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Confidential Balances Product Guide

Introduction

Confidential Balances is a set of Token2022 extensions that enable privacy on Solana asset transfers. The set of extensions is comprised of:

Instead of an all-or-nothing approach, these token extensions allow varying degrees of configurable privacy. You can transfer tokens with increasing levels of confidentiality:

  1. Disabled confidentiality.
  2. Whitelisted confidentiality.
  3. Opt-in confidentiality.
  4. Confidentiality by default with opt-out options.
  5. Required confidentiality.

Confidentiality is achieved with use of serveral encryption techniques on token balances:

  • Homomorphic encryption to enable arithmetic operations on encrypted data.
  • Advanced encryption standards (AES) to encrypt the balance and transfer amounts.
  • Zero-knowledge proofs (ZKPs) to ensure integrity of encrypted balance changes without revealing the amount.

Confidential Balances have compliance baked in. Token issuers can optionally assign global auditors for regulated jurisdictions. Auditors have the ability to decrypt account balances and transfer amounts for KYC, AML, and other compliance purposes.

To develop a technical intuition for Confidential Balances, see the Protocol Overview.

Getting Started

Confidential Balances require several Solana primitives illustrated below:

flowchart TB
    A[Token 2022<br>Program]
    F[ZK ElGamal Proof<br>Program]

    subgraph Token Mint
        B[Conf. Transfer Extension]
        C[Conf. MintBurn Extension]
    end

    subgraph Sender Token Account
        D[Conf. Transfer<br>Account Extension]
    end
    
    subgraph Recipient Token Account
        E[Conf. Transfer<br>Account Extension]
    end
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  • The token mint must be created with Token2022 to support extensions.
  • Token accounts must also initialize a confidential transfer extension.
  • ElGamal Proof program is used to generate & verify ZKP's.

Developers interfacing with Confidential Balances need to set up a typical Solana development environment, or at the bare minimum, the latest version of the Solana CLI.

🚧 Notice:
Token2022 & ElGamal Proof programs work together for confidential transfers and require compatible versions. At the time of writing Devnet meets this requirement, while Mainnet has a pending upgrade for Token2022 to support confidential transfers which lands in Q1 2025.

Try It Out

There are two ways to try your first confidential transfer:

  • Beginner: Token CLI Quickstart Guide

    • Minimum requirements:
      • solana-cli 2.1.13 (src:67412607; feat:1725507508, client:Agave)
      • spl-token-cli 5.1.0
    • Provides all basic functionality to operate a confidential token.
    • Fixed set of operations from the CLI menu.
    • Use this provided shell script to execute an end-to-end confidential transfer.

  • Intermediate: Cookbook Basic Transfer Example Recipe

    • Requires the Solana development environment installation.
    • Includes examples of signing transactions & encryptions with Turnkey and Google KMS.
    • Extended set of operations from the CLI menu with easy tweaking and experimentation.

Regardless of method you will find yourself conducting the same key operations:

    sequenceDiagram

    participant A as "Sender"
    participant AA as "Sender Token Account"
    participant BB as "Receiver Token Account"
    participant B as "Receiver"

    A->>AA: Deposit
    A->>AA: Apply

    AA->>BB: Transfer
    B->>BB: Apply

    B->>BB: Withdraw
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  • Deposit:
    • Confidentializes a token account's balance by storing the amount in an encrypted form.
    • Deposit amount is set to a pending state.
    • This operation is disabled if using MintBurn extension.
  • Withdraw:
    • Removes amount from available confidential balance.
    • Withdraw amount is set to a pending state.
    • This operation is disabled if using MintBurn extension.
  • Transfer:
    • Deducts the sender's available confidential balance.
    • Credits the recipient's pending balance.
  • Apply:
    • Reconciles all pending amounts to credit/debit public token balance & available confidential balance.

Read more about pending & available balances.

Specialized Guides