Introducing Zarcanum: Revolutionizing Blockchain Privacy for Mass Adoption

After years of non-stop work leaving no line of code in our codebase untouched, we can proudly say the Zarcanum hard fork (HF4) has successfully happened on Zano's mainnet at block height 2555000, marking the most significant milestone in Zano's journey to this date.

The Zarcanum hard fork transforms Zano from a secure, single-asset chain, to an ultra-secure, multi-asset, decentralized financial universe. From previously hosting $ZANO alone to now being able to host countless fungible digital currencies (read privacy tokens) on Zano's blockchain. In this article, we'll explain to you what exactly has changed, and what the rest of 2024 will look like to keep Zano the most innovative blockchain platform out there.

World's first Proof of Stake scheme with hidden amounts

Any information that a digital cash system reveals about its users is information that bad actors could use against them. The Proof of Stake consensus system has been routinely rejected by projects that put user privacy (and consequently user security) first because it requires the exact number of coins in a staking transaction to be public. Or at least it used to. Zarcanum (ZPoS) is the first-ever secure and private blockchain consensus scheme that enhances traditional Proof of Stake with untraceability and hidden amounts.

How Zarcanum (ZPoS) Makes PoS Private

Zarcanum improves upon traditional PoS in two fundamental ways:

• Amount Privacy — The number of coins in the staked output is hidden
• Untraceability — The output itself is hidden within a group of equiprobable decoy outputs

In its strongest form (as described in Section 6 of the research paper) Zarcanum reveals so little information that it makes identifying individual users through chain analysis all but impossible. By sealing the minor information leaks of traditional Proof of Stake, Zarcanum (ZPoS) becomes the first PoS scheme capable of delivering the same level of privacy as the most private of its PoW counterparts. Truly private Proof of Stake.

Zarcanum has been audited by Cypher Stack and the external audit result can be found here. Want to read a more detailed article about the world's first private PoS scheme? We recommend you read this article.

Introduction of Confidential Assets

To our knowledge, all first-generation token standards suffer from the same weakness as first-generation cryptocurrencies: complete, non-optional, naked transparency. Like a cookie consent popup with no opt-out button. Transaction data is detailed, potentially compromising, and available to anyone via the relevant block explorer putting users in danger.

With Zano Confidential Assets, anyone can easily issue their own currencies and digital tokens on the Zano chain; assets secured by the same mechanisms that make Zano itself so much more secure than first-generation cryptocurrencies, namely hidden addresses, hidden amounts, and IP obfuscation—all underpinned by our custom PoW/PoS hybrid consensus system. Aside from the obvious security benefits, it will give dApp developers a powerful new weapon in their arsenal and put us well on our way to achieving our goal of creating a secure, self-contained, universally accessible, decentralized peer-to-peer economy.

With our upcoming hard fork, Zano, as Ethereum did, will give users and organizations the ability to easily create custom tokenized assets that meet your specific needs. And crucially, all transactions involving these assets will be secured by the following properties:

Untraceability: it is not possible to determine the sender of a transaction.

Unlinkability: it is not possible to determine if more than one transaction was sent to the same recipient.

Asset Indistinguishability: It is not possible to determine which asset(s) were involved in a transaction.

Amount Privacy: It is not possible to determine the amount of a Confidential Asset transacted.

IP Obfuscation: it is infeasible to trace the IP (and hence geographical location) of the transaction originator.

We improved d-CLSAG (ring signature tech used in Monero) to d/v-CLSAG to be able to use Zarcanum PoS and Confidential Assets with ring signature within a tx. Just like Zarcanum, the underlying tech that makes Confidential Assets possible; Zano d/v-CLSAG, has been peer-reviewed by Cypher Stack. You can find the results of the audit here. Want to read more about Confidential Assets? Check out this article.

Burning of all Network Transaction Fees

Following the upcoming hard fork, the entirety of the revenue generated from fees will be allocated towards burning ZANO daily—positively contributing to Zano becoming a truly deflationary asset over time. Zano's model actively reduces its circulating supply, particularly as its blockchain gains traction, further diminishing the coin's availability. The more Zano's blockchain becomes adopted, the more Zano gets burned each day positioning Zano as a trailblazer in the realm of cryptocurrency economics. Want to read further about our fee-burning model? Check out this article.

Ring Size Upgraded From 11 to 16 and Other Privacy Improvements

Our ring size has been increased from 11 to 16 decoys, increasing overall privacy and putting us on par with Monero's ring size.

RingCT

RingCT is a form of CryptoNote transactions that uses hidden amounts (introduced by Monero). From RingCT we use Pedersen Commitments scheme to hide amounts and to commit their values confidentially; we use the homomorphic property of Pedersen commitments to make sure the balance is correct without revealing the amounts; and also we use the pseudo output amount commitment approach to hide the actual amount commitments used in the ring (all these technics are from RingCT). But on top of this, we added (invented) two things: 1) the Zarcanum PoS scheme; and 2) Confidential assets. It can be considered as the next version or evolution of RingCT technology.

Bulletproofs+

We use Bulletproofs+ as a range proof to make sure in zero-knowledge that amounts committed in outputs and amount commitments are in valid range. Also, we extended existing Bulletproofs+ to support double-blinded commitments used in the Zarcanum PoS signature. We described it in the Zarcanum preprint with corresponding security proofs.

Decoy Selection Algorithm Improved

One of the fundamental principles of privacy used by Zano is 'unlinkability' — a feature that prevents the association of transactions with each other. In creating a transaction, the sender references their own input and also includes a 'decoy set' — outputs from random transactions of other users. This incorporation of decoys ensures that, through a specialized Ring Signature, the sender is cryptographically proven to own only one of the inputs. However, it remains unknown to a third-party observer which specific input belongs to the sender.

As we transitioned to the Zarcanum era, with its emphasis on hidden amounts, we at Zano undertook our own research to develop an appropriate algorithm for decoy set selection. The Zarcanum era represents a significant advancement in our blockchain's capabilities, warranting this new approach.

Want all the juice about the newly created decoy selection algorithm? We've got your back with this article.

The Road Ahead

The plans for the rest of 2024 are equally as exciting as the hard fork was. Future additions to the Zano ecosystem include:

• Zano Governance System: Anonymous on-chain voting for $ZANO holders
• Zano Companion: A browser extension that enables authentication and connects the Zano desktop wallet to web applications and dApps
• Decentralized Exchange - Zano Trade: On-chain trading experience for $ZANO and the confidential assets
• Entirely new wallets including a lite/web wallet
• Peer-to-peer Trading Platform enabled by escrow contracts
• Peer-to-peer off-chain protocol for P2P settlements
• Cake Wallet integration
• The launch of Confidential Layer, Zano Bazaar, and possibly many more projects developing on Zano's ecosystem

We're ending today's article with a great quote from Ravaga:

''The anticipation surrounding the Zarcanum hard fork has been palpable, with many in our community viewing it as a pivotal endpoint. However, I see it quite differently – to me, this hard fork isn't the conclusion of our journey, but a groundbreaking commencement. By introducing Zarcanum, we've not just updated; we've added a whole new dimension to our project's growth. This is the beginning of an era where our platform evolves, expands, and truly flourishes. Let's look forward to exploring this new frontier together.'' ~Pavel Nikienkov - Co-Founder & Project Manager

Excited to read more about all the use cases, benefits, and applications of the new Zano? Check out this article.