Stellar Development Foundation presents confidential transfer protocol for Stellar blockchain, enabling encrypted transaction amounts and balances while maintaining regulatory compliance through selective disclosure and zero-knowledge proofs.
A Stellar Development Foundation researcher discusses privacy features needed for institutional adoption of Stellar blockchain. The presentation focuses on confidential transfer, a cryptographic approach that encrypts transaction amounts and account balances while keeping identities transparent. The system uses homomorphic encryption and zero-knowledge proofs to enable balance updates and transfers without revealing plaintext values. Key features include deposit/withdrawal operations between transparent and confidential accounts, pending and available balance separation to prevent denial-of-service attacks, and auditor keys for regulatory compliance. A live demo shows how Alice and Bob can transfer confidential tokens with encrypted amounts that only intended recipients and auditors can decrypt. Future work includes formal security specifications, Stellar Core and Soroban support, and developing auditing standards and compliance tools with ecosystem input.