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SPARC: Spend Proof and Anonymized Returns for CARROT

Status: Planned

SPARC is a planned extension to the CARROT addressing protocol and is not yet implemented in Salvium. This document describes the conceptual design and intended functionality.

Overview

SPARC (Spend Proof and Anonymized Returns for CARROT) is a cryptographic protocol designed for Salvium cryptocurrency that extends the CARROT addressing scheme. It aims to solve two critical challenges in privacy-focused cryptocurrencies:

  • It enables anonymous refunds/returns while maintaining privacy
  • It allows users to prove they control an address without revealing private keys

SPARC is a key innovation that will enable Salvium to meet anti-money laundering (AML) compliance requirements while preserving core privacy features.

Key Components

Anonymized Returns

SPARC will implement a secure return payment system that allows recipients to send funds back to senders without knowing their address:

  • Encrypted Return Data: When a user sends funds, they can include encrypted return data in the transaction
  • Privacy Preservation: This return data appears as random noise to outside observers
  • Recipient Capabilities: Only the intended recipient can recognize and use this return data
  • Return Transactions: The recipient can send funds back to the original sender without knowing their address
  • Sender Verification: The original sender can verify returned funds are genuinely for them

This system will maintain complete privacy while enabling two-way transactions, solving a fundamental limitation of traditional privacy coins.

Spend Authority Proof

The spend authority proof is a zero-knowledge proof that demonstrates a user controls an address without revealing their private keys:

  • Zero-Knowledge Property: Proves knowledge of secret values without revealing them
  • Schnorr-Like Construction: Based on established cryptographic techniques
  • Security Guarantees: Satisfies completeness, soundness, and zero-knowledge properties
  • Regulatory Compliance: Enables verification of address ownership for AML compliance purposes

This capability is critical for regulatory compliance, allowing exchanges and other regulated entities to verify address control without compromising user privacy.

Security Properties

SPARC is designed to provide formal security guarantees:

  • Indistinguishability: Transactions with return data are indistinguishable from those without
  • Unlinkability: Transactions cannot be linked across the blockchain
  • Return Address Hiding: Return addresses cannot be recovered by third parties
  • Non-Swindling: Adversaries cannot redirect return funds to themselves
  • Unforgeability: Proofs cannot be faked without breaking cryptographic assumptions

Relationship to CARROT

SPARC will extend the CARROT (Cryptonote Address on Rerandomizable-RingCT-Output Transactions) addressing protocol, which provides:

  • Full view-only wallets: Monitoring of both incoming and outgoing transactions
  • Forward secrecy: Protection against future advances in computing
  • Enhanced security: Protection against various attack vectors

SPARC will add the critical anonymized returns and spend proof capabilities on top of this foundation once CARROT is fully implemented in Salvium.

Implementation Timeline

SPARC implementation will follow these general phases:

  1. Complete CARROT addressing system implementation
  2. Develop and test SPARC extensions
  3. Integrate with wallet software
  4. Deploy to testnet for community testing
  5. Launch on mainnet

For the most current timeline, please refer to the Salvium roadmap.

Practical Applications

SPARC will enable various real-world applications:

  • E-commerce & Refunds: Merchants can issue refunds without storing customer wallet addresses
  • Escrow Systems: Funds can be returned automatically if conditions aren't met
  • Compliant Exchange Listings: Exchanges can verify transaction information when required by regulations
  • Private Smart Contracts: Foundation for complex, private return logic in applications

Quantum Resistance Considerations

SPARC incorporates design elements intended to provide protection against quantum computing threats:

  • Forward Secrecy: Protection of past transactions even if encryption is broken in the future
  • Modified Cryptographic Constructions: Adaptations to increase resistance to quantum algorithms
  • Unlinkability: Prevention of transaction linking that could be vulnerable to quantum analysis

Technical Documentation

For detailed technical specifications, including mathematical formulations, security proofs, and implementation details, please refer to the Salvium White Paper available in our documentation repository.

FAQ

Q: When will SPARC be implemented in Salvium?
A: SPARC will be implemented after the CARROT addressing system is fully integrated. Refer to the project roadmap for the latest timeline.

Q: Does using SPARC compromise privacy?
A: No. SPARC is designed to maintain all the privacy guarantees of traditional privacy coins while adding capabilities for returns and regulatory compliance.

Q: How does SPARC differ from Monero's approach?
A: Monero does not currently implement a return payment system or spend authority proofs. SPARC builds on concepts originally proposed for Monero but not implemented.

Q: Is SPARC's implementation open source?
A: Yes, when implemented, SPARC in Salvium will be fully open source and available for review in our code repository.

Q: How does SPARC help with regulatory compliance?
A: SPARC enables users to prove they control an address without revealing private keys, satisfying AML regulatory requirements for verification while maintaining privacy.

Q: Does SPARC require changes to the consensus protocol?
A: SPARC will build on the existing Salvium consensus protocol with additions to transaction formats and validation rules.