There has been much speculation in recent weeks whether the upcoming Tezos protocol upgrade dubbed the ‘Bond’ upgrade, due to its 007 reference number is likely to include privacy for smart contracts. The aptness of the protocol number in relation to this highly desired feature of privacy has not been lost on the Tezos community. Up until now there has been no definite indication that the privacy upgrade will actually be included in the upcoming protocol proposal 007.
With the current proposal period ending in 7 days time from the time of writing, time appears to be running out on the current round. However, it is likely any proposal will be injected just after this time period has ran out, to allow enough time for people to vote on the 007 proposal. It is also expected any proposal will be injected at the beginning (or in the very early stages) of the next round. This is because if no proposal is injected, a new round will begin and as this looks to be a big upgrade, ample time will be needed to discuss and vote upon it.
This anticipated privacy feature will come in the form of an innovation initially created for the cryptocurrency ZCash. The specific ZCash innovation relates to zkSNARKS and their own upgrade called Sapling. Sapling was third in line within the ZCash upgrade schedule, after Spout and Overwinter. After Sapling, there was another upgrade named Blossom, which was released in December 2019. In just over two days time from the time of writing ZCash is due to upgrade again to ‘Heartwood’.
In fact, Heartwood has some unique attributes that may be able to be ported to Tezos in the future. One big upgrade is the ability to have coinbase funds to be mined directly to shielded Sapling addresses. In a potential future Tezos implementation it may be possible for bakers to bake coinbase funds directly to the shielded accounts of Tezos delegators, enabling fully featured institutional grade privacy.
Sapling was a big upgrade on initial ZCash implementations and allowed for the proving of zkSnarks to be more efficient. Sapling also allowed for selective audit-ability, which will prove to be a crucial area of innovation for STOS and other tokenized assets, especially if ran through highly regulated institutions. This comes in the form of view keys. As the ZCash Sapling upgrade specification states: “Full viewing keys allow owners of shielded addresses the ability to view incoming and outgoing transaction details without exposing their private spending key.” This feature is necessary if privacy is ever to be used in regulated digital asset finance and this will enable Tezos to have that box ticked as it aims to be the go-to platform when it comes to tokenized assets.
Of course, Sapling was first launched on ZCash, but what makes this implementation unique on Tezos is that Tezos is already a proof of stake smart contract platform. Bringing privacy and Sapling to smart contracts with proof of stake will unleash a whole array of new use cases that are not yet present on any blockchain to this degree of privacy.
ZCash has already been accepted in highly regulated districts such as New York and is trades on platforms which hold the Bitlicense including Gemini. There has been concern in the cryptocurrency community that adding privacy features may make coins more susceptible to regulatory scrutiny, however ZCash’s acceptance by New York regulatory body’s has helped to ease those fears.
Sapling On Tezos
Sapling on Tezos has been in development for a while and Nomadic Labs (One of the main core development teams on Tezos, alongside Metastate and Dai Lamda) previewed the technology in December 2019, however it had been talked about long before this.
The Sapling upgrade was originally hoped to have been featured in the 006 protocol (named Carthage). The new 007 protocol upgrade is yet to be named, but is expected to begin with the letter D and represent a city/ancient place like the previous 3 upgrades: Athens, Babylon and Carthage.
We can now see on the following Gitlab page that the request to merge the Sapling integration into the ‘Proto Proposal’ (protocol proposal) has been made. We can see it states: “This MR (merge request) integrates the Sapling protocol in Tezos protocol proposal 007”. This was last updated 1 week ago.
It main file for the protocol has 100% test coverage. In the pipeline section it is possible to view that all build and test phases have been passed:
The only stages left to complete are the ‘Test Coverage’ and ‘Publish Coverage’ phases, which were ‘allowed to fail’ up until this point.
The Sapling integration recognizes a milestone in not only Tezos development, but also cryptocurrency development as a whole. This will represent one of the most complex integrations of an innovation created for a different technology in the cryptocurrency space into another coins protocol.
It is made even more unique that the integration (if eventually passed) will be enforced automatically, democratically, through a bind on-chain amendment. It will also represent a different milestone in the fact that this level of privacy has been integrated into a large cap, smart contract platform that has best in class institutional-grade staking features, opening up use-cases that have not even been thought of as of yet.
Institutions that require a high degree of privacy within their smart contracts will now be able to build solutions on Tezos. The forthcoming Tenderbake solution (originally built for the Cosmos blockchain in the guise of Tendermint) that is anticipated to be built on Tezos will enable instant-finality, another highly anticipated upgrade needed by certain institutions. It is this ability to add innovations that will help to ensure that Tezos is the most efficient, well-rounded package that can suite multiple use-cases, industries and regulatory frameworks.
Such innovations, when combined with Tezos’s innate abilities should allow Tezos a distinct advantage when compared to its competitors. Such innate abilities include institutional-grade security via formal verification methods, best-in-class staking (allowing delegators to safe-guard their funds) and Governance (allowing unlimited protocol upgrades in a democratic, efficient and security focussed fashion).
For more information on the Sapling integration we recommend you listen to this audio episode which includes 3 members of the Tezos community, including 2 core developers who worked on the Sapling protocol.
This article was sponsored by the Luv4 Marketing Digital Marketing Franchise.
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