Use Cases of eERC

The eERC standard can be deployed across Avalanche C-Chain Mainnet, Fuji (Testnet), and custom L1s, enabling privacy in a variety of scenarios.

Avalanche C-Chain

• Private DeFi operations: Farming, lending, and trading without exposing transaction sizes.
• Confidential payments: Salaries and supplier payments visible only to participants and authorized auditors.

Custom L1 Deployments

• Tokenized real-world assets (RWA): Privacy-enabled trading with compliance auditability.
• Private gaming economies: Fungible and non-fungible in-game assets with encrypted transfers.

Step-by-Step: Private Transfer Flow (Standalone Mode)

1. Transaction Creation

   • Wallet integrates.
   • Amount is encrypted using ElGamal over BabyJubJub.
   • A Poseidon hash of the ciphertext is generated for proof validation.

2. Proof Generation

   • User creates a zk-SNARK proving the transaction’s validity without revealing details.

3. On-Chain Verification

   • Smart contract verifies the proof in a zk-friendly circuit optimized for BabyJubJub and Poseidon.
   • Encrypted balances in the EncryptedUserBalances contract are updated.

4. Auditor Access (Optional)

   • Authorized auditors can decrypt specific transactions if enabled in the Registrar Contract.

5. Finalization

   • Transaction is recorded on Avalanche with encrypted values only.
   • Explorers show the transfer occurred, but not the amount or updated balances.

In the next section, we will examine the eERC Contracts Flow, covering how to create an eERC, configure auditor access, choose zk-proof types, and interact with it as a user.