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Privacy-Preserving Payment Layer using Zero-Knowledge Proofs & Rust

Project Snapshot

    • 🔹Client: Confidential (DeFi Infrastructure Provider targeting APAC + EU region)
    • 🔹Industry: Decentralized Finance (DeFi), Privacy Infrastructure
    • 🔹Duration: 10 Months
    • 🔹Team: 8 Rust + ZK Engineers, 2 Cryptographers, 1 Ethereum Architect

    🔹Environment: Ethereum Layer 1 & Testnets (Goerli, Sepolia), Rust-native zkStack

Objectives

  • 🔹To build a modular, privacy-preserving payment layer that operates on top of Ethereum or other L1 chains—allowing users to send, receive, and mix funds without leaking metadata or transaction history.

    🔹Inspired by Tornado Cash, Zether, and Aztec, the goal was to implement a regulatory-aware, off-chain privacy layer using Zero-Knowledge Proofs, without compromising composability or performance.

Solution

      • TechSteck Solutions architected a Rust-powered zk-based mixer and shielded payment system capable of supporting arbitrary ERC-20 and ETH deposits, with off-chain proof generation and a zk-SNARK-based L1 bridge for trustless withdrawals.

        Core Technologies Used

        • 🔹Rust – Backend microservices, prover services, SNARK coordination layer
        • 🔹arkworks-rs – Circuit design and cryptographic primitives
        • 🔹bulletproofs – For confidential range proofs and commitment schemes
        • 🔹circom-rs – Native Circom circuit compiler with WASM backends
        • 🔹Poseidon Hash / MiMC – ZK-friendly hashing for note commitment & Merkle proofs
        • 🔹Solidity – Smart contracts for deposit, withdrawal, and Merkle tree root management
        •  

        • Key Features & Architecture

        •  

          1. Shielded Transactions

          • 🔹Users generate shielded notes off-chain using a Rust client, each representing a fixed denomination.
          • Each note includes:
            • 🔹Commitment: Poseidon(Msg + blinding)
            • 🔹Nullifier: Prevents double-spending
            • 🔹Serial Number: Revealed only on withdrawal for verification

          2. Off-chain ZK Proof Generation

          • 🔹ZK circuits compiled via circom-rs and proven via snarkjs/groth16 or Bulletproofs.
          • 🔹Rust orchestrator handles:
            • 🔹Input signal generation
            • 🔹Merkle proof path computation
            • 🔹Proof verification before submission to L1
          • 🔹Designed for light-client compatibility via WebAssembly

          3. Ethereum L1 Bridge (zk-SNARKs)

          • Solidity smart contract:
            • 🔹Validates incoming zk-proofs (Groth16)
            • 🔹Manages the Merkle tree root history
            • 🔹Allows trustless withdrawals only if the proof is valid & nullifier unused

          Additional Security Features

          • 🔹Anti-frontrunning: Used a commit-reveal scheme to prevent withdrawal sniping
          • 🔹Trusted Setup Ceremony: Phase 1 MPC coordinated using powers-of-tau in-browser
          • 🔹Circuit Size Optimizations: Reduced constraint count by 30% using elliptic-friendly hashes and fixed-denomination optimizations

Results & Impact

 

Metric

Impact

On-chain Footprint

Reduced calldata size by ~70% via off-chain proof generation

Anonymity Set Growth

Grew to 12,000+ shielded notes in first 4 months

Withdrawal Latency

<15s (including proof gen and submission)

Regulatory Controls

Designed optional compliance hooks for blacklisting UTXOs/nullifiers

Gas Cost for Withdrawals

Averaged 190k gas per Groth16 verified tx

Lessons Learned

  • 🔹ZK Circuits Are Fragile: Minor changes to note structure or hashing drastically impact proof size and performance.
  • 🔹Rust + ZK is Powerful but Demands Rigor: Using Rust’s strong type system and arkworks helped avoid low-level cryptographic errors, but required expert familiarity.
      • 🔹Composability Tradeoffs Exist: Full privacy often comes at the cost of reduced L1 composability. Selective transparency can help.

      • 🔹User Experience Matters: Integrated browser-based proof generators for accessibility.

Conclusion

      • TechSteck Solutions successfully delivered a scalable, zk-powered privacy layer for Ethereum that empowers users with financial privacy while aligning with regulatory realities. The client now offers this privacy layer as a white-labeled SDK to fintech and wallet partners in Europe and Asia.

        This project sets a foundation for privacy-enhancing DeFi—without needing a new chain or exotic consensus models.

GET STARTED

If you would like to work with us or just want to get in touch, we’d love to hear from you!

Contact Us

Add: 2nd Floor, Bata Road, Plot No 16, NIT 1, Faridabad, Haryana 121001

 

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