The Electric Coin Company (ECC) will soon activate the testnet of its Network Upgrade 5 (NU5) for its privacy coin zcash (ZEC). This upgrade features multiple Zcash Improvement Proposals (ZIPs), which could eventually launch to the mainnet.
Founded in 2016, Zcash grew out of an academic approach to creating a coin that focuses on privacy. Unlike cryptocurrencies like bitcoin (BTC) and ethereum (ETH), the zcash blockchain transactions can have their metadata hidden.
As such, the updates to the coin are heavily based on increasing its utility as well as the continued effective privacy of its users.
The activation of the NU5 testnet is a key step in moving the system from its original shielding system, zk-SNARKs, to the Halo proving system.
This change aims to address two aspects of the privacy coin. They are moving Zcash from a trusted setup and upgrading the protocol’s underlying cryptography.
In addition, the upgrade brings with it unified addresses. This will give users a single Zcash address that is compatible across all Zcash value pools. Currently, users have to have multiple address types, which isn’t efficient.
“Unified addresses increase interoperability between wallets and exchanges, improving the overall user experience of Zcash,” explains Josh Swihart, VP of Growth at ECC.
The Zcash NU5 testnet will officially activate on July 1. This will be followed by a mainnet launch in October, coinciding with the planned Halo Arc release.
“For end-users, NU5 means Zcash will no longer rely on a trusted setup, and shielding funds will be easier than ever. NU5 is supported by the Halo Arc product suite, which includes mobile wallet SDKs to help developers integrate Zcash’s latest features in their applications,” says Swihart.
Overall, the Halo Arc product suite includes ZcashD, ECC reference wallet, and NU5-compatible wallet disks, which feature auto-shielding, auto-migration, and improved note management.
“NU5 is the next major upgrade for the Zcash protocol, ushering in a new era for Zcash.”
This update is part of the larger Network Upgrade Pipeline 2.0. The NU5 launch features upgrades that work towards bringing the first application of the Halo 2 proving system to Zcash. Each ZIP is a factor in the application and fixes to current issues.
The first proposal addresses a flaw in the first network upgrade (Sapling) consensus rules. In it, Jubjub points were intended as strongly typed canonical representations. However, an oversight allowed an edge case to slip through. This proposal remedies this by rejecting all non-canonical representations of Jubjub points.
Orchard shielded deployment
The next proposal brings in the Orchard shield pool. This is the first phase of the Halo 2 deployment. This shielded transfer does not rely on a trusted setup, as it leverages the Halo 2 stack.
This new transaction format works with the Orchard shield protocol and can will work with future extensions. In addition, the serialized transaction format will no longer be consensus-critical.
New transaction identifier
Replacing a hash of the flat serialized form of a transaction, “this new digest algorithm specifies a tree of hashes that commits to exactly the parts of the transaction which are ‘effecting’ data, and excludes proofs and signatures,” explains ECC.
Halo 2, a long-term scalability solution
The Halo 2 proving system is expected to be the game-changer for the Zcash protocol. The current trusted setup doesn’t work particularly well with the overall notion behind the privacy coin due to its possible vulnerabilities.
However, the trusted setup is argued by ECC as being a necessity when the coin was first created to utilize its privacy features.
The move towards a decentrazlied digital currency has been the goal of Zcash. The Halo proving system is the next improvement taking the closer to this goal.
“If adopted, Halo on Zcash would create fertile ground for new Zcash-inclusive solutions, with the potential to equal or surpass the import of our previous work with zero-knowledge proofs and improvements,’ said the ECC in an explainer.
Although the animation of zero-knowledge proofs by Zcash was a breakthrough in this field, it had scalability issues. This is where this new proving system comes in. The team is looking to leverage this system to support scalability using recursive proofs.
Another upgrade coming
Despite NU5 not even launching to mainnet yet, ECC is already planning the next upgrade. NU6 is expected to launch in early 2022. The process for this will kick off shortly after the NU5 mainnet launch.