EY’s Nightfall Just Got a Game-Changer—Is Private Ethereum Finally Here?

EY has upgraded its business-focused Ethereum layer-2 blockchain, Nightfall, into a zero-knowledge rollup (ZK-rollup). This upgrade eliminates finality wait times for transactions and simplifies the platform’s architecture to enhance its usability for business clients.

The new version, Nightfall_4, replaces the earlier optimistic rollup design with a cryptographic approach that verifies transactions before posting them onto Ethereum. Unlike optimistic rollups, whose window of challenge may take days to settle, zero-knowledge rollups achieve near-instant finality.

From Optimistic Rollups to Zero-Knowledge Security

Nightfall once worked as a positive rollup, using economic incentives and game-theoretic assumptions of security to capture malicious transactions. But the new zero-knowledge solution gives more robust cryptographic assurances, eliminating the necessity for mechanisms of dispute and significantly enhancing transaction speed and efficiency.

EY described in a statement how, by substituting a “cryptoeconomic approach with a cryptographic approach,” the architecture in Nightfall is now easier, as it no longer has to support mechanisms for challenging erroneous blocks. The improvement makes the platform more stable and easier to use with high levels of privacy and security.

Key Benefits of Nightfall_4

The transition to a zero-knowledge rollup brings several benefits beyond transaction speed:

• Near-Instant Finality: Unlike optimistic rollups, which involve waiting periods for fraud detection, Nightfall_4 ensures immediate finality upon submission.
• Simplified Architecture: Eliminating dispute resolution mechanisms reduces complexity and enhances platform efficiency.
• Enhanced Privacy and Security: Users retain the ability to conduct private transactions while leveraging Ethereum’s robust security framework.
• Lower Costs: As a layer-2 solution, Nightfall_4 significantly reduces transaction fees compared to executing transactions directly on Ethereum’s mainnet.

Paul Brody, EY’s global blockchain lead, emphasized the significance of the upgrade, stating that the latest version retains the “same privacy and scaling” capabilities as Nightfall_3 but now delivers a more streamlined and efficient experience.

Availability and Open-Source Challenges

EY disclosed that Nightfall_4 and the accompanying software are public domain. The GitHub repository, however, is not yet synchronized to the changes and returns a 404 error currently. This means the release is not yet totally deployed, and questions regarding availability for enterprise and developer consumers come into play.

When asked to respond, EY did not respond promptly to Decrypt’s comment request about the status of the GitHub repository.

Regulatory Tailwinds for Privacy Tech

The release of EY Nightfall_4 coincides with the introduction of stricter regulatory frameworks for blockchain privacy technology. The U.S. Treasury recently removed sanctions from Tornado Cash, a previously blacklisted crypto mixer, which was an indication of a change of regulatory attitudes towards privacy tools in the cryptocurrency market.

Despite being an open-source project, Nightfall remains permissioned for EY’s corporate clients. The platform integrates industry-standard identity certificates, ensuring regulatory compliance by preventing anonymous usage while still enabling private Ethereum transactions.

EY’s Commitment to Ethereum

EY has been building Nightfall since 2019 as a global commitment to blockchain innovation. In an interview in 2022, EY’s blockchain leader reaffirmed the company’s goal “to be the best on earth at Ethereum.” With Nightfall_4, EY continues to advance the state of enterprise blockchain adoption by bringing a better and privacy-oriented layer-2 solution.