How will you ensure that the compliance mechanisms through Association Set Providers (ASPs) do not become a centralization point that weakens privacy or restricts user freedom, especially as you aim to attract institutions ?

Stellar Development Foundation has open-sourced its Stellar Private Payments (SPP) system, introducing zero-knowledge proof technology to enable confidential transactions on the Stellar network. The move positions Stellar as a major player in privacy-focused blockchain infrastructure.
According to Stellar Org on X, the system allows private deposits, transfers, and withdrawals on Stellar with ZK proofs and configurable safeguards. The foundation is actively calling on privacy builders to start developing on the newly released platform.
Privacy Meets Compliance Through Zero-Knowledge Architecture
The Stellar Private Payments protocol leverages Groth16 zero-knowledge proofs generated through Circom circuits, enabling users to conduct transactions without revealing amounts or participant identities. Built on Soroban smart contracts, the system maintains balance conservation while keeping transaction details confidential.
A unique feature distinguishes Stellar's approach from other privacy protocols. The system incorporates Association Set Provider (ASPs) as administrative controls, maintaining membership and non-membership Merkle trees. This design allows pool operators to enforce compliance measures without compromising user privacy—a critical balance for institutional adoption.
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The GitHub repository reveals technical specifications showing browser-based proving capabilities through WebAssembly. Users can generate proofs client-side, reducing server dependencies and enhancing decentralization. The protocol supports deposits that create commitments, withdrawals that prove ownership, and transfers that spend existing commitments while generating new ones—all executed privately.
Technical Framework Enables Advanced Privacy Features
The zero-knowledge circuits prove several critical elements simultaneously. They verify ownership of input UTXOs through private key knowledge, compute correct nullifiers to prevent double-spending, validate Merkle proofs for input commitments, and ensure balance conservation where inputs equal outputs plus public amounts.
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Smart contract architecture includes four main components working in coordination. The Pool contract handles deposits, transfers, and withdrawals. The Circom Groth16 Verifier performs on-chain verification of ZK proofs. ASP Membership maintains Merkle trees of approved public keys, while ASP Non-Membership manages sparse Merkle trees for exclusion proofs.
The demo application showcases three interconnected parts. The frontend provides user interface functionality, circuits define zero-knowledge constraints, and smart contracts manage system state and transaction processing. An ASP admin interface allows authorized parties to control membership lists, though actual insertion requires signatures from designated admin accounts.
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Development Limitations and Future Roadmap
The proof-of-concept implementation carries several acknowledged limitations. The Common Reference String (CRS) was not generated through a decentralized ceremony, raising concerns about trusted setup parameters. Current functionality supports only a single circuit configuration with two inputs and two outputs.
The system depends heavily on Stellar events, but RPC nodes maintain only seven-day retention windows. This constraint means the demo requires a dedicated indexer serving events to users for sustained operation beyond the retention period. The codebase has not undergone formal security audits, and error handling may not address all edge cases.
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Deployment requires specific setup parameters including ASP levels, pool levels, maximum deposit amounts in Stroops, and verification key files. The system supports XLM deposits with decimal amounts, though extensive UI testing remains pending. Developers using the platform need to populate ASP membership contracts with public keys either through Stellar CLI or the web-based admin interface.
The implementation carries mixed licensing—most source code uses Apache 2.0 while circuits fall under GNU Lesser General Public License v3.0. Deployers bear responsibility for ensuring compiled artifacts comply with license requirements and making source code available to end users as mandated by LGPLv3 provisions.
#Stellar #Privacy #ZeroKnowledge #Blockchain #Cryptocurrency
Key Takeaways
Stellar open-sourced private payment system enabling confidential transactions using Groth16 zero-knowledge proofsProtocol includes Association Set Provider controls balancing privacy with compliance for institutional adoptionSystem built on Soroban smart contracts with browser-based proving and multiple acknowledged development limitations
This Article First Appeared on: https://www.cryptonewslive.org/article/stellar-unleashes-private-payments-with-zero-knowledge-proofs