New ERC: Confidential Fungible Token Standard

Summary

The team is proposing an specification for confidential fungible tokens that uses pointer-based amounts to maintain transaction privacy while enabling DeFi integration. This standard addresses the growing need for privacy-preserving token transfers on Ethereum without prescribing specific cryptographic implementations.

Key Features

The proposed standard introduces several novel concepts:

  • Pointer-based amounts: All token amounts are represented as bytes32 pointers rather than plaintext values, allowing implementation flexibility across various privacy mechanisms (FHE, zero-knowledge proofs, secure enclaves, etc.)

  • Time-limited operators: Instead of traditional approvals with specific amounts, the standard uses time-bounded operator permissions that expire automatically, reducing external system overhead and providing natural permission expiration

  • Comprehensive callback system: Transfer functions include andCall variants that enable rich smart contract interactions while maintaining confidentiality

  • Technology-agnostic design: The standard accommodates current and future privacy technologies without being tied to specific cryptographic assumptions

3 Likes

Should ERC clarify that confidential assets are not entirely private? This is because the address is exposed in the calldata.

How the amount of tokens is expected to be disclosed to work with DeFi protocols?

Callbacks generally come with quite a few security implications like reentrancy and gas griefing. This should be addressed in the Scurity section