Ethereum privacy technology developments

Developments in the Ethereum ecosystem have focused on enhancing user privacy through zero-knowledge proof technologies.

Aztec Labs relaunched ‘zk. money’, a self-custodial privacy wallet on its Ethereum layer-2 network. The tool enables private stablecoin transactions by validating data without revealing balances or identities. The relaunch includes a new codebase and utilizes the Ethereum Name Service for improved usability, though it currently operates under transaction and daily deposit limits.

Following this, the Ethereum Foundation and the Open Anonymity Project introduced ‘zkAPI’ on the Ethereum mainnet. This tool aims to protect privacy for users of artificial intelligence services by decoupling payment information from specific queries. By using zero-knowledge proofs and vault contracts, the system allows service providers to verify funds without identifying the specific source of the deposit. The tool is compatible with OpenAI and Ollama API formats.

Under the zkAPI framework, users deposit assets like ETH or USDC into an on-chain vault to generate short-lived API keys with predefined spending limits. This mechanism is intended to lower latency and gas fees by reducing the need for individual on-chain transactions for every request. However, the system does not guarantee total privacy; it does not hide prompt content or network metadata, such as IP addresses, meaning users could potentially be identified through request patterns or information included within prompts.