Decentralized currency being public and very much traceable, it eventually became necessary for certain people to blur the movements of their crypto, in order to send a gift to a lover, hiding their considerable wealth from their friends and family or doing illegal things such as buying drugs. In some cases, legal or illegal, having all your transactions visible to the world can be a problem.

As such, a solution was created, known as a "mixer" or an "anonymizer". Originally centralized systems created for use with Bitcoin, and widely popularized by dark web drug markets, the concept has been introduced to EVM chains like Ethereum in a decentralized manner, through the use of smart contracts and a technology called "Zero-Knowledge Proofs" (also referred to as "zk" or "zkp").

Why are they harder to trace?

The way these protocols work is simple: they consist of a pool, where all assets are sent. Once a user starts the process, he is given a key generated using Zero Knowledge Proofs (invisible on the blockchain, but verifiable by the blockchain) to access his funds. He then sends the funds to the protocol, which adds them to the pool with the funds of all the other users.

Then, the user only needs to wait. The more time a user's funds spend in the pool, the harder it is to correlate the deposit transaction with the withdraw transaction, especially if withdrawn in smaller amounts and sent to different addresses, as the same amount being deposited and withdrawn would be easier to recognize. Additionally, it is now possible within these protocols to transfer funds between addresses, swap tokens and access other DeFi applications without withdrawing the funds.

How do you withdraw?

When the time comes to withdraw, all the user has to do is enter his key, and specify an address. A "relayer" will then be used, who will submit the transaction for the user in exchange for a fee. Relayers can be set up by anyone, and prevent linking the address sending the funds to the address receiving, which may not contain the gas for the transaction if it is a new wallet. They receive the transaction already signed and cannot modify it.

Examples:

• Tornado.cash: First decentralized anonymizer, multi-chain

• Aztec Network: Ethereum privacy layer for accessing DeFi

• Railgun: Beta protocol aiming to allow anonymous access to DeFi

• Panther Protocol: Planned anonymizer, in development