EY updates privacy L2 as nixed Tornado Cash sanctions ease fears

Big Four accounting firm EY, formerly Ernst Young, has changed its enterprise-focused Ethereum layer-2 blockchain Nightfall to a zero-knowledge rollup design as it says corporate clients are more comfortable with privacy solutions with easing US sanctions.EY said in an April 2 announcement that Nightfalls new source code, Nightfall_4, simplifies the networks architecture and offers near-instant transaction finality on Ethereum while making it more accessible to users than its previous optimistic rollup-based version.EYs global blockchain leader, Paul Brody, told Cointelegraph that switching to a ZK-rollup model means instant finality, but it also makes operations simpler since you dont need a challenger node to secure the network, which verifies the correctness of transactions.The move away from optimistic rollups means Nightfall users wont need to challenge potentially incorrect transactions on Ethereum and wait out the challenging period, leading to faster transaction finality.No such feature is present with zero-knowledge rollups, meaning that a transaction becomes final as soon as it is added into a Nightfall block, EY said.It is the fourth major update to Nightfall since EY launched the business-focused Ethereum layer 2 in 2019.Nightfall enables the firms business partners to transfer tokens privately using Ethereums security while being cheaper than the base network. It also uses a technology that binds a verified identity to a public key through digital signatures to try to stem counterparty risk.Nixed Tornado Cash sanctions helped people feel comfortableBrody said the US Treasurys Office of Foreign Assets Control (OFAC) sanctions on the crypto mixing service Tornado Cash had a chilling effect on legitimate business user interest.Even though we long ago took steps to make Nightfall unattractive to bad actors, since it cannot be used anonymously, the removal of OFAC sanctions has really helped people feel comfortable that using a privacy technology will not be risky, he added.Nightfalls code is open source on GitHub but remains a permissioned blockchain for EYs customer base, competing with the likes of the IBM-backed Hyperledger Fabric, R3 Corda and the Consensus-built Quorum.Brody said that EYs blockchain team is working toward a single environment that supports payments, logic, and composability.Currently, the firm requires Nightfall and Starlight, a tool that can change smart contract code to enable zero-knowledge proofs to enable complex multiparty business agreements under privacy, he added.Well spend some time supporting Nightfall_4 deployments initially, Brody said. Then well move on to the development of Nightfall_5.Magazine: What are native rollups? Full guide to Ethereums latest innovation