How to Implement Smart Account Privacy Features

Smart accounts, defined by the ERC-4337 standard, transform externally owned accounts (EOAs) into programmable smart contract wallets. While this unlocks powerful features like social recovery and batched transactions, it introduces new privacy challenges. Every action—from deploying the account to executing a UserOperation—is permanently recorded on-chain, creating a linkable history. This guide explains how to implement privacy features that break these links, protecting user identity and transaction patterns from public blockchain analysis.

The foundational privacy technique for smart accounts is the stealth address. Instead of funding your main account address directly, you generate a one-time stealth address for each interaction. Protocols like ERC-5564 standardize this using elliptic curve cryptography. A sender can compute a stealth address using the recipient's public viewing key and their own private ephemeral key. Only the recipient, using their spending key, can detect and control funds sent to this stealth address, preventing observers from linking multiple transactions to the same user.

To implement stealth addresses, your smart account's validateUserOp function must support signature schemes like ERC-4337's signature aggregator or custom validation logic. For example, you can modify the account to accept a zero-knowledge proof that demonstrates knowledge of the stealth address's private key without revealing it. The Safe{Core} Account Abstraction Kit provides modular hooks where you can integrate privacy-preserving validation modules, separating core security from privacy logic.

Beyond stealth addresses, transaction anonymization is critical. Use privacy-focused paymasters or bundlers that can obscure the transaction's origin. Services like Pimlico or Stackup offer paymaster sponsorships that can be routed through relayers, masking the initial UserOperation submitter. Furthermore, utilize batched transactions to combine multiple actions—like a token swap followed by an NFT purchase—into a single, less interpretable on-chain event, increasing ambiguity for chain analysis.

For advanced privacy, integrate zero-knowledge proofs (ZKPs). Your smart account can be designed to only execute a transaction if a ZKP (e.g., using Circom or Noir) validates a private condition, such as proving your balance is above a threshold without revealing the amount. ZK rollup-based account systems like zkSync Era's Account Abstraction natively support this. The implementation involves an off-chain prover generating a proof and the on-chain verifier contract within your account logic checking it before proceeding.

When implementing these features, audit your privacy guarantees. A stealth address leaks privacy if the subsequent UserOperation to transfer funds from it is linked on-chain. Use separate signers or privacy pools for funding. Always reference established libraries like the ZeroDev Kernel for modular privacy modules. The goal is to create a smart account that operates with the flexibility of a contract while preserving the pseudonymity expected in decentralized systems.

Smart accounts, or account abstraction wallets like those built with ERC-4337 or Safe{Core}, separate a user's identity from their on-chain activity. Unlike Externally Owned Accounts (EOAs), smart accounts are programmable contracts. This programmability is the foundation for privacy features, allowing you to implement logic for stealth addresses, transaction mixing, and zero-knowledge proofs. You should be comfortable with Solidity or Vyper for writing account logic and have a working knowledge of how user operations are bundled and relayed via a Bundler.

A core prerequisite is understanding the privacy-utility trade-offs on public blockchains. Every transaction is visible, linking a smart account's address to all its interactions. Privacy features aim to break these links. Key concepts include stealth addresses (generating unique, one-time addresses for receiving funds), confidential transactions (hiding amounts/tokens using cryptography like zk-SNARKs), and transaction obfuscation (using mixers or privacy pools). Familiarity with these models from protocols like Tornado Cash (historical reference) or Aztec is valuable for design decisions.

You will need development tools for the specific smart account standard. For ERC-4337, set up a development environment with the account-abstraction SDKs from Stackup, Biconomy, or Alchemy. For Safe smart accounts, use the Safe{Core} SDK and Safe API. Essential testing requires a local node (like Hardhat or Foundry) and testnet ETH on Sepolia or Goerli. Understanding how to sponsor gas via paymasters is also crucial, as privacy mechanisms can increase gas costs.

Implementing advanced cryptography, such as zero-knowledge proofs for identity or transaction shielding, requires additional expertise. You may integrate with zk-SNARK circuits (using libraries like circom and snarkjs) or leverage existing privacy-focused Layer 2 solutions like Aztec or zkSync Era. Knowledge of Elliptic Curve Cryptography (ECC) and how to use it securely in smart contracts (e.g., for stealth address generation) is necessary to avoid critical vulnerabilities.

Finally, consider the regulatory and user experience implications. Privacy features must be designed to comply with local regulations regarding transaction monitoring. From a UX perspective, you need to clearly communicate privacy guarantees and limitations to users. The implementation should not drastically degrade performance; profiling gas costs and relay times is essential. Start by forking and studying open-source examples from the Ethereum Foundation's 4337 examples or Safe{Core} protocol workshops to build a solid foundation.

A stealth address receiver is a smart contract that allows a user to receive assets privately without revealing their primary wallet address on-chain. Instead of publishing a static public address, the receiver uses a spending key to generate unique, one-time deposit addresses. This mechanism, popularized by protocols like EIP-5564, enables non-interactive private transactions where only the intended recipient can compute the private key for the generated stealth address and claim the funds. For smart accounts, this functionality is typically implemented as a module or a custom fallback handler.

