Inco Network and Circle Research introduce Confidential ERC-20 Framework, an innovative solution aimed at bringing privacy compliant to public blockchains
The new framework’s white paper, published on October 28, describes how it converts standard ERC-20 tokens into secret, encrypted versions, shielding transaction amounts and balances from the public view and increasing privacy without compromising security. Meets regulatory requirements for
The importance of privacy
The framework, outlined in a co-authored whitepaper, uses Fully Homomorphic Encryption (FHE) to store transaction data on public Ethereum-based blockchains while maintaining regulatory compliance. I’ll keep it secret.
This cryptographic approach allows users to perform transactions securely without exposing sensitive information. It also allows the framework to perform operations on encrypted data directly within the Ethereum Virtual Machine (EVM), ensuring that both privacy and security remain intact.
Circle CEO Jeremy Allaire emphasized the importance of regulated financial institutions maintaining privacy protections while meeting their anti-money laundering responsibilities.
The Confidential ERC-20 framework addresses these needs by allowing authorized parties such as auditors and regulators to selectively access transaction details, ensuring that user privacy is not compromised. Provides the monitoring you need without exposing you to
This feature increases transparency without sacrificing confidentiality and reduces the risk of abuse by keeping certain aspects of transactions private yet available for public review.
wide range of applications
The Confidential ERC-20 framework serves a variety of sectors by supporting payroll processing, supply chain management, and peer-to-peer payment applications.
The framework enhances privacy for businesses and individual users alike by incorporating programmable compliance measures such as transaction restrictions and anti-money laundering controls within smart contracts.
These features make the framework particularly valuable for companies working with strategic financial data, enabling secure and compliant transactions over open networks. In addition to its technical advantages, this framework provides a modular structure that allows developers to easily integrate privacy-focused financial applications.
Unlike common zero-knowledge proof protocols, FHE-based frameworks ensure data encryption robustness and support seamless composability without exposing transaction details.
Inco Network and Circle Research have open sourced the Confidential ERC-20 framework and encouraged developers to extend and improve the system. This transparency will foster innovation in privacy-oriented decentralized finance and financial services by encouraging the blockchain community to build on the framework’s foundation.
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