zknifty: Zero-knowledge transactions of non-fungible tokens on Ethereum

zknifty is an experiment in using an implementation of zero-knowledge merkle tree proofs to facilitate bulk transactions of non-fungible tokens on Ethereum. It was built as a hack at ETHBerlin. This work was strongly inspired and influenced by https://github.com/barryWhiteHat/roll_up.

How it works

Merkle trees can lead to significant data compression for smart contracts, where an entire contract state can be compressed in a single bytes32 hash on-chain. In this NFT repository, each leaf of the merkle tree represents the ID of a Non-Fungible Token and each leaf also stores the current owner of the corresponding token. This design could allow us to transfer an arbitrary number of tokens with a single transaction updating the root of the merkle tree. However, since the data composing the merkle-tree is stored off-chain, it is difficult for contracts to validate changes to the merkle tree. Here, we utilize the properties of zk-SNARKs to guarantee that the merkle tree was updated according to verify specific rules. These rules are currently as follow :

• The actual owner of the token to be transferred signed a message
• This message is composed of the token ID and the receiver address
• The signature is valid (eddsa signature scheme)
• The token transfer is reflected in the new merkle tree

The token contract will accept a new merkle root only if all the conditions above are met. This is possible by providing a zk-SNARK proof to the token contract with the new merkle root. Additional conditions are needed to make the contract secure, hence this contract is not to be used in production.

Presentation Slides : https://docs.google.com/presentation/d/1aHfaHy_FPxF0fHw-9EuCTUImhFxwRv63mDTZMPVgdg0/edit?usp=sharing