🔄 Harpo in Action: Private Transfers with Cryptographic Security

#drex #blockchain #smartcontract #web3

Last time we explored private swaps using ZK proofs — now let’s dive into another essential operation: wallet-to-wallet transfers, where N input UTXOs are transformed into 1 or 2 output UTXOs (transfer value + optional change).

This goes far beyond simple balance movement. It’s a cryptographically verified operation, with privacy guaranteed by zero-knowledge proofs (ZKPs) and auditable compliance.

⚙️ How does this transfer work?

Inputs and Outputs
Your assets are represented as UTXOs — like digital banknotes.
When transferring, you select N input UTXOs and generate:

1 output UTXO with the transferred value
1 change UTXO (optional)
All of this happens privately — without revealing the amount or recipient publicly.
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🧪 Transaction Verifications

🌳 Existence Proof
Each UTXO is a commitment in the private Merkle Tree.
The ZKP proves the UTXO exists in the tree — without revealing which one.
The Merkle root is published on the public blockchain.

📜 Root History
Prevents fraud by ensuring the UTXO existed in a valid tree state recently.

🔑 Ownership Proof
Only the holder of the secret key can spend the UTXO.
This is proven via ZKP — without revealing the key.

⚖️ Mass Conservation
Sum of input values = sum of output values.
No tokens are created or destroyed.

🚫 Nullifier (Double-Spend Prevention)
Each spent UTXO generates a unique nullifier.
It’s published on the public chain.
Harpo checks if the nullifier has already been used before validating the transaction.

🛡️ Lock Verification
If a UTXO is blocked by an authority (e.g. regulatory reasons), it cannot be spent.
The ZK circuit enforces this in the proof.

📤 Auditing
Harpo enables selective auditability.
ZKPs ensure that data shared with authorities for compliance matches the original transaction — without revealing secrets.

✅ If everything checks out…

Nullifiers are added to the public list to prevent reuse
New commitments are created in the Merkle Tree with updated balances
The transaction is recorded — with privacy for users and verifiability for regulators