Stealth Address Implementations (like those used by Ethereum's ERC-5564 or Monero) excel at unlinkability and scalability because they generate a unique, one-time deposit address for each transaction off-chain. This approach keeps the core protocol lean, with privacy logic handled by wallets and indexers. For example, a social protocol like Farcaster could integrate stealth addresses without altering its core contracts, maintaining high TPS and low base-layer fees. The primary cost is shifted to the recipient, who must scan for incoming transactions, a manageable burden for active users.
LABS
Comparisons
Stealth Address Implementations vs ZK-based Address Privacy
A technical comparison of two leading on-chain privacy paradigms for Web3 social applications, analyzing stealth address protocols like ERC-5564 versus ZK-based systems for transaction privacy, including trade-offs for CTOs and protocol architects.
Chainscore © 2026
introduction
THE ANALYSIS
Introduction: The On-Chain Privacy Dilemma for Social Protocols
A technical breakdown of stealth addresses and ZK-based privacy for social applications, focusing on scalability, user experience, and protocol-level trade-offs.
ZK-based Address Privacy (exemplified by Aztec Network or zkBob) takes a fundamentally different approach by using zero-knowledge proofs to shield both sender and receiver addresses on-chain. This results in stronger, default privacy but introduces significant computational overhead. A social graph built on a ZK-rollup gains complete anonymity sets, but transaction fees are higher (e.g., Aztec's private transfers can cost 10-100x a base Ethereum transfer) and proving times add latency. This trade-off is a direct exchange of resource efficiency for cryptographic guarantees.
The key trade-off: If your priority is scalable, lightweight privacy that integrates easily with existing social graphs (like friend.tech or Lens Protocol) and you accept that metadata might be linkable by sophisticated analysts, choose Stealth Addresses. If you prioritize maximum, by-default privacy for sensitive social interactions (e.g., anonymous voting or confidential DMs) and have the budget for higher gas costs and proving complexity, choose a ZK-based system.
tldr-summary
Stealth Addresses vs ZK Privacy
TL;DR: Core Differentiators at a Glance
Key architectural trade-offs for on-chain privacy. Stealth addresses focus on receiver anonymity, while ZK systems provide comprehensive transaction privacy.
01
Stealth Addresses: Pros
Lightweight & Cost-Effective: No complex proving circuits. Transaction costs are near-native (~$0.01-$0.10 on L2s). This matters for high-frequency, low-value payments where gas overhead is critical.
Universal Compatibility: Can be implemented as an EIP (e.g., EIP-5564) on any EVM chain. This matters for protocols needing broad, chain-agnostic privacy without new VM support.
02
Stealth Addresses: Cons
Limited Privacy Scope: Only hides the receiver's identity. Sender, amount, and asset type remain public on-chain. This matters if you need full transaction confidentiality for DeFi or institutional settlements.
Key Management Burden: Requires an off-chain key broadcast mechanism (like the Ethereum P2P network or IRC). This adds complexity and potential liveness issues for users.
03
ZK-based Privacy: Pros
Full Transaction Privacy: Hides sender, receiver, amount, and asset type via zero-knowledge proofs (e.g., zk-SNARKs in Zcash, zk.money). This matters for regulatory-grade privacy in institutional finance or confidential DeFi.
Strong On-Chain Guarantees: Privacy is enforced by cryptographic proof verification, not off-chain coordination. This provides auditable, trust-minimized confidentiality for high-value transfers.
04
ZK-based Privacy: Cons
High Computational Cost: Proof generation is heavy (~10-45 seconds, 4-8GB RAM). This matters for mobile or browser-based wallets where user experience is paramount.
Protocol Lock-in & Fragmentation: Often requires dedicated L1s (Zcash) or specific L2 rollups (Aztec). This fragments liquidity and complicates cross-chain interoperability compared to a simple EIP standard.
ADDRESS PRIVACY ARCHITECTURES
Feature Comparison: Stealth Addresses vs ZK Privacy
Direct comparison of on-chain privacy solutions for wallet addresses and transaction metadata.
| Metric / Feature | Stealth Addresses (e.g., ERC-5564) | ZK Privacy (e.g., zk-SNARKs, Aztec) |
|---|---|---|
Privacy Scope | Sender-Receiver Relationship | Full Transaction (Amount, Sender, Receiver) |
On-Chain Gas Overhead | ~50k-100k gas per transfer | ~500k-1M+ gas per transfer |
Required User Action | Scan for incoming transfers | Generate ZK proof (~2-10 sec) |
Smart Contract Compatibility | Requires specialized VM (e.g., Aztec) | |
Trust Assumptions | Relies on broadcasters/relayers | Cryptographic (no trusted setup for some) |
Implementation Standard | ERC-5564, Dandelion++ | zk-SNARKs, zk-STARKs, Plonk |
Adoption Examples | Vitalik Buterin proposal, Railgun | Tornado Cash, Aztec Network, Zcash |
pros-cons-a
Two Approaches to On-Chain Privacy
Stealth Address Implementations: Pros and Cons
A technical comparison of stealth address schemes (like ERC-5564) versus ZK-based privacy systems (like zk-SNARKs/zk-STARKs) for protecting transaction recipient identity. Evaluate based on your protocol's need for interoperability, privacy guarantees, and computational overhead.
01
Stealth Addresses: Pros
Post-quantum secure & lightweight: Uses standard elliptic curve cryptography (e.g., secp256k1). No complex proving systems required, making it ideal for integration into existing wallets and protocols like Ethereum, Polygon, and Arbitrum.
