ERC-5564 and ERC-6538 pave the way for stealth address payments on Ethereum. Think Monero-like privacy but on Ethereum. Next billion users don't want to have their transaction history available for everyone to see and track. Stealth addresses make this feasible. A thread:
https://twitter.com/UmbraCash/status/1808584703840301280
Some priors: Alice has one blockchain address (Alice.eth). This is the one address Alice uses to receive ETH, ERC-20 tokens, soulbound tokens, POAPs, and monkey JPEGs. Alice's account history is visible on-chain for Bob to see and monitor/analyze. Not good for privacy.
Ethereum doesn’t provide privacy with ring signatures (Monero) or ZK-SNARKs (Zcash). At this point, you probably think: "TradFi might just be better; at least, the world doesn’t see what I'm receiving and when." Not so fast--we have stealth addresses to the rescue!
A stealth address is an ephemeral address for receiving funds in privacy-preserving fashion. Stealth addresses are are one-use and generated per transaction. This fixes address reuse problems and makes it harder to corelate multiple transfers to the same user.
A stealth address is generated by combining the recipient's stealth meta-address with an ephemeral key created by the sender. The stealth meta-address is generated by the recipient with the spending key (spending key ≈ private key and must be kept secret). Cool cryptography.
The stealth meta-address never receives funds, but can be shared with anyone who wishes to send funds to Alice. Specifically, the meta-address can be used to generate an unlimited amounts of stealth addresses. Alice can also publish her meta-address for better discoverability.
Note that the process can be non-interactive: if Alice's stealth meta-address is available in a registry, Bob can compute a new stealth address for Alice and send funds w/o Alice's involvement. ERC-6538 provides a standard for storing stealth addresses on-chain to improve UX.
So, how can Alice claim funds? Bob creates an "ephemeral public key" and publishes it to an on-chain registry after sending assets. Alice checks for pubkeys published since the last check and multiplies each one by her spending key to generate a stealth address.
Alice generates a stealth address that contains assets (the address Bob generated with Alice's stealth meta-address) and a one-time spending key for that address. Clever cryptography ensures Alice can only claim funds from a stealth address if she knows the private key.
"So, how does this help me?" First, no address re-use and storing everything in one place. Second, you can increase on-chain privacy by splitting funds throughout different stealth addresses. Third, you can send everything from NFTs to tokens privately with ERC-5564.
An example: a merchant that uses different stealth addresses to receive payments and prevent on-chain sleuths from monitoring inflows. Buyers can pull meta-addresses from registries, compute stealth addresses, and publish pubkeys on-chain for merchants to claim funds. Easy W.
Imagine if you could ERC-20 tokens, NFTs, POAPs, SBTs, etc., privately? Whatever use-case you can imagine (beyond private payments) is possible with ERC-5564. ERC-5564 provides a standard for creating and managing stealth addresses. Read the full ERC speci: eips.ethereum.org/EIPS/eip-5564
Blog post from @2077Collective on the low-level design of ERC-5564's modular stealth address protocol and ERC-6538's stealth meta-address registry standard: research.2077.xyz/blog/eips-for-…
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