What a lovely hat

Paper 2024/903

Nopenena Untraceable Payments: Defeating Graph Analysis with Small Decoy Sets

Abstract

Decentralized payments have evolved from using pseudonymous identifiers to much more elaborate mechanisms to ensure privacy. They can shield the amounts in payments and achieve untraceability, e.g., decoy-based untraceable payments use decoys to obfuscate the actual asset sender or asset receiver. There are two types of decoy-based payments: full decoy set payments that use all other available users as decoys, e.g., Zerocoin, Zerocash, and ZCash, and user-defined decoy set payments where the users select small decoy sets from available users, e.g., Monero, Zether, and QuisQuis. Existing decoy-based payments face at least two of the following problems: (1) degrading untraceability due to the possibility of payment-graph analysis in user-defined decoy payments, (2) trusted setup, (3) availability issues due to expiring transactions in full decoy sets and epochs, and (4) an ever-growing set of unspent outputs since transactions keep generating outputs without saying which ones are spent. QuisQuis is the first one to solve all these problems; however, QuisQuis requires large cryptographic proofs for validity. We introduce Nopenena (means ``cannot see''): account-based, confidential, and user-defined decoy set payment protocol, that has short proofs and also avoids these four issues. Additionally, Nopenena can be integrated with zero-knowledge contracts like Zether's $\Sigma-$Bullets and Confidential Integer Processing (CIP) to build decentralized applications. Nopenena payments are about 80% smaller than QuisQuis payments due to Nopenena's novel cryptographic protocol. Therefore, decentralized systems benefit from Nopenena's untraceability and efficiency.