The core cryptographic primitive is Elliptic Curve Diffie-Hellman (ECDH). The sender uses the recipient's public viewing key and a random ephemeral private key to compute a shared secret. This secret, along with the recipient's public spending key, deterministically generates a new stealth address. The recipient, who holds the corresponding private viewing key, can scan the blockchain for announcements of these stealth addresses, compute the same shared secret, derive the stealth address's private key, and ultimately transfer the funds to their main account. This process ensures the link between the recipient's identity and the transaction is hidden.

To implement this for an ERC-4337 smart account, you must design a module that can validate and execute a UserOperation for claiming funds from a stealth address. The module's validateUserOp function must verify a cryptographic proof that the caller (likely a separate relayer) is authorized to act on behalf of the stealth address linked to this account. A common pattern is for the module to store a mapping of authorized stealth meta-addresses (the combination of spending and viewing public keys) and validate signatures or zero-knowledge proofs against them.

Here is a simplified Solidity snippet for a stealth module's validation logic. It assumes the UserOperation callData includes the stealth address parameters and a signature from the ephemeral key.

solidityCopy
function validateUserOp(
    UserOperation calldata op,
    bytes32 userOpHash,
    uint256
) external view returns (uint256 validationData) {
    // Decode stealth metadata and signature from callData
    (address stealthAddr, bytes memory signature) = abi.decode(op.callData[4:], (address, bytes));
    // Recover the ephemeral public key from the signature
    address ephemeralPubKey = ECDSA.recover(userOpHash, signature);
    // Verify the stealthAddr was correctly derived from the ephemeral key and the account's meta-address
    require(
        stealthAddr == generateStealthAddress(ephemeralPubKey, metaAddress),
        "Invalid stealth address"
    );
    return 0; // Validation passed
}

After validation, the execute function of the module would perform the actual asset transfer. This typically involves calling a pre-deployed stealth address contract (where the funds are held) or directly interacting with the asset's contract. For example, it might call IERC20(stealthAddr).transfer(owner(), amount) if the stealth address is a simple Externally Owned Account (EOA) whose private key was derived by the user. For better gas efficiency and atomicity, consider batching multiple stealth claims into a single UserOperation or using a singleton forwarder contract.

Key considerations for production include gas optimization for the scanning and claiming process, key management security for the spending and viewing keys, and integration with existing account abstraction infrastructure like bundlers and paymasters. Testing is critical; use libraries such as the stealth-address-js SDK to generate test vectors. Implementing stealth address receivers moves smart accounts beyond simple transaction batching into the realm of strong, user-centric privacy.

Smart accounts, like those defined by ERC-4337, enhance user experience with features such as social recovery and gas sponsorship. However, their on-chain activity can create a persistent, linkable identity. Integrating privacy mixing protocols addresses this by obfuscating transaction graphs and asset origins. This is achieved by combining smart account logic with privacy primitives like zero-knowledge proofs (ZKPs) and stealth address systems. The goal is to enable private, non-custodial transactions without sacrificing the programmability of account abstraction.

The core mechanism involves using a privacy pool or mixer smart contract. Instead of a user sending funds directly from their main smart account, they first deposit to a mixer. They then generate a zero-knowledge proof, such as a zk-SNARK, that attests to a valid deposit without revealing which one. Finally, they can withdraw to a fresh, unlinked address. For smart accounts, the withdrawal address can be a new smart account wallet, effectively breaking the on-chain link. Protocols like Aztec Network and Tornado Cash (on compatible networks) exemplify this architecture, though implementation details differ.

To implement this, developers must design their smart account to interact with mixer contracts. A common pattern is to use a relayer or paymaster to sponsor the private withdrawal transaction, as the receiving address may not have gas tokens. The smart account logic should also manage stealth addresses for future interactions. When User A wants to send private funds to User B's smart account, they can generate a stealth address derived from B's public key. Only B can compute the corresponding private key to control funds sent there, preserving privacy for both parties.

Here is a simplified conceptual flow for a privacy-enhanced transaction using a smart account and a hypothetical mixer:

solidityCopy
// 1. User's Smart Account deposits to Mixer
mixer.deposit(amount, zkCommitment);
// 2. Later, generate ZK proof of deposit
bytes memory proof = generateZKProof(depositSecret);
// 3. Withdraw to a new, unlinked Smart Account via a relayer
mixer.withdraw(newSmartAccountAddress, proof, relayerSignature);

The zkCommitment is a cryptographic hash submitted on-chain during deposit. The off-chain generateZKProof function creates a proof that the prover knows the secret behind a valid commitment without revealing it, allowing the mixer contract to verify and release funds.