Native interoperability: Frameworks like ERC-5564 are designed for EVM chains. Enables privacy for any asset without migrating to a separate chain, crucial for DeFi protocols requiring composability.
~0.01 sec
Address Gen Time
ERC-5564
Leading Standard
02
Stealth Addresses: Cons
Metadata leakage & sender privacy: Only hides the recipient. The sender, transaction amount, and asset type remain visible on-chain. Requires a separate announcement registry (like the ENS Stealth Meta-Protocol) which can become a central point of analysis.
User experience friction: Recipients must actively scan for incoming stealth payments. This introduces latency and complexity compared to transparent transactions, a significant hurdle for mainstream adoption.
03
ZK-Based Privacy: Pros
Full transaction privacy: Systems like Aztec, Zcash, and Tornado Cash hide sender, recipient, and amount using zero-knowledge proofs (zk-SNARKs). Provides the strongest on-chain privacy guarantee by breaking the deterministic link between inputs and outputs.
Programmable privacy: Enables private smart contract execution. Platforms like Aztec allow for private DeFi (zk.money) where both logic and state are concealed, a necessity for institutional-grade compliance and trading.
zk-SNARKs/STARKs
Cryptographic Base
Aztec, Zcash
Key Protocols
04
ZK-Based Privacy: Cons
High computational cost: Generating zk proofs is resource-intensive, leading to higher fees and latency. For example, a private contract call on Aztec can cost 10-100x more gas than a public equivalent.
Ecosystem fragmentation: Operates often as an isolated layer or appchain (e.g., Aztec Network). This breaks composability with mainstream DeFi on Ethereum L1/L2, limiting liquidity and integration with protocols like Uniswap or Aave.
pros-cons-b
Stealth Addresses vs. ZK Proofs
ZK-based Address Privacy: Pros and Cons
A technical breakdown of two dominant privacy paradigms, focusing on implementation complexity, on-chain footprint, and user experience trade-offs.
02
Stealth Addresses: Cons
Requires third-party scanning: Recipients must constantly scan the chain or rely on an indexer service (like Etherscan for private tx) to discover incoming funds, adding latency and infrastructure dependency.
No sender privacy: The initiating transaction and the sender's address remain fully visible on-chain. This is a significant weakness for protocols like Tornado Cash alternatives seeking full-chain anonymity.
04
ZK-based Privacy (e.g., zk-SNARKs): Cons
High computational overhead: Generating a ZK proof for a simple transfer can take 2-10 seconds locally and requires significant proving key sizes (~GBs), creating UX friction.
Substantial gas costs: Verifying a SNARK on-chain, while constant, is expensive (~500k gas). This makes small transactions prohibitive on Ethereum L1, often necessitating dedicated L2s or application-specific chains.
CHOOSE YOUR PRIORITY
When to Choose Which: A Decision Framework
Stealth Addresses for DeFi
Verdict: Ideal for privacy-preserving transfers within existing DeFi infrastructure. Strengths: Minimal protocol overhead. Integrates with existing smart contracts (e.g., Aave, Uniswap) without requiring changes to their core logic. Users generate stealth addresses for receiving funds, which can then interact with DeFi protocols as normal EOAs. Lower computational cost per transaction compared to ZK proofs. Weaknesses: Does not hide transaction amounts or the contract interaction itself. Linkability can occur if the same stealth meta-address is reused across multiple services. Requires a decentralized Stealth Address Registry (like the ERC-5564 standard) for discoverability, adding a coordination layer. Best For: Protocols like Aztec Connect (deprecated) demonstrated this model, and new standards aim to revive it for private transfers into public DeFi.
verdict
THE ANALYSIS
Final Verdict and Strategic Recommendation
Choosing between stealth addresses and ZK-based privacy is a strategic decision between immediate, cost-effective obfuscation and comprehensive, programmable confidentiality.
Stealth Address Implementations excel at providing low-cost, on-chain privacy for simple asset transfers. Their primary strength is operational simplicity and minimal computational overhead, as seen in protocols like Monero and Zcash's Sapling shielded payments. For example, Monero's RingCT-based stealth addresses achieve privacy with transaction fees under $0.01, making them ideal for high-volume, low-value payments. This approach is highly effective for its singular purpose but offers limited programmability for complex DeFi interactions.
ZK-based Address Privacy takes a fundamentally different approach by leveraging zero-knowledge proofs to enable private, programmable state. This strategy, exemplified by Aztec Network and zk.money, results in the trade-off of higher computational cost for vastly greater functionality. A ZK-rollup like Aztec can batch private transactions, achieving ~300 TPS for private swaps and lending, but with proving costs that can be 10-100x higher than a simple stealth address transaction. The payoff is full smart contract privacy within the rollup environment.
The key architectural divergence: Stealth addresses are a privacy feature added to a base layer, while ZK-privacy systems are privacy-first execution environments. The former modifies address generation; the latter reconstructs the entire transaction lifecycle within a cryptographic envelope.
Consider Stealth Addresses if your priority is efficient, asset-transfer privacy for a token or simple payment system. They are the optimal choice for projects needing to integrate privacy into existing L1s like Ethereum or Cosmos with minimal protocol changes, as demonstrated by the EIP-5564 standard for stealth addresses on EVM chains.
Choose a ZK-based Privacy System when you require confidential smart contract logic, such as private DEXes, shielded lending pools, or institutional-grade compliance tools. This is the path for protocols building new, privacy-native applications where the cost of proving is justified by the value of hiding amounts, identities, and business logic, as seen in the growth of zkSync's ZK Stack for private enterprise chains.
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