Settlement Layer
The Settlement Layer is responsible for applying the results of execution without exposing financial state or transaction traceability. It ensures that once an action is authorized, assets are moved and states are updated privately, while still remaining verifiable.
This layer completes the ZKFund lifecycle by turning approved intent into private on-chain reality.
Purpose
In most on-chain systems, settlement is the point where privacy completely breaks down:
Treasury balances become visible
Recipients are exposed
Execution paths can be reconstructed
Historical behavior is permanently traceable
For funds, DAOs, and OTC desks, this creates:
Front-running risk
Strategy leakage
Targeted attacks on treasury wallets
Long-term intelligence exposure
The Settlement Layer is designed to prevent settlement from becoming a disclosure event.
Stealth Treasury Model
ZKFund does not use public treasury addresses.
Instead, it operates a stealth treasury model, where:
Assets are not associated with a single public wallet
Balances are not queryable on-chain
Ownership is enforced through cryptographic proofs, not addresses
Treasury control flows from:
Governance authorization
Execution approval
Settlement constraints
Not from possession of a visible private key.
ZK Pool Settlement
All asset movements are settled through ZK Pools.
ZK Pools provide:
Private transfers
Private swaps
Private allocations
Unlinkable settlement paths
From an external observer’s perspective:
No sender address is revealed
No recipient address is revealed
No intermediate routing is visible
Only the fact that a valid settlement occurred is observable.
Settlement Flow
1. Execution Authorization
The Execution Layer emits an authorization state
The action parameters remain hidden
2. Private Settlement
Assets are moved within the ZK Pool
Settlement follows the constraints defined in the proposal
Internal accounting is updated privately
3. Proof Receipt Emission
A cryptographic receipt is published on-chain
The receipt proves:
The action was authorized
Settlement followed governance rules
No constraints were violated
No financial details are disclosed.
Proof-Only Logging
The Settlement Layer emits proof-only logs, not transaction details.
These logs confirm:
Execution success or failure
Settlement validity
Governance compliance
They do not include:
Token amounts
Asset composition
Counterparties
Treasury balances
This allows full verifiability without financial surveillance.
NAV and Internal Accounting
Net Asset Value (NAV) and internal balances are computed using ZK circuits.
Asset composition remains hidden
Only aggregate metrics (e.g. NAV = 1.28x) may be revealed
NAV proofs can be verified without exposing underlying positions
This enables reporting without strategy disclosure.
Selective Disclosure at Settlement
When required, the Settlement Layer supports selective disclosure.
Under governance control, the system can reveal:
Specific settlement proofs
Limited historical data
Aggregated compliance metrics
Disclosure is:
Scoped
Auditable
Cryptographically enforced
There is no unilateral data leakage.
Security Guarantees
The Settlement Layer guarantees that:
Unauthorized settlement is impossible
Approved actions cannot settle outside defined constraints
Funds cannot be drained without valid execution proofs
Historical settlement data cannot be reconstructed
What the Settlement Layer Does Not Do
It does not expose treasury wallets
It does not publish balances
It does not rely on trusted relayers
It does not sacrifice privacy for convenience
Why Settlement Is the Final Barrier
Even with private governance and execution, public settlement would nullify all privacy guarantees.
The Settlement Layer ensures that:
Decisions remain confidential
Strategies remain hidden
Capital remains protected
It is the final enforcement point where privacy becomes irreversible.
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