Architecture Overview

This document explains how zERC20 is architected across on-chain contracts, off-chain services, and the Internet Computer (ICP) stealth messaging layer.

• Privacy-preserving transfers: Senders burn zERC20 to stealth addresses; recipients mint on the same or another chain without linkable on-chain metadata

• ERC-20 compatibility: Standard token interface works with existing wallets, DEXes, and DeFi protocols

• Provable integrity: Every mint relies on zero-knowledge proofs (Nova/Groth16)

• Scalability: Poseidon Merkle trees and IVC batch thousands of transfers into one proof

• Cross-chain: LayerZero-based hub aggregates roots across all chains

On-Chain Contracts

Contract	Purpose
zERC20	Upgradeable ERC-20 that emits IndexedTransfer events, maintains SHA-256 hash chain, and exposes teleport for verified mints
Verifier	LayerZero OApp that verifies Nova/Groth16 proofs, tracks teleported amounts per recipient, and relays roots to Hub
Hub	Aggregates transfer roots from all chains into a Poseidon tree, broadcasts global root to all Verifiers
LiquidityManager	Manages liquidity policy, handles wrap/unwrap of underlying assets
Adaptor	Cross-chain exit via Stargate when liquidity is more favorable on another chain

Off-Chain Services

Service	Purpose
Indexer	Actix HTTP server + Postgres. Syncs on-chain events, maintains Merkle trees, generates root proofs
Decider Prover	HTTP worker that finalizes Nova proofs for on-chain verification
Cross-chain Job	Relays transfer roots to Hub and triggers broadcasts

ICP Stealth Storage

Component	Purpose
Key Manager Canister	VetKD-backed IBE key derivation per EVM address
Storage Canister	Stores encrypted announcements and signed invoices

Data Flow

1. Transfer Emission

zERC20._update() → emits IndexedTransfer → updates hashChain

Every transfer (mint/transfer/burn) appends to the SHA-256 hash chain and emits an indexed event.

2. Root Proving

Merkle Tree and Hash Chain

The indexer maintains Poseidon Merkle trees and periodically proves new transfer roots on-chain using IVC proofs.

3. Cross-chain Aggregation

Cross-chain Architecture

Each chain's Verifier relays its transfer root to the Hub, which aggregates them and broadcasts the global root back to all Verifiers.

4. Private Transfer

Sender → zERC20 transfer to burn address → Recipient scans ICP storage →
Generates ZKP → Verifier.teleport() → zERC20 mints to recipient

Cryptographic Primitives

Primitive	Usage
Poseidon Hash	Merkle trees, burn address derivation, recipient binding
SHA-256	Hash chain commitments (truncated to 248 bits for BN254)
Nova Folding	Batch withdrawal proofs, root transition proofs
Groth16	Single withdrawal proofs
VetKD/IBE	Encrypted stealth messaging on ICP

Trust Model

Actor	Trust Assumption
Contract Owner	Can upgrade contracts, rotate verifiers
Indexer Operator	Observes sender/burn-address/value; learns recipient on query
ICP Canisters	Stores encrypted data; cannot decrypt without recipient's key

For maximum privacy: Run your own indexer instance to avoid sender-recipient linkage leaks.