Ankita Virani

Posted on Nov 29

Kohaku: A Practical Privacy Framework for Ethereum Wallets

#privacy #ethereum #web3 #tooling

Ethereum’s transparency is both a design feature and a liability. Everything on-chain — from portfolio holdings to trading behavior — is permanently visible. That’s great for verifiability but terrible for everyday privacy.

Over the past few years, we’ve built brilliant tooling around scalability and security. Privacy, however, has lagged behind. Tornado Cash created a spark, Railgun improved the usability, and Vitalik’s Privacy Pools proposal introduced a new compliance-aware model. But none of these solved the core problem:

Privacy tools exist, but none are wallet-native and users feel that friction.

At Devcon 2025 in Buenos Aires, the Ethereum Foundation introduced Kohaku, a framework designed to bring privacy directly into wallets — not as a standalone protocol, but as a modular layer that orchestrates multiple privacy systems under a unified SDK.

This article breaks down how Kohaku works, why it matters, and how developers can start building with it.

1. Why Ethereum Needs a Wallet-Level Privacy Layer

Ethereum’s default transparency creates several issues:

Traders leak strategies through transaction patterns.
Companies expose payroll, treasury movements, and vendor payments.
DeFi users reveal risk profiles and liquidation thresholds.
Institutions exploring RWAs cannot operate publicly.
RPC metadata still exposes location/IP even if the on-chain tx is private.

Existing privacy tools require users to jump between UIs, learn new abstractions, or manage separate shielded balances. Kohaku tries to remove this cognitive overhead:

“Turn on Private Mode → wallet handles the rest.”

It’s not a new chain. Not a mixer. Not a singular protocol.
It’s more like a privacy OS for wallets.

2. What Kohaku Actually Is

Rather than reinventing privacy, Kohaku integrates and orchestrates three layers:

A. Modular Privacy Routing

Wallets using Kohaku can route transactions through:

Railgun (production-ready)
Privacy Pools (alpha)
Future ZK stealth modules
Potential third-party privacy routers

The wallet chooses the routing path based on:

asset type,
shielded balance availability,
compliance requirements,
user configuration.

B. Secure Wallet Key Architecture (via Account Abstraction)

Kohaku uses smart accounts (ERC-4337 / ERC-7579) to implement:

Hot keys -> daily spending, low-value actions
Cold/guardian keys -> high-value approvals
Session keys -> permissioned automation
Policy-based execution -> spending limits, auth constraints

This lets users interact privately without relying on a single seed phrase for everything.

C. Metadata Protection (Off-Chain Privacy)

Transaction privacy is meaningless if RPC leaks metadata.

Kohaku integrates:

Helios light client -> self-verified blockchain reads
P2P transaction broadcasting -> no RPC endpoint
Mixnet / Tor relays (optional)
Ephemeral session keys for unlinkability

This avoids one of the biggest pitfalls of privacy systems:
off-chain surveillance of user intent.

3. Architecture Overview

Here’s a simplified view of the workflow:

The key design principle:
each layer has a single job and clean boundaries.

4. How a Private Transaction Works (Step-by-Step)

Example: User sends 1 ETH privately.

User toggles “Private Send.”
Wallet checks available shielded balance.
- If shielded → prepare proof
- If not → auto-shield
Prover generates ZK proof
Wallet constructs calldata
Smart account signs a UserOperation
Tx broadcast via P2P
Proof verification
Shielded state updates

The flow is UI-simple but technically complex.

5. Developer-Facing Abstractions

Kohaku hides ZK complexity behind an SDK.

A. Preparing a shielded transaction

import { PrivacyProtocol } from "@kohaku/sdk";

const payload = await PrivacyProtocol.prepareTransfer({
  asset: "ETH",
  amount: "1",
  recipient: "0xRecipientAddress"
});

B. Generating the proof

import { ZkProver } from "@kohaku/sdk";

const proof = await ZkProver.generateTransferProof(
  payload.notes,
  payload.merklePath
);

C. Submitting via Account Abstraction

import { P2PBroadcaster } from "@kohaku/sdk";

await P2PBroadcaster.submitUserOperation({
  sender: smartAccount.address,
  callData: payload.callData,
  signature: smartAccount.sign(proof)
});

D. Example JSON config

{
  "privacy": {
    "enabled": true,
    "defaultRoute": "railgun",
    "metadataProtection": {
      "p2pBroadcast": true,
      "useHelios": true
    },
    "prover": {
      "mode": "local",
      "threads": 4
    }
  }
}

6. Mathematical Intuition Behind Key Components

Commitments

commitment = Hash(value || blinding || ownerPubKey)

Provides:

hiding
binding
non-linkability

Nullifiers

nullifier = Hash(commitment || spendingKey)

Prevents double spend without revealing which note was spent.

Merkle Proofs

Proves:

“I own one of the notes in this tree”
without revealing which note.

This is the basis of Railgun + Privacy Pools.

7. Comparison With Existing Solutions

System	UX	Compliance	Integration	Metadata
Tornado Cash	Hard	None	Low	None
Railgun	Medium	Optional	Moderate	Basic
Privacy Pools	Medium	Strong	Alpha	Basic
Aztec Connect	Good	None	Rollup-only	Good
Kohaku	Wallet-native	Inherited	High	Strong

Kohaku doesn’t replace privacy protocols it orchestrates them.

8. Use Cases

A. Trading
Hide swaps, size, liquidation thresholds.

B. DAO Payroll
Pay contributors without exposing income.

C. RWA Institutions
Private but auditable flows.

D. Enhanced Wallet UX
No new apps, seed phrases, or awkward flows.

9. Limitations & Risks (Important)

No universal ZK system
Mobile proving is slow
Regulatory ambiguity
Cross-rollup privacy is early
SDK modules still evolving

This isn’t “solved privacy,” but a pragmatic architecture.

10. Forward-Looking Insights

Session-key stealth addresses
Mobile-optimized provers
Cross-rollup private swaps
AA + ZK recovery
Hardware wallet integrations

Wallet-level privacy is the real unlock.
Kohaku is the first serious step in that direction.

If you’re building wallets, pay attention privacy finally has an architecture.

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