On October 25th, the encryption startup Nocturne Labs completed a $6 million seed round of financing, which was jointly led by Bain Capital Crypto and Polychain Capital. Co-investors included Vitalik Buterin, co-founder of Ethereum, Bankless Ventures, Hack VC, Robot Ventures, and others. Nocturne was established in the United States last year and is building a protocol that allows users to conduct anonymous transactions within the Ethereum ecosystem. It is expected to be released on the Ethereum mainnet next month.

Vitalik 为什么投？

Vitalik Why Vote?

During Farcaster's recent AMA event, when asked about "what he is most worried about for the future of Ethereum", Vitalik Buterin responded, "The risks of cryptocurrency stagnation, privacy, and open internet infrastructure could all be reasons for failure."

In January of this year, Vitalik wrote in a blog post that "privacy is one of the remaining biggest challenges in the Ethereum ecosystem." In this blog post, he detailed the plan for stealth addresses.

Related reading: "What is a stealth address? Vitalik's Ethereum privacy solution."

This is not the first time Vitalik has proposed the concept of stealth addresses. In March 2020, Vitalik proposed a stealth address scheme compatible with Ethereum Name Service (ENS). In August 2022, Vitalik proposed using stealth addresses to hide the owner's identity for private NFTs.

The stealth address system refers to a system that allows the generation of many non-linkable "one-time addresses". For example, Alice wants to pay Bob 1000 DAI, but does not want to reveal to the public that Bob is the recipient. Alice also wants to complete this operation without the need to interact with Bob in advance.

For the above situation, stealth addresses provide a solution. A stealth address is an address that can be generated by Alice or Bob, but can only be controlled by Bob. Bob generates and keeps secret a spending key, and uses that key to generate a secret ephemeral address. He then passes this ephemeral address to Alice (or registers it on ENS). Alice can perform calculations on this ephemeral address to generate a stealth address belonging to Bob. She can then send any assets she wants to that address, which Bob will have complete control over. At the same time, Alice also publishes some additional encrypted data (temporary public key) on the chain to help Bob discover that the address belongs to him.

It can also be understood as providing privacy attributes that are the same as generating a new address for each transaction with Bob, but without requiring any interaction from Bob, which can be referred to as invisible addresses.

This concept utilizes the EIP-5564 standard, which generates a secret externally owned account (EOA) in a non-interactive way. The recipient has both a spending key and a viewing key, which are standard Ethereum private keys. The combination of the public keys of the two keys forms a secret "meta-address". The sender can use the meta-address to non-interactively export the secret shared with the recipient. Using this shared secret, the sender will generate a new Ethereum address, and the recipient can derive a private key specifically for it. Then, the sender transfers the funds to the new Ethereum address, and the recipient detects the transfer and derives the corresponding private key for the address to control the received funds.

Vitalik: The Workflow of Stealth Addresses

Although EIP-5564 provides an EOA-level stealth address system, the core problem of anonymous payments relying solely on stealth EOAs is that moving funds in and out of stealth addresses creates space for unintended links between addresses. This usability flaw makes actual usage difficult. The emergence of Nocturne can partially solve this problem.

Nocturne's Method

Nocturne is a highly composable protocol for private accounts on Ethereum. Using a combination of account abstraction and zero-knowledge proofs, Nocturne builds a layer of private accounts that allows users to send, receive, and transact their funds without exposing their addresses. It is designed as a general system that can easily build end-user products on top of it. Given this flexibility, Nocturne can meet the needs of both privacy maximalists and traditional users.

Protocol process example: exchanging ETH for DAI

Private Insurance Vault

The simplest application that users can build on Nocturne is a private insurance vault, which allows users to store assets for the long term, earn returns on idle assets, and withdraw them for high-touch activities such as trading on the burner wallet, all without exposing their address or net balance. This product addresses privacy concerns and is the first product prepared for Nocturne V1.

Private Payment Backend

Nocturne states that users do not need to directly pay the recipient's EOA and expose their financial history. Instead, they can send funds to Nocturne and set its owner as the recipient's stealth address. For example, there is already such a requirement in the on-chain organization's payroll. By integrating Nocturne into existing DAO payment products, organizers can keep employees' salaries confidential.

Protecting Privacy Smart Contract Wallet

The first iteration of Nocturne was achieved by integrating the SDK into MetaMask Snap, which to a limited extent, provides a standard wallet experience with built-in asset privacy, allowing users to interact with Nocturne applications using MetaMask. In theory, Nocturne can build a wallet that allows users to transact as usual while seamlessly integrating asset privacy into their on-chain interactions.

Development and Financing

The private insurance vault will be the first product built on the Nocturne protocol. Nocturne will initially be offered through the private custody UI after the mainnet launch. This interface will allow users to privately store/earn returns on idle assets and withdraw them to a clean burner wallet for high-touch activities such as trading.

Yesterday, Nocturne Labs announced on their official Twitter account that they have completed a $6 million seed round of financing, led by Bain Capital Crypto and Polychain Capital, with participation from Ethereum co-founder Vitalik Buterin, Bankless Ventures, Hack VC, Robot Ventures, and others. The funds will be used to launch the v1 protocol and support integration with protocols, wallets, payment platforms, and other partners.

In this tweet, Nocturne states that "Combining the best ideas from ZK, AA, and stealth addresses, Nocturne has created an abstraction of an Ethereum account with built-in asset privacy. Our mission is to build infrastructure and products that address the most pressing privacy/user experience issues in cryptocurrency."

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