Stealth Addressing: The new extension for ERC-721 tokens

Vitalik Buterin himself, co-founder of Ethereum, has given the go-ahead for the implementation of this extension that promises more privacy to the NFT ecosystem.

ERC-721 tokens are the official standard for NFTs on the Ethereum blockchain. There are currently thirty different standards for different tokens created within the most well-known blockchain after Bitcoin.

Several days ago, Vitalik Buterin posted on his Twitter, accompanied with a link from the “Ethereum Research” forum the new idea of stealth addresses for ERC-721 tokens. It refers to a low-tech approach with the intention of adding a significant amount of privacy in the ecosystem of NFTs. His Twitter post culminated with a simple example to understand this idea: send an NFT to vitalik.eth without anyone except vitalik.eth (the new owner of the NFT) being able to see who the new owner of the NFT is.

The link left by Vitalik from ethresear.ch is from Anton Wahrstätter, known in the community as Nerolation, where he details more technically this new extension for the ERC-721 compatible with zk-SNARK which comes from the acronym “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge”.

The idea of Nerolation is that each ERC-721 token is stored in a Stealth Address and generated using zk-SNARKs cryptographic standards. The goal is to ensure the security of the user’s address, token ID, and token metadata so that digital creators of NFT collections can protect their identity when participating in today’s non-fungible token marketplaces.

Anton Wahrstätter, an Austrian, is a researcher and professor at the Institute for Distributed Ledgers and Token Economy and an affiliated researcher at the Research Institute for Cryptoeconomics. His work focuses on proposing different scaling solutions on different blockchain features such as security, privacy and trust, especially on Bitcoin and Ethereum.

He holds a degree in economics and law, a master’s degree in both digital business and blockchain and cryptocurrencies.

Anton, in his rationale, calls it EIP-0000, since, he argues, the idea arose from the need to prove ownership of non-fungible tokens without revealing private information.later, he added an example: the possibility of providing users who wish to prove ownership of an NFT ticket to a concert, but at the same time do not wish to reveal personal information.

Nerolation himself, published that his idea was inspired by the one article Vitalik Buterin published in January 2022 about “Soulbound” or “soulbound NFTs”. The goal is to make more items in the crypto space “soulbound” that could be a path to an alternative, where NFTs represent much more of who oneself and not just what one can afford.

Also, in the article, Buterin hints at the importance of private POAPs and how to ensure that these non-transferable NFTs are not sold or transferred to the highest bidder (the Adidas case is the best known, but not the only one).

This extension has brought several positive and negative comments. Samuel Cardillo, CTO of RTFKT, commented that he is not a fan of this new extension, since, blockchain in his opinion is all about transparency. Likewise, he does not think it is unusable, but it depends on what use cases are effective.

For his part, Cooper Kunz, CTO of social token startup web3 Calaxy, gave his point of view emphasizing on the example of NFT tickets for a concert, since, anyone in the world can see the ticket on the blockchain. He further added that this extension could be used for certifications and private credentials.

The bottom line on this new extension to the best known standard for non-fungible tokens is that we will see over time how it affects or benefits collections and collectors of NFTs. From the positive side I see it as a good way to safeguard private property. However, it would be an increase in gas costs for all users, since, it comes with a fixed and limited number of owners/transfers (depending on the size of the merkle tree). That is why Anton Wahrstätter himself, believes that including a merkle tree in the chain adds calculation burdens that are not necessary (more calculation burdens, more expensive gas costs).

The Austrian Nerolation, is still in the most effective quest to bring this to the (virtual) reality of NFTs. Their latest announcement regarding the above explained merkle tree is to add a resource called roll_up (a method to add multiple signatures and/or updates to the Merkle tree within a SNARK).

In his last post he has said that hidden directions are required for the final implementation as explained by Vitalik. Also, he added that he is currently working to finish such implementation and will update the new features, it just requires a few more days to work on the idea.

From NFTexpress we will inform you of the updates of this new extension for the NFT industry, which undoubtedly, comes to change the paradigm on private, digital property and that every day is in greater development and adoption by society.

Written by Rodrigo Catalan (TW: @RodrigoCatalanB) for NFT Express.