Thoughts on Significantly Improving the Privacy of the ETH Ecosystem

Currently, the coin mixing business in the Ethereum ecosystem mainly relies on the coin mixing contract tornado.cash. However , there is a big problem with tornado.cash . All addresses that have participated in coin mixing are public on the entire network. As long as you participate in coin mixing, you can put a label on your input and output addresses. Although everyone does not know the specific correspondence between the input and output addresses, as long as all addresses that have interacted with tornado.cash on the entire network are labeled as coin mixing , it is also a great threat to privacy.

If you trade with another person, and the other person’s address has interacted with tornado.cash , you might start to wonder if he is a bad person.

The truly effective way to mix coins is to hide in the crowd.

The Bitcoin coin mixing based on UTXO is a multi-input and multi-output transaction when viewed on the block browser. This kind of transaction is very common in the entire network, and almost all exchanges use this method for coin withdrawal. Therefore, you cannot identify which transactions are mixed transactions.

I think the Ethereum ecosystem can also learn from Bitcoin's mechanism of hiding in the dark, making mixed currency transactions look the same as other transactions, making it more difficult for tracking and analysis software to identify them.

One way is to have a large number of businesses integrate with a mixer like tornado.cash . Here is an example to illustrate.

Un -iswap is currently one of the top three platforms for sending transactions on the Ethereum ecosystem. If Un- iswap provides currency mixing services, it can achieve the goal of being hidden in the city.

When using uniswap to mint Lptoken , you can embed the currency mixing logic like this:

1. Assuming ETH -usdt-lptoken is minted , address A inputs assets ETH and usdt , and the uniswap contract without mixing logic returns eth-usdt-lptoken to the user

2. When the currency mixing logic is added, the user must provide an additional address B when casting lpotoken . After the uniswap contract casts lptoken , it directly transfers these lp tokens to tornado.cash . The target output address is the address B provided by the user. tornado.cash also returns the deposit certificate to the user.

In this way, the user can withdraw lptoken from address B , and the entire network is unaware of the asset transfer relationship between address B and address A.

Of course, this requires tornado.cash to support Lptoken , but I think a better result would be that uniswap directly implements the business logic of tornado.cash .

If the currency exchange transactions of Uniswap can also be implanted with the currency mixing logic, it will be more conducive to privacy protection.

For example, in the process of exchanging ETH for USDT , the user transfers the ETH at address A to the lptoken contract of uniswap , and then uniswap changes the USDT that was originally transferred directly back to the user's address A to be deposited into t ornado.cash , and the withdrawal address is set to the address B provided by the user.

Various devise projects in the Ethereum ecosystem can use a similar approach to embed currency mixing logic. For example, Compound transfers cTokens to tornado.cash , and Opensea transfers ERC20 coins to tornado.cash after transactions ( tornado.cash does not support NFT yet ).

But there are two real obstacles. One is that all project parties are unwilling to embed the currency mixing logic, and they feel that embedding the currency mixing logic is like doing something bad. In addition, embedding the currency mixing logic behind the normal transaction logic will increase the gas fee , and users who do not pay attention to privacy will not do this.

One way to promote it is to build a front-end for projects like Uniswap and implant the logic of Tornado.cash . Businesses using Uniswap on this front-end will interact with Tornado.cash , and minted Lp tokens will be transferred to Tornado.cash . However, it is difficult for this front-end to have a business model and difficult to promote.

I think there may be such a fork of the existing DeFi project in the market , and then add the logic of currency mixing, and provide additional logic of currency mixing and mining.

For example, force uniswap and implant the currency mixing logic, such as implementing the following features. For the sake of accurate description, we named this force uniswap project shuffleswap .

1. Shuffleswap implements all the functions of uniswap , which is force .

2.shuffleswap implements the core functionality of tornado.cash .

3. Users mint lptoken in shuffleswap and can choose whether to transfer Lpt oken into the mixer, and the transferred one can be mined.

4. When users buy and sell coins in shuffleswap , they can choose whether to automatically transfer the purchased coins to the mixer, and can participate in single-coin mining.

Just like sushiswap issued a coin, forcing u niswap to issue a coin, it is possible that after shuffleswap implants the currency mixing logic, it will also force u niswap to implement the currency mixing logic.

In this way, there will be more transactions involved in currency mixing in the Ethereum ecosystem, and they will be mixed with normal transactions, which greatly improves privacy.