Tornado Cash: Everything to Know

Overview

Tornado Cash is a privacy-focused protocol for Ethereum that enables users to send and receive anonymous transactions. It addresses one of the significant challenges in blockchain networks: The transparent and traceable nature of transactions. The protocol allows users to mix their Ethereum (ETH) and other compatible tokens, making it challenging to associate the sender's address with the recipient.

This is achieved through a process called "tornado mixing," wherein users pool tokens with others and then withdraw an equivalent amount from a different address, effectively obfuscating the transaction trail. The process breaks the linkage between the initial sender and the final receiver, significantly enhancing privacy.

A Brief History

Tornado Cash was launched in 2020 by anonymous developers who recognized the need for privacy in cryptocurrencies. Its innovative approach and compatibility with Ethereum gained significant attention. Users quickly adopted it to enhance transaction privacy and protect their financial information.

Tornado Cash: Everything to Know

Tornado Cash operates on trustlessness and decentralization. It utilizes zero-knowledge proofs, specifically zk-SNARKs, to achieve privacy. These proofs validate statements without revealing additional information. In Tornado Cash, zk-SNARKs prove the integrity of deposited funds without disclosing source or destination addresses.

To use Tornado Cash, users deposit Ethereum-based assets into a smart contract called a "tornado pool". These pools aggregate funds from multiple users, making individual transactions difficult to trace. Depositors receive private notes, or "tornado notes," representing their share of the pool. These notes can later be used to withdraw equivalent funds.

When withdrawing funds, users submit their tornado note to the smart contract. The contract verifies the note's validity using zk-SNARKs and releases funds without revealing the user's identity. This process breaks the transaction trail, ensuring withdrawn funds are not linked to the original deposit.

It's important to note that Tornado Cash does not provide complete anonymity. While it hides the link between deposits and withdrawals within its system, external parties can still analyze on-chain data to deduce potential connections. Absolute anonymity requires additional privacy measures.

Getting Started

To start using Tornado Cash, users must understand the concept of mixing or obfuscating their cryptocurrency transactions. Mixing involves combining multiple transactions from different sources and sending them to different addresses, making it difficult to trace the original sender and recipient. Tornado Cash utilizes a smart contract on the Ethereum blockchain to facilitate this mixing process.

To begin, users need Ethereum (ETH) in their wallet that they want to mix for enhanced privacy. The first step is accessing the Tornado Cash interface through a web browser. On the interface, users can select the desired anonymity set, which determines the number of other users' transactions their own transaction will be mixed with. A larger anonymity set provides higher privacy.

After selecting the anonymity set, users must specify the deposit amount and the recipient address. It's crucial to note that the recipient address should not be linked to the user's identity to maintain privacy. Once these details are provided, the user can initiate the deposit transaction. The deposited funds are stored in a smart contract until the user decides to withdraw them.

Unique Aspects

Tornado Cash stands out for being non-custodial. Unlike traditional mixing services that require users to trust a centralized entity with their funds, Tornado Cash operates entirely on the Ethereum blockchain through smart contracts. This ensures that users maintain full control over their funds throughout the mixing process, reducing the risk of theft or loss.

Another notable aspect is the use of zero-knowledge proofs (ZKPs) to enhance privacy. ZKPs allow users to prove the validity of a statement without revealing any additional information. In Tornado Cash, ZKPs are used to prove that a user made a valid deposit without disclosing specific transaction details. This ensures that the mixing process remains private and secure.

Furthermore, Tornado Cash employs a decentralized pool of relayers to facilitate the mixing process. Relayers accept deposits from users, mix them with other transactions and forward them to the withdrawal phase. By utilizing a decentralized network of relayers, Tornado Cash minimizes the risk of collusion or censorship, further enhancing privacy for users.