Zcash Announces 'Halo Arc' and Timeline for Protocol Privacy Update

Electric Coin Company (ECC) has announced the next suite of upgrades to privacy coin Zcash – Halo Arc.

Halo Arc includes updates to Zcashd (Zcash’s consensus node), an ECC wallet prototype and the ECC wallet software development kits (SDKs). The wallet will enable shielded-by-default transactions, something that is merely optional for Zcash right now.

Previously planned for release this summer, Halo Arc will now launch on Oct. 1, 2021, in coordination with the activation of Zcash’s Network Upgrade 5 (NU5). NU5 will be the first mainnet activation of the Halo proving system, furthering the development of zero-knowledge-proof cryptography.

The October protocol upgrade will also introduce unified addresses, a feature that creates a single Zcash address that is compatible across all Zcash value pools, including shielded and transparent ones, so that users no longer have to juggle multiple address types. At present, protocol upgrades at times required new address formats.

Eliminating Zcash's trusted setup

Halo is a “trustless recursive” version of zero-knowledge proofs that allows greater scalability and removes the controversial “trusted setups” involved.

A trusted setup creates a secret number, and a derivative of that number is used by the Zcash protocol. This number is created in multiple parts by multiple actors. They all must then destroy what’s known as “cryptographic toxic waste” without revealing what it was. A trusted setup would have had to occur at each hard fork.

Read more: Zcash’s Halo Breakthrough Is a Big Deal – Not Just For Cryptocurrencies

But if no one destroys that waste, possibly through intentional planning, or if the secret number is figured out, then it would provide a fundamental flaw in the protocol and even let the individual or individuals that discovered it to create zcash arbitrarily and without anyone’s knowledge.

“This is all built on top of Halo, which will usher in a new era of zero-knowledge cryptography and means, for this first release, increased confidence in the money supply by removing the trusted setup necessary for current zero-knowledge proving systems,” said Josh Swihart, ECC's Vice President of Growth.

Halo Arc and wallets

Halo Arc includes a number of products, but the most tangible takeaway for users will be the ability to ensure that their transactions are private, right from the outset.

“With Halo Arc, we’re making it easy for wallets to support shielded Zcash by default,” said Swihart. “Users of supporting wallets will be able to give counterparties a single address and know that funds will be sent to their shielded address, regardless of whether the sender supports shielded addresses.”

Read more: You Can Now Prove a Whole Blockchain With One Math Problem – Really

In addition to the automatic shielding feature that’s part of the NU5-compatible wallet SDKs, Halo Arc also includes auto-migration. This allows wallets to move funds to the most modern shielded pool supported by the wallet. This feature will also make it easier to deprecate (or recommend against using) older pools.

Halo Arc also includes "improved note management” according to a blog post announcing the release. This will reduce the time users need to wait between sending transactions, so they’ll be able to send one transaction immediately after another.

Going forward, ECC will bundle upgrades, products and features into regular releases, rather than relying on intermittent or one-off instances.