Crypto entrepreneur Balaji Srinivasan has proposed a concept to improve Ethereum privacy. In a post on X, Srinivasan termed the concept Zethereum, saying it would involve adding zero-knowledge (zk) technology to Ethereum smart contracts.
According to Srinivasan, all it takes is for a pseudonymous engineer, whom he chose to call Zatoshi, to add private transactions and zk stack features to Ethereum as optional smart contracts. He believes a developer must have high-level OpSec knowledge to implement the changes.
Srinivasan said:
“Essentially it would be a way to ship much of Justin Drake’s impressive five year ZK roadmap in three months…except via smart contracts rather than the base layer. This would enable our hypothetical Zatoshi to move quickly and take more risk.”
He believes that going this route is more efficient as it ensures that Ethereum could have privacy features within months instead of years. With the implementation, Zethereum could function like Tornado Cash, the crypto mixer that a recent US court ruling declared not illegal.
However, the entrepreneur admitted that developing Zethereum could be risky even though the legal position on Tornado Cash has become more favorable. Thus, it is better for any developer working on such a project to do it anonymously.
He observed that until Tornado Cash developers Roman Storm and Alexey Pertsev are pardoned, anyone building such technology will be taking a major risk with their freedom.
Why build on Ethereum?
Srinivasan discussed why he chose Ethereum for this idea and not any other blockchain network. According to him, Ethereum is the best option because the recent Tornado Cash ruling concerns an Ethereum smart contract. This ensures that anyone who builds Zethereum on Ethereum could directly rely on the ruling as a defense.
He further noted that other chains do not have the qualities that make Ethereum ideal. Bitcoin, for instance, has an immutable base layer, and the community is more focused on “political innovation than technical innovation.” As for Zcash, which is a pioneer in ZK technology, he noted that it is not as popular as Ethereum.
He said:
“Zooko and his old team are of course the pioneers in zero knowledge. And Zcash arguably has already done much of this in terms of base-layer privacy. But Zcash doesn’t have the distribution of Ethereum.”
Meanwhile, he said popular networks such as Solana and Base would have been good for such a protocol, but most of their developers are not anonymous, which could put them at risk given the current legal situation.
However, he believes that any developer willing to build Zethereum on any network and improve internet freedom can still give it a shot.
Crypto community reacts to proposal
Srinivasan’s proposal has sparked several reactions. While everyone agrees on the importance of on-chain privacy, most people believe that several projects are focused on this problem and that the solution is not as simple as the former Coinbase CTO presents it.
Pseudonymous Basedcrypto noted on X that Aztec Network, Penumbra, and Rift are just a few of the protocols building this vision. Aztec Network, a privacy-focused L2 on Ethereum, stole the most spotlight, with many stakeholders noting that it has been working on this issue for years.
Aztec Labs CEO Zac Williamson also responded, noting that he has been working on the idea for seven years now, and it will take at least 70 developers to make it work rather than just one.
He said:
“I’ve been working on this exact thing for seven years and now the KOLs are clout farming with their microbrain ‘hot takes’ because privacy is the new meme narrative.”
He went further to explain that the tech involved in making this work is extremely complex, with years of collaborative painstaking research and thousands of technical deployments by several protocols. According to him, this is why it has taken seven years to build the Aztec Network, and the mainnet will soon launch.
However, Williamson noted that it is not necessary for developers working on the Zethereum concept to be anonymous, and Aztec Network has focused on programmability.
He said:
“This work does not need to be done anon. Privacy is a force for good and is not fundamentally hostile to the concept of protecting users. On the contrary, our programmability enables specific dapp developers to program in whatever checks they need for the jurisdiction they are targeting.”
In his response, Srinivasan called on Aztec to launch its mainnet, noting that the community is looking forward to trying it. However, he acknowledged the technical difficulties and noted that he has supported several projects within the sector.
Meanwhile, some believe there is no need for Zethereum at all. Pseudonymous user Naval believes Zcash is sufficient as a privacy network and works well because it uses proof of work. He noted that a programmable chain has more vulnerabilities and that it is best to separate chains for store value, programmability, and privacy.
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