Key considerations include regulatory compliance and auditability. Some protocols integrate anonymity sets and allow users to provide proof-of-innocence (e.g., proving funds are not from a sanctioned address) using ZKPs. Developers must also account for gas overhead, as ZK proof verification on-chain is computationally expensive. Using layer-2 solutions or proof co-processors like Risc Zero or Brevis can mitigate costs. Always use audited, well-established libraries for cryptographic operations, such as the circom compiler or snarkjs for zk-SNARKs, to prevent critical security vulnerabilities.

The integration of privacy features is becoming a standard expectation for smart account implementations. By leveraging ZKPs and mixer protocols, developers can offer users the benefits of account abstraction—like seamless onboarding and transaction batching—while preserving the fundamental cryptocurrency property of financial privacy. The technical stack is maturing rapidly, with projects like Polygon zkEVM and zkSync Era providing native support for both smart accounts and efficient ZK verification, paving the way for mainstream private, programmable wallets.

Smart accounts, like those defined by ERC-4337, introduce programmable logic to user wallets. While powerful, they can leak sensitive on-chain data: your transaction history, spending patterns, and social connections are permanently visible. Zero-knowledge proofs (ZKPs) solve this by allowing you to prove a statement is true—like "I have sufficient funds" or "I am a member of this group"—without revealing the underlying data. This enables private actions such as sending tokens, voting, or accessing gated services while keeping your account's internal state confidential.

Implementing privacy starts with defining a circuit. This is a program, written in a language like Circom or Noir, that encodes the rules of your private action. For a private transfer, the circuit would verify: the sender's secret balance is greater than the amount, a valid secret signature authorizes the transfer, and the new hidden balances are calculated correctly. The circuit generates a witness (the private inputs) and a proof (the cryptographic attestation). Only the proof is submitted on-chain, where a verifier contract checks its validity against a public statement.

A core pattern is the commitment scheme. Instead of storing a balance directly, the smart account holds a cryptographic commitment (e.g., a Pedersen hash) to it. To spend, you generate a ZK proof that you know a secret value (the old balance and a blinding factor) that hashes to the on-chain commitment, and that the new commitments are correct. The contract then updates the public commitment. Libraries like circomlib offer pre-built circuits for these primitives. This approach hides amounts and counterparties, a foundational technique for privacy-focused rollups like Aztec.

For developers, integrating ZKPs involves a toolchain. You write the circuit, compile it to generate verification keys, and deploy a verifier contract (often using the SNARK-friendly Groth16 or PLONK proving schemes). Your off-chain client (a bundler or wallet) uses SDKs like snarkjs or noir_js to generate proofs from user inputs. The account abstraction entry point then validates the user's signature and the ZK proof before executing the logic. Frameworks like zkemail or zk-kit provide modular circuits for common operations, accelerating development.

Key considerations include gas cost and trust assumptions. On-chain verification is computationally expensive, though new precompiles like EIP-1962 (BN254 pairing) and EIP-2537 (BLS12-381) on L2s reduce costs. You must also decide who generates proofs: client-side is trust-minimized but requires user compute, while a proof-serving infrastructure introduces a reliance. Always audit your circuits for logical soundness; a bug can leak secrets or lock funds. For production, consider using audited libraries and proving systems with active maintenance, such as those from the Ethereum Privacy & Scaling Exploration team.

Implementing privacy for smart accounts is a multi-layered process. The foundational step is transaction privacy, achieved through stealth address systems like those in the ERC-5564 standard or privacy-focused Layer 2s such as Aztec. This ensures that on-chain activity cannot be trivially linked to your account's public address. The next layer involves data privacy, where you should leverage zero-knowledge proofs (ZKPs) via frameworks like Noir or Circom to validate conditions without revealing underlying data, and consider storing sensitive information off-chain using solutions like IPFS or Ceramic with encrypted pointers.

For ongoing development, your focus should shift to operational security and user experience. Audit your privacy logic thoroughly, as complex ZK circuits and novel signature schemes introduce new attack vectors. Tools like the PSE ZK Toolkit can help. Furthermore, design your account's recovery and social features with privacy in mind—using ZK proofs for recovery attestations or implementing social logins that do not leak graph data to the public chain.

To stay current, monitor the evolution of privacy-preserving infrastructure. Key areas include the maturation of fully homomorphic encryption (FHE) for on-chain private computation, advancements in zk-SNARK recursion for batching proofs, and the integration of privacy layers across major rollup ecosystems. Participating in communities like the Privacy & Scaling Explorations group or following the development of protocols like Namada will provide insights into next-generation tools.

Begin testing your implementation on a testnet with real privacy constraints. Deploy your modified SmartAccount contract to Sepolia or Holesky and simulate user journeys involving private transactions and shielded interactions. Use block explorers like Etherscan to verify that intended data (like recipient addresses or specific amounts) remains hidden, while your account's core logic executes correctly.

Finally, consider the broader implications of privacy features. While they empower users, they also interact with regulatory compliance and decentralized governance. Designing with transparency for optional auditability—such as allowing users to generate zero-knowledge proofs of compliance—can create more robust and sustainable systems. Your implementation choices today will shape the usability and adoption of private smart accounts in the future.