LP Privacy Model
The LP Privacy Model defines how liquidity providers can contribute and withdraw capital without exposing their identity, balance, or participation history.
In ZKFund, LPs are treated as capital providers, not public entities.
Purpose
In public vaults and funds, LPs are exposed by default:
Addresses reveal capital size
Deposit timing reveals intent
Withdrawal patterns reveal strategy confidence
Historical participation is permanently traceable
This discourages serious capital from participating on-chain.
The LP Privacy Model exists to ensure that:
LP participation is invisible
Capital size is not inferable
Participation history cannot be reconstructed
Private LP Onboarding
LPs join a fund vault through private deposit flows.
Deposits are routed through ZK Pools
No public LP address is linked to the vault
No deposit amount is published
Upon deposit:
LP receives a private share credential
Shares are represented cryptographically, not as public balances
Proof-of-Share
LP ownership is represented via proof-of-share.
This proof allows an LP to demonstrate:
Membership in the fund
Ownership of a valid share
Eligibility to withdraw or claim performance
Without revealing:
LP identity
Total share amount
Share history
Proof-of-share is:
Non-transferable
Non-linkable across actions
Context-bound to the vault
Private Withdrawals
LP withdrawals follow a private, proof-based flow.
LP submits a proof-of-share
Governance and manager approval is verified
Funds are sent to a fresh stealth address
No withdrawal record links to LP identity
Withdrawal actions do not reveal:
Which LP withdrew
How much was withdrawn
How many LPs exist
Balance & Exposure Privacy
The system ensures that:
LP balances are never queryable
Share ratios are not publicly computable
Performance cannot be inferred per LP
Even internal participants cannot correlate LP activity unless explicitly authorized.
Fee & Performance Accounting
Fees and performance attribution are handled privately.
Fees are calculated inside ZK circuits
Distribution rules are enforced cryptographically
No fee recipient list is public
LPs can verify correctness without seeing others’ data.
Protection Against Inference Attacks
The LP Privacy Model prevents:
Correlation of deposits and withdrawals
Timing-based inference
Cross-fund identity linking
Strategy confidence signaling
Capital movements do not reveal sentiment.
Selective Disclosure for LPs
LPs may opt into selective disclosure under governance rules.
Examples:
Proof of participation without amount
Proof of holding period
Proof of eligibility for off-chain agreements
Disclosure is:
Explicit
Limited
Cryptographically enforced
Why LP Privacy Matters
Without LP privacy:
Capital becomes a signal
LPs become targets
Funds become observable strategies
With LP privacy:
Capital is protected
Participation is safe
On-chain funds become viable for institutions
Relationship to Other Systems
The LP Privacy Model integrates with:
Identity Layer (zkID & proof-of-share)
Governance Layer (withdrawal approval)
Execution Layer (permission enforcement)
Settlement Layer (private payouts)
It does not rely on trust or discretion.
The LP Privacy Model ensures that capital can participate without being seen.
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