zCred: A Confidential Decision Layer for Multi-Credential Identity, Creditworthiness, and Compliance in Decentralized Networks
Author Note: Correspondence concerning this technical report should be addressed to the zCred Architecture Team (research@zcred.xyz). Attestation contracts deployed to Base L2; enclave coprocessors operating on Horizen Vela Nitro TEE silicon.
Abstract
Public decentralized ledgers inherently expose execution trace and state storage, creating an existential barrier for institutional decentralized finance (DeFi), tokenized real-world assets (RWA), and Web3 identity applications subject to stringent regulatory mandates (e.g., KYC, AML, OFAC sanctions, credit underwriting). Existing solutions require users to either entrust sensitive personally identifiable information (PII) to centralized intermediaries or utilize single-purpose zero-knowledge (ZK) circuits that cannot privately evaluate multi-source, evolving policy rules without high computational overhead and proprietary algorithm exposure. This technical specification presents zCred, a confidential decision layer constructed on Horizen Vela hardware-isolated Trusted Execution Environments (AWS Nitro TEE) and Base Layer 2. By combining client-side zkTLS cryptographic ingress with sealed in-silicon WebAssembly (WASM) policy execution, zCred permits clients to prove authenticity of off-chain bank cashflows, centralized exchange (CEX) reserves, and regulatory credentials without revealing underlying data to verifiers. Concurrently, the verifier's proprietary risk weights and policy algorithms remain confidential within the hardware enclave. Attestations are settled on-chain via domain-scoped cryptographic nullifiers that inhibit cross-application user correlation and are verifiable with sub-26,000 gas consumption. Empirical benchmarks demonstrate execution latency below 180 ms and a zero-byte persistent PII custody footprint, realizing GDPR compliance by architectural construction.
1. Problem Formulation: The Web3 Transparency Paradox
Decentralized finance (DeFi) and tokenized real-world asset (RWA) protocols face a fundamental paradox: public blockchain ledgers guarantee execution integrity through radical state transparency, yet institutional compliance, credit underwriting, and anti-fraud mechanisms necessitate confidentiality. When a decentralized borrowing market seeks to ascertain whether a borrower meets creditworthiness criteria, or an institutional dark pool enforces Office of Foreign Assets Control (OFAC) sanctions compliance, two failure modes currently predominate:
- Centralized Custody Failure: Protocols ingest raw credentials (e.g., bank statements, tax IDs, passport scans) into off-chain relational databases, creating honeypots subject to cyber intrusions and substantial regulatory liability under the European Union General Data Protection Regulation (GDPR).
- Pure Zero-Knowledge Circuit Limitations: While client-side zero-knowledge succinct non-interactive arguments of knowledge (ZK-SNARKs) enable a user to prove a single arithmetic relation (e.g., balance > threshold), they require the verification circuit logic to be publicly declared. Consequently, proprietary underwriting models, dynamic fraud weighting algorithms, and multi-credential joins cannot be executed without exposing the protocol's intellectual property or incurring prohibitive prover computation times on mobile devices.
2. System Architecture: The Three-Tier Pipeline
The zCred architecture decomposes confidential verification into three sequential cryptographic stages: Ingest, Decide, and Settle.
Users generate unfakeable cryptographic proofs of Web2 authentic data (e.g., open banking APIs, CEX account balances, certified identity providers) directly in their client runtime (browser extension or mobile SDK). Utilizing TLS 1.3 session decomposition, the client produces a cryptographic proof that the received HTTP response was signed by the certified server's TLS certificate without disclosing plaintext session secrets, auth tokens, or unredacted PII.
The encrypted claim bundle is transmitted via TLS 1.3 to a hardware-isolated AWS Nitro Enclave running the Horizen Vela WebAssembly (WASM) coprocessor kernel:
- The host operating system, hypervisor, and cloud operators are cryptographically barred from inspecting or altering enclave memory (AES-128 in-silicon memory encryption).
- The enclave validates PCR0 cryptographic attestation measurements before receiving decryption keys.
- The proprietary risk assessment or compliance policy executes entirely in ephemeral enclave RAM.
- Dual-Blind Shield: The borrower's raw financial data is hidden from the lender; the lender's proprietary risk scoring algorithm is hidden from the borrower and public chain.
Upon evaluating the policy, the enclave signs an attestation payload containing:Attestation = Sign_enclave(PolicyID, DomainNullifier, DecisionTier, ExpirationTimestamp)where DomainNullifier = Keccak256(UserSecretKey, ConsumingAppContractAddress). The signed payload is submitted to the zCred Attestation Registry on Base L2. Consuming dApps verify eligibility with a single constant-time read call (< 26,000 gas), completely bypassing expensive on-chain ZK pairing operations (~300,000+ gas).
3. Cryptographic Privacy & Security Guarantees
Zero Data Custody (0 Bytes PII)
No personally identifiable information is written to disk or preserved across enclave executions. State is strictly ephemeral.
Unlinkability via Domain Nullifiers
Because nullifiers incorporate the target application's contract address as a cryptographic salt, user transactions across distinct dApps cannot be clustered or correlated by blockchain analytics firms.
Dual-Sided IP Shield
Enterprise risk models remain sealed within the compiled WASM binary inside the enclave, protecting proprietary algorithms.
Cryptographic Freshness
Attestations carry deterministic UNIX expiration timestamps and anti-replay nonces, preventing credential reselling or replay attacks.
4. Empirical Benchmarks & Performance Characteristics
| Performance Dimension | zCred Metric | Comparison Baseline |
|---|---|---|
| Enclave Decision Latency | < 180 ms | 12 - 45 s (Complex ZK prover) |
| Client Ingress Proof | < 420 ms (zkTLS) | Manual document upload / OCR |
| On-Chain Verification Gas | ~24,500 gas (1-Line Read) | > 280,000 gas (Groth16 ZK) |
| PII Custody Footprint | 0 Bytes (Zero Storage) | Persistent database honeypots |
| Regulatory Compliance | GDPR Art. 25 & 17 Inherent | High GDPR breach liabilities |
5. References (APA 7th Edition)
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World Wide Web Consortium. (2022). Decentralized identifiers (DIDs) v1.0: Core architecture, data model, and representations. W3C Recommendation. https://www.w3.org/TR/did-core/