What Are Zcash Shielded Pools and How Have They Evolved?

What Are Zcash Shielded Pools?

A Shielded Pool is a name given to the method used by popular privacy protocol Zcash to obscure the details of a transaction, and preserve the anonymity of a user of ZEC. In essence, it is a section of the Zcash ledger which records transactions using privacy preserving technologies. 

One of the most important of these is a proof technology called zk-SNARKS or zero-knowledge succinct non-interactive arguments of knowledge. These proofs allow the Zcash blockchain to confirm that coins are valid and have not been double-spent, without needing to make certain details of the transaction known, such as the identity of the sender/recipient or the amount sent. 

If required, this information can later be audited selectively using what’s known as “view keys”, but typically the details of transactions made using Zcash will be entirely hidden, unlike other networks such as Bitcoin and Ethereum, which publicizes amounts sent and wallet addresses. This has made Zcash a popular network for private storage of value, transactions, and other use cases.    

How Have Zcash Shielded Pools Changed Over Time?

To understand how the privacy preserving features of Zcash work, it can be useful to look at some milestone improvements to the network over the years.

Sprout 

The original shielded pool protocol was known as Sprout and was launched in 2016 alongside the network. It demonstrated the ability of Zcash to transfer assets using zk-SNARKs, and made clear the value of the network. This was the protocol which introduced the z-address format for which Zcash is known and enabled ZEC users to transfer value without needing to reveal their identities. 

As the first implementation of the shielded pool however, it had limitations which make it outdated by today’s standards of blockchain technology. The zk-SNARK proofs were generated slowly and expensively, and more importantly they required a trust ceremony – meaning that the network was not fully autonomous.    

Sapling 

Deployed in 2018, Sapling was a major upgrade to shielded pools which focused on making Zcash-based ZEC transactions more practical for a wider variety of use cases. It changed the protocol’s management of transactions to allow proofs to be cheaper and reduced memory usage so they could be generated more quickly. 

Both of these improvements helped reduce barriers to adoption and allowed the network to acquire a wider userbase, by helping to mature the original concept. 

Halo, Halo 2, and Halo Arc

Halo and its successors Halo 2 and Halo Arc are major improvements to Zcash’s proof system, as opposed to upgrades to shielded pools directly. Released in 2019, 2020 and 2022 respectively, these upgrades removed the need for trusted party setups and allowed shielded pools to be upgraded more easily. They also allowed for faster throughput, by improving how transactions are managed by the network. 

Orchard

The most recent major upgrade to shielded pools is known as Orchard and was released in 2022. The upgrade enabled the network to take advantage of newer proof technologies and made its privacy preserving features more intuitive. 

It introduced the Unified Address (UA) model, which allows funds to be routed into Orchard-based shielded pools automatically. It also further reduced the reliance on trusted parties, meaning that fewer risks exist for funds sent using its zk-SNARK proofs.

Why Orchard Is the Most Secure Zcash Protocol Yet

Orchard is the most private and secure way to use Zcash. One of the main reasons for this is its implementation of the Halo upgrades, which removes the need for a trustless setup for its privacy protecting transfers. This is crucial for its privacy model as it means that the network is now truly private in terms of how transactions are handled. 

The other major advantage of Orchard is the use of Unified Addresses, and its implementation of “shielded by default.” These changes mean that the shielded pool grows continuously and every transaction using Orchard is growing the shielded pool while contributing to the anonymity of transactions. The protocol is also designed to be the most efficient for modern blockchain technology and dApps. All of these things make Orchard the most powerful Zcash shielded pool yet.

It’s important to remember, however, that while privacy is the goal of the Zcash network, potential errors, hacks, or leaks outside of the network could still result in information surrounding a transaction being made known.    

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