Solana's Token-2022 Program, through the Confidential Transfer extensions, enables users to transact with encrypted balance amounts while preserving blockchain transaction verifiability through appropriate cryptographic schemes. Specifically, the extension employs twisted ElGamal encryption, sigma protocols for proving algebraic relationships, and Bulletproof-based range proofs to establish transaction validity without revealing actual amounts.
The CT extensions supports a dual balance architecture where each account can simultaneously hold both a confidential balance and a non-confidential balance. Users can deposit funds from their public balance into the confidential balance, perform private transfers between confidential balances, and withdraw back to the public balance when needed. This separation enables efficient homomorphic updates to encrypted balances while allowing recipients to decrypt and reconcile their funds asynchronously.
Optional auditor keys can be configured at the mint level, allowing designated parties to decrypt transfer amounts for compliance purposes without affecting the privacy guarantees for other observers.
The primary objectives of the overall audit are to: