Bringing Privacy to Cosmos with Zcash

Protocols like Cosmos, Polkadot, and Ethereum 2.0 that aim to add interoperability across different blockchains are rapidly gaining steam. The Zcash Foundation knows there’s a path to bring the privacy gains of Zcash to these projects — benefiting all of their users, strengthening the already-strong Zcash anonymity set, and re-defining Zcash’s role in this ever-evolving ecosystem as the shared privacy layer for cryptoassets.

And we’re starting that journey by bringing privacy to the Cosmos ecosystem.

Why do this with Zcash? Zcash is unique among privacy solutions in that it has strong network effects: new users gain anonymity from all prior transactions of existing users, while in turn contributing to a greater anonymity set for the entire system. Our plan is to take advantage of these network effects by giving Cosmos users access to this anonymity set through an IBC-enabled pegzone.

This work will proceed in two phases, with the design of the first phase enabling the features of the second phase. In the first phase, the pegzone will provide tokens backed by ZEC in the existing Zcash shielded pool, and secured by a novel shielded-compatible staking mechanism. These tokens can be sent throughout the Cosmos ecosystem, allowing Cosmos users to trade and use ZEC. In the second phase, we plan to add a shielded pool to the pegzone itself, providing shielded staking, shielded IBC assets, and shielded cross-chain transfers.

This plan provides an increasingly useful privacy layer for the Cosmos ecosystem, while growing the anonymity set of Zcash. And our library-first design for Zebra will let us build the Zcash portions of the project using modular, reusable components.

We’ve published our initial design document on our zcash-pegzone repo on Github with more details. We’re looking forward to sharing more with the community as we continue development; this is the first step of a much bigger journey for Zcash, and we’re excited to help make Zcash the go-to protocol for cryptoasset privacy.