Privacy preserving event based transaction system in a decentralized environment

Abstract

In this paper, we present the design and implementation of a privacy preserving event based UTXO (Unspent Transaction Output) transaction system. Unlike the existing approaches that often depend on smart contracts where digital assets are first locked in a vault, and then released according to event triggers, the event based transaction system encodes event outcome as part of the UTXO note and safeguards event privacy by shielding it with zero-knowledge proof based protocols such that associations between UTXO notes and events are hidden from the validators. Without relying on any triggering mechanism, the proposed transaction system separates event processing from the transaction processing where confidential event based UTXO notes (event based UTXOs or conditional UTXOs) can be transferred freely with full privacy in an asynchronous manner, only with their asset values conditional to the linked event outcomes. The main advantage of such design is that it enables free trade of event based digital assets and prevents the assets from being locked. We implemented the proposed transaction system by extending the Zerocoin data model and protocols. The system is implemented and evaluated using xJsnark.