Glossary
Privacy Pools
A zero-knowledge privacy protocol that lets users shield transactions while cryptographically proving their deposits are dissociated from known illicit funds.
Privacy Pools let users deposit assets into a shared smart-contract pool and later withdraw to a fresh address, breaking the on-chain link between the two. Each withdrawal is authorized by a zero-knowledge proof of membership, so no one can tell which deposit funded it.
The key advance over plain mixers like Tornado Cash is the association set: a withdrawer proves their deposit belongs to a chosen subset of deposits — one that excludes known-illicit sources — without revealing exactly which deposit is theirs. Honest users can thereby dissociate from criminal funds while keeping their activity private. The scheme was formalized in a 2023 paper co-authored by Vitalik Buterin, aiming to reconcile on-chain privacy with regulatory compliance.