Ethereum News: pERC-20 Proposal Introduces Default Private Token Transfers
A new draft Ethereum token standard, pERC-20 (formally ERC-7605), proposes a major shift in how tokens function by making transfers private by default. The design uses zero-knowledge proofs embedded directly into the token contract to conceal balances, transaction amounts, and counterparties.
Unlike a simple privacy layer on top of ERC-20, pERC-20 is intended as a full replacement interface. It is built to be privacy-native from issuance through transfer, ensuring that token balances never exist as publicly visible state at any point in their lifecycle.
The proposal borrows heavily from ZK-UTXO systems pioneered by Zcash, particularly Groth16 proofs and Orchard-style note commitments, adapting them for Ethereum Virtual Machine (EVM) compatibility. It is designed to work with standard wallets like MetaMask and does not require new precompiled contracts.
In this model, tokens are represented as cryptographic notes rather than account-based balances.
A compliance-oriented blacklist mechanism is also included in the design. This positions pERC-20 as a privacy-focused but regulation-aware framework, reflecting the cautious approach taken in response to regulatory scrutiny of privacy technologies in recent years.
Ethereum News: How pERC-20 Works — A UTXO-Inspired Model for Tokens
Under today’s ERC-20 standard, token balances are publicly visible on-chain. Any address can be queried to reveal holdings, transaction history, and token flows using standard functions like balanceOf.
pERC-20 removes these primitives entirely.
Instead of balanceOf, transferFrom, and allowance, the proposed standard introduces a new interface centered on mint, burn, and transfer operations. Each action must be validated through zero-knowledge proofs.
The system adopts a UTXO-like structure similar to Zcash’s Orchard model. Balances do not exist in public accounts; they are stored as encrypted notes tied to cryptographic keys, each representing a specific value and designed to be spent only once.
Ownership is proven through standard ECDSA signatures, allowing compatibility with existing EVM wallets without specialized hardware or browser extensions.
Transaction validity relies on Groth16 zero-knowledge proofs, enabling the network to confirm correctness—such as balanced inputs and outputs and legitimate ownership—without revealing any sensitive data.
Poseidon hash functions are used for efficient cryptographic commitments, while spent-note tracking is optimized for performance to avoid long-term state bloat that affected earlier privacy designs.
However, one element remains partially visible: the transaction graph. While amounts are hidden, interactions between addresses are still observable, meaning full network-level privacy is not achieved. This represents a deliberate compromise in the design.
Proposal Status and Next Steps
pERC-20 is still in draft form and must pass the Ethereum improvement proposal review process before any potential adoption. No changes to Ethereum’s base protocol are required for it to function as an application-level standard.
Its first major hurdle is moving from conceptual discussion to a stable specification with a reference implementation. If it succeeds, Ethereum could soon face a foundational design decision: whether token standards should remain fully transparent by default or shift toward privacy-preserving defaults as a new norm.
