ETLS: Efficient Two-Level Supervision for Decentralized Anonymous Payments

Decentralized anonymous payment (DAP) solves the privacy leakage problem in decentralized payment. However, some criminals may use DAP to carry out illegal activities, since DAP supports unconditional privacy protection and illegal transactions are difficult to be identified and tracked. Some studies have introduced regulatory mechanisms in DAP to track illegal transactions, but there are still problems such as privacy disclosure and low regulatory efficiency. In this article, we propose an efficient two-level supervision scheme ETLS, which aggregates anonymous transactions based on Walsh commitment. The first-level regulator only needs to process the aggregation results to screen out suspicious users, and the second-level regulator discloses the public keys of suspicious users. During the supervision process, only the public keys of suspicious users will be identified, and the privacy of compliant transactions will be kept confidential. Compared to previous works, the ETLS scheme greatly improves regulatory efficiency while ensuring the privacy of transaction address and payment amount. The security properties of the ETLS scheme are defined and proved based on the security of DAP system, the security of Walsh commitment and zero-knowledge proof, and its performance is tested based on the Zcash system. The findings demonstrate that the ETLS scheme can effectively strike a compromise between privacy protection and regulatory requirements while maintaining low computational and communication overheads.