The XRP Ledger (XRPL) community has introduced a new privacy-focused amendment, XLS-0096, in response to a market crisis at competing network Zcash. Following the discovery of a critical bug in Zcash’s Orchard pool that triggered a 46% price crash for ZEC, XRPL is proposing a “verifiable confidentiality” standard. This framework aims to balance transaction privacy with supply transparency, allowing validators to audit total token circulation while keeping amounts and balances hidden from the public.
The debate around cryptocurrency privacy intensified dramatically after a major flaw was discovered in Zcash‘s Orchard pool. This bug, which had remained hidden since May 2022, sparked a market panic. Zcash‘s native token, ZEC, lost 46% of its value in a single day as investors rushed to exit their positions.
The sell-off highlighted a core challenge for privacy networks verifying accurate token supply. Concerns about hidden inflation spread quickly, forcing major holders like Arthur Hayes to liquidate. Against this backdrop, the XRP Ledger community has unveiled a new approach to privacy.
XRPL Foundation community lead Vet recently teased amendment XLS-0096, known as Confidential Transfers for Multi-Purpose Tokens. The proposal introduces what its creators describe as a shift from blind anonymity to verifiable confidentiality. Vet stated on social media, “if you’re in zcash, pivot soon to XRP Ledger privacy.”
The design uses EC-ElGamal homomorphic encryption and zero-knowledge proofs to hide transaction amounts and balances. Validators can still verify the total circulating supply never exceeds the authorized maximum. This framework aims to eliminate the risk of tokens being secretly created.
The proposal also includes security features like compact sigma protocols and range proofs. A split balance model, with a spending balance and an “Inbox” buffer, is designed to prevent transaction failures. For institutions, the amendment adds selective disclosure tools and view keys to share information with regulators when required.
Initially, XLS-0096 will be deployed for stablecoins and tokenized assets using Multi-Purpose Tokens. The framework could eventually serve as a foundation for bringing advanced confidentiality features to XRP itself.
