Elusiv: Bringing Privacy To Solana

Elusiv is a blockchain-based, zero-knowledge privacy protocol for general-purpose chains (currently deployed on Solana). It enables users and applications to access universal encryption and privacy, giving users the option to have private transactions (transfers, swaps etc.) and making it easier for developers to integrate privacy into their applications by using the Elusiv SDK. You can find more information on Elusiv through their docs or on GitHub.

We worked with Elusiv for about a year, mostly focusing on the implementation of compliance solutions and the Warden network. He also supported the Elusiv core engineering team in other areas.

Overview of Elusiv

Privacy is a fundamental right and necessary for many applications and users, yet the vast majority of blockchains today are fully transparent. This is particularly bad for financial transactions and payments that reveal a lot of sensitive information, such as counterparties and the full transaction history.

Previous attempts to solve the problem have failed to achieve user privacy in a decentralized setting without sacrificing a network's safety and security. In addition, a few bad actors attempting to exploit the protocol have made it hard for everyone else to use existing privacy solutions. One notable example is Tornado Cash which is now blacklisted and sanctioned in many countries.

This is where Elusiv comes into the picture - providing a combination of privacy and decentralized compliance:

Privacy

Elusiv leverages commitments and zero-knowledge proofs (ZKPs) to create a multiasset shielded pool that can be integrated into payment systems, exchanges, and other applications. Users deposit funds into the shared pool, from which they can instruct various transactions, such as payments or swaps. An outside observer can only see transfers in/out of the shared pool, which is how Elusiv is able to break the direct link between sender and receiver and maintain privacy for users.

‍Commitments are used to keep track of funds belonging to each user in the shared pool, while ZKPs are used to generate proof of authority over unspent amounts. These two combined enable users to spend funds in the shared pool that belongs to them without revealing any additional information.

Source: Elusiv

When it comes to privacy, it turns out that size matters and privacy loves company. The more users that deposit their funds into the shielded pool, the more private it becomes on the level of an individual user. The same is also true for the number of transactions done using Elusiv as it becomes more difficult to extract information from the shielded set.

Decentralized Compliance

Compliance on Elusiv works two ways: The protocol tries to provide self-defense against bad actors through a sub-protocol called ZEUS (Zero-knowledge Encrypted User Safeguarding) and also enables users to prove that they haven’t done anything bad (proof of innocence).

ZEUS works through community and network vetting. Elusiv has a community-driven blocklist for identified bad actors, such as hackers. An MPC network called the Warden Network prevents them from using the network by on one hand not allowing them to enter the pool and on the other hand retroactively decrypting their on-chain transactions (again, only if a supermajority of on-chain participants agrees to this). Both of these actions help prevent bad actors from accessing and misusing the protocol.

Proof of innocence is done with the help of viewing keys, which gives third parties permission to view individual transactions. Only the owner of any given transaction can generate the viewing key for it. There is also an option on Elusiv to share full transaction history and current private asset ownership with a trusted third party, which is useful when dealing with law enforcement, tax authorities, and other relevant parties. Both of these options only give permission to view - the third parties can’t take any action on the account.

Current Features and Future Plans

Elusiv launched on Solana mainnet in March 2023 and currently has three different features:‍

Private transfers
was the first feature that opened the door to private payments on Solana and laid the foundation for other use cases. Users deposit funds into the Elusiv shared pool and can then instruct the program to send their funds to the receiver. Can be integrated with Solana Pay or other third-party payment applications.
Private swaps

enable users to swap between assets without revealing any identifying information about the user. It works by using a temporary key pair that acts as the
sender
in the transaction, which means that token pairs and amounts can’t be linked to a user’s wallet address. The same is true for profit and loss fluctuations and trading strategies, giving better conditions for traders wanting to keep their identities private.
‍
Elusiv SDK
gives developers access to various privacy features that can be easily integrated into new and existing applications with just a few lines of code.

In addition to these, there are plans to enable private staking and further DeFi use cases in the near future, as well as further improve the compliance side of the protocol.

Summary

Privacy is not just a “nice to have”, but in many cases a necessity to get wider adoption of blockchains. As we’ve seen, however, privacy is not enough - we also need compliance to avoid bad actors from using the protocol. Elusiv is a solution to this problem, offering private transactions for users combined with decentralized compliance tools.

While there are many projects aiming to include privacy at the ledger level (Aleo, Aztec, Polygon Miden…), Elusiv takes a different approach by serving as a privacy layer on top of Solana. Not all use cases require ledger-level privacy and this approach of a bolt-on privacy layer enables existing applications to easily integrate privacy into their operations with the Elusiv SDK.

Note: Equilibrium Group is an investor in Elusiv (seed round).

‍Originally delivered as Eiger, before Eiger and Equilibrium Labs merged to form Equilibrium.