated from the ETH Boston hackathon and received a $25,000 grant from ConsenSys.
According to the team, ZeroPool is an advanced privacy solution, better than other currency mixing tools, users can use it to hide the amount, source of funds and destination address from any external observer, store or execute ETH and any other ERC-20 Exchange of Tokens. ZeroPool will consist of two parts, a smart contract that integrates zero-knowledge proof (ZKP) and unspent transaction output (UTXO), and a Chrome browser plug-in wallet that uses public-private key pairs generated by BabyJubJub elliptic curves.
ZeroPool also integrates Optimstic Rollup, an Ethereum scalability solution, which reduces on-chain transaction costs for users. In the extreme market on March 12, ZeroPool stated that due to the adoption of Optimstic Rollup technology, private transactions can also achieve very low on-chain transaction fees, which is close to an ordinary transaction.
ZeroPool was co-founded by blockchain independent researchers Igor Gulamo and Kirill Kuznetcov. The project has been relatively low-key, operating in the form of community funding, receiving donations through the Gitcoin platform, and they have not disclosed financing information.
The ZeroPool paper was published in the Ethereum Research Forum, and Ethereum founder Vitalik Buterin commented on the paper as "Excellent work! Looking forward to seeing it available."
