Privacy preserving validation module for contract accounts

Safe Ecosystem Initiatives
1

Project description
The current on-chain execution mechanisms lack standardization in user authentication and operation validation, leading to security vulnerabilities and inefficiencies. This project addresses these issues by integrating advanced cryptographic techniques and modular account structures to achieve a compliant on-chain execution environment when contract accounts can freely batching and sponsoring transactions simultaneously.

This project aims to develop and implement a Zero-Knowledge (ZK) validation module for standardized on-chain executions through modular accounts. The module will enhance security, privacy, and efficiency in decentralized applications by integrating ZK-proofs and verifiable credentials, ensuring secure and compliant transactions within the SAFE ecosystem.

The primary objective is to create a ZK validation module that enhances security, privacy, and efficiency in on-chain executions for a modular contract account. Success will be measured by the module’s adoption, its interoperability with existing dApps, and the reduction in transaction complexity and cost.

The project will benefit the SAFE ecosystem by providing a standardized, secure, and privacy-preserving framework for on-chain executions. This will facilitate broader adoption of decentralized applications and improve the overall resilience and efficiency of the network.

Enhance Security: Provide an additional security layer by verifying user operations’ authenticity and integrity, reducing sybil attacks and counterparty risk.

Privacy Preserving: Utilize ZK-proofs to enable privacy preserving transactions, ensuring data minimization without revealing additional sensitive user information.

Improve Efficiency: Streamline on-chain executions, reducing complexity and cost of smart contract interactions.

Promote Standardization: Establish a standardized framework for modular accounts set up, and zk proof origination and verification, facilitating interoperability across various dApps and protocols.

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General Purpose User flow:

  1. Creation of credentials and adding them to the module or the initCode of the account if it is not deployed yet
  2. Generation of a UserOp and creation of the relevant zk proof(s)
  3. Submission of the UserOp to a bundler/mempool which will relay it onchain by calling the ERC-4337 EntryPoint
  4. The EP calls the modular account which will then call into the validator module proposed above
  5. The validator will verify the zk proofs and any other necessary information to then return to the account whether the UserOp should be executed which is then relayed back to the EP
  6. If the proofs are valid, the EP will now move on to execute the UserOp

Use case description: DAO Governance Voting and Fund Allocation

A DAOs can use modular ZK accounts for secure, private governance voting and fund for approved grants allocation. Members submit votes using ZKPs to prove eligibility without revealing identities or voting preferences, enhancing voting integrity and confidentiality while optimizing on-chain operations.

  • Use case Flow:
    • Creation of Credentials: DAO members receive verifiable credentials (VCs) representing their membership and voting rights, stored in the account module or included in the initCode if the account isn’t deployed.
    • UserOps Generation: Members generate UserOps containing their vote and create ZK proofs to verify eligibility and prevent conflicts of interest without revealing identity or specific votes.
    • Submission to Mempool: UserOps and ZK proofs are submitted to a bundler or mempool, relayed to the blockchain via the ERC-4337 Entry Point.
    • Account and Validator Call: The Entry Point calls the modular account, which calls the validator module to verify ZK proofs and ensure voting process integrity.
    • Proof Verification and Execution: Validated proofs lead to the execution of UserOps, recording votes on-chain and allocating funds to projects based on DAO governance decisions.

Scope and concluding thoughts

The implementation of a Zero-Knowledge (ZK) validation module within the SAFE DAO and its ecosystem will significantly enhance security, privacy, and operational efficiency. By using ZK-proofs, SAFE DAO can validate user actions and transactions without revealing sensitive information, making the platform more secure against Sybil attacks and fraudulent activities. This is particularly beneficial for privacy-preserving voting in DAO governance, where members can verify their eligibility and cast votes confidentially, ensuring the integrity of decisions without compromising user privacy.

Additionally, the ZK validation module will streamline on-chain transactions by reducing complexity and costs, enabling faster and more efficient smart contract execution. It aligns with SAFE’s modular architecture, ensuring compatibility with standards like ERC 4337 and ERC 7579, which fosters interoperability with other decentralized applications and DeFi protocols. This also opens up new opportunities for collaboration across various industries, such as supply chain and finance, where privacy and compliance are crucial.

Lastly, the module supports regulatory compliance by allowing participants to provide verifiable proof of operations or fund origin without exposing sensitive data, making it easier for SAFE to meet global regulations like GDPR and AML requirements. By adopting ZK-proof technology, SAFE future-proofs its ecosystem, positioning itself as a leader in secure and privacy-preserving digital asset management, attracting a broader range of use cases and participants.